Diesel and Hybrid Cars in Europe Automotive World Briefing 29 th January 08 Al Bedwell al.bedwell@jdpa.com
Introduction Strategies for reducing CO 2 output from personal vehicles include improved traffic management, modified driver behaviour and technical improvement to vehicles Despite growing awareness of global warming and CO 2, drivers are unwilling to change their habits So carmakers are increasingly being required to produce low carbon vehicles at little/no extra cost or performance penalty Powertrain solutions have provided most of the CO 2 reduction over the last decade will this continue to be the case? Diesel is here to stay, but how much more growth will we see? The climate for hybrids in Europe hasn t been right so far, but will pressure for better FE move them from niche to mainstream? If so, which technology will win gasoline or diesel hybrid? 2
WE Diesel Share is a Function of Tax W Europe Diesel Passenger Car Shares & Breakeven Distances 07 90 80 70 Belgium Norw ay France Spain Portugal Diesel Share (%) Austria Low Diesel Tax Italy Germ any UK Sw eden Sw itzerland Ireland High Diesel Tax Denm ark Finland Netherlands 0 5,000,000 15,000,000 25,000 Breakeven Distance (Km) 3
Diesel Car Outlook, Germany & France Diesel Volumes & Share of New Passenger Car Sales % 65 55 45 35 25 Germany 2.5 2.0 1.5 1.0 0.5 U n its (m n ) 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 % 80 70 France 2.0 1.5 1.0 0.5 U n its (m n ) 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 Volume Share Volume Share 4
UK & Norway! Diesel Volumes & Share of New Passenger Car Sales % 55 45 35 25 15 UK 1.5 1.0 0.5 0.0 U n its (m n ) 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 % 90 80 70 0 France Norway 1 0 80 0 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 U n its (th o u ) Volume Share Volume Share 5
Western, Eastern Europe Diesel Outlook Diesel Volumes & Share of New Passenger Car Sales % 70 W Europe.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 U n its (m n ) 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 % 0 France E Europe 2.5 2.0 1.5 1.0 0.5 0.0 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 U n its (m n ) Volume Share Volume (inc RU, Ukr) Share (inc RU, Ukr Volume (not RU, Ukr) Share (not RU, Ukr) 6
Diesel Premium Segment is More Robust Dieselisation of Market Sectors 70% 65% % 55% % 45% % 35% % Pan-Europe Car Market 02 03 04 05 06 Premium 07 08 09 Non-Premium 11 12 13 14 15 16 17 Peak Premium sales 2.3mn (1.8mn 07) Peak non-premium sales 9.2mn (6.8mn 07) Premium is more resilient to future rises in diesel powertrain 65.2% 65.6% costs Premium may benefit more from company car tax policy Typical distance driven is greater than for non-premium Absolute financial savings are greater in larger (Premium?) cars 7
HEVs in Europe Niche or Mainstream? Small volumes, but strong growth Sales in 07 just k, but up 2,000% from 02! Market is constrained by lack of choice Only a few HEVs available, most segments not covered Price premium v Gasoline % or more, diesel circa 8% Share (% ) 0. 0.25 0. 0.15 0. HEV Sales & Share in Europe mild/full hybrids only Sales ('000 units) Hybrid FE is no big deal 0.05 Diesel is default for those worried about FE/CO 2 0.00 0 Can hybrids offer value for money? 00 01 02 03 HEV sales 04 05 06 HEV share 07 8
The Financial Case for Hybrids Assumptions: Gasoline hybrid costs 15% more than non-hybrid gasoline Diesel hybrids cost % more than non-hybrid gasoline Diesel/gasoline hybrids pay % of annual circulation tax/congestion charge of non-hybrid gasoline Mature market gasoline & diesel hybrid model availability similar to non-hybrid diesel Gasoline hybrid fuel efficiency same as non-hybrid diesel Diesel hybrids achieve % better fuel economy than non-hybrid diesel Share (%) 0 90 80 70 0 - - 0 5,000 WE Hybrid Breakeven Model 07 Diesel Diesel Hybrid Gasoline Hybrid,000 15,000,000 25,000,000 35,000,000 Breakeven Distance (Km) (versus non-hybrid gasoline) 9
Medium Term OEM Hybrid Activity - Europe OEM Comments 07 08 09 11 12 Toyota Group Honda Target % of sales. Isuzu link for DHEV Will introduce hybrid-only model in next few years Prius, Lexus (existing) Target 0k HEV sales Toyota DHEV? Civic (existing) Hybrid-only CR-Z? Target k sales HEV 'major alternative in Europe' M-B Partner with BMW, GM in twomode project ML4 S0 E0 BlueTec S0 BlueTec C0 BlueTec S0 BlueTec BMW Will lag M-B and GM for hybrids X6 5 Series BluePerformance VW Group Hybrid for large SUVs first. Little DHEV activity so far Q7 (end '08) Touareg VW DHEV PSA Pioneer non-premium DHEV. 2,000 premium over diesel 6 HDI, C4 HDI R-N Infiniti introduce GHEV. R-N follow PSA DHEV later? Infiniti Renault Ford Group Volvo to get PSA technology? Kuga Volvo? GM Group Saab to get 2-mode system? Opel DHEVs shown Saab Saab 9-5?, Astra, Corsa Fiat Group Has least need for hybrids, but could share GM tech. Punto? Hyundai Group Working on in-house GHEV system. Intro delayed SUV/Large cars Porsche Will use GHEV to boost performance & lower CO 2 Cayenne Panamera Tata Group Land Rover needs CO 2 - reducing technology Land Rover LRX XF hybrid? Gasoline Diesel
Europe HEV F cast Pessimistic Scenario Early Adopters Only Premium for full GHEV versus gasoline remains at % Only a few OEMs enter HEV market Not all major market segments covered No long term hybrid incentives Hybrids are part of the basket of choice for a portion of buyers only Diesel hybrid too expensive for mass market Share (% ) 2.5 2.0 1.5 1.0 0.5 0.0 HEV Sales & Share in Europe mild/full hybrids only 00 01 02 03 04 05 HEV sales 06 07 08 09 HEV share 11 12 13 14 15 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Sales (m n units) 11
Europe HEV F cast Optimistic Scenario Mass Market Opportunity Price premium for full GHEV versus gasoline falls to %-15% Diesel hybrid premium at 15% to % over gasoline Most OEMs enter HEV market Most market segments covered Hybrids are part of the basket of choice for most buyers Hybrids retain incentives in medium term S h a re (% ) 6.0 5.0 4.0 3.0 2.0 1.0 0.0 HEV Sales & Share in Europe mild/full hybrids only 00 01 02 03 04 05 HEV sales 06 07 08 09 11 HEV share 12 13 14 15 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 S a le s (m n u n its ) 12
Conclusions The rate of expansion in the W Europe diesel car market has peaked but further growth will take place Some diesel markets are saturated but others are constrained by tax and so have pent-up demand Pressure will come to bear on the diesel sector in the next decade from both gasoline sector improvements and EU-6 Hybrids could play a significant part in CO 2 reduction, but are not yet fully commercially tested in Europe Diesel hybrids are better suited to Europe than gasoline hybrids Consumer appetite for low carbon vehicles will need suitable government policies Continuous improvement of existing powertrains offers the most cost effective medium term solution to CO 2 reduction 13
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