CO2 regulations could inhibit EV growth by 2025

Electric vehicle (EV) uptake in Europe has continued to rise this year despite the challenges wrought by Covid-19, but this growth could stagnate by 2025 unless carbon emission regulations are strengthened, the European Federation for Transport and Environment (T&E) said.

EVs could account for 10pc of European car sales by the end of this year — up from just 2.5pc in the first quarter — and then climb to a 20pc share by 2025, T&E said. But there is a "real danger that the supply of electric cars will stagnate throughout the 2020s just as the technology matures and market demand surges," it said, calling for more ambitious annual targets from 2025 onward in order for the region to achieve 100pc zero emission sales by 2035.

The current car CO2 regulation calls for a 15pc reduction in 2025 and 37.5pc reduction in 2030, as compared with a baseline of around 115g/km in 2021. This would translate into an EU-wide fleet target of 98g/km in 2025 and 72g/km in 2030.

A number of auto manufacturers have made progress this year, in part because of higher EV sales, with Europe's new car CO2 emissions dropping to 111g/km in the first half of 2020, from 122g/km in 2019 — the fastest rate of decline since new carbon emission regulations came into effect in 2008, with certain OEMs such as PSA Group, Volvo, FCA-Tesla and BMW Group having already hit their CO2 reduction goals for the year.

But change has historically been slow, with CO2 emissions from new cars actually rising in 2016-19, in part because of higher sales of SUVs.

Furthermore, thousands of premium cars with CO2 emissions exceeding 200g/km have been sold this year, and a large proportion of plug-in electric cars emit far more CO2 on the road than a lab setting — an issue that would need to be addressed in the 2020s in order for Europe to hit emission reduction targets.

Overall, T&E estimates that in order for Europe's entire car fleet to be producing zero emissions by 2050, the last new car with a CO2 emitting engine would need to be sold no later than 2035.

Issues with the supply chain

T&E's findings coincide with widespread concerns about the carbon footprint of the metals supply chain involved in EV batteries. There are currently no major fully-operational sources of lithium within Europe, critical for the lithium-ion batteries to power the vehicles. Instead it is often sourced from Chile or Australia, and processed in China or South Korea before components are shipped to Europe for assembly — all of which increases the carbon footprint of the vehicle before it can be sold. This process may be further strengthened under new guidelines regarding cobalt salts.

The same can also be said for materials such as graphite used in the cathodes of the battery and certain rare earths that are used elsewhere within the vehicle. Similarly, structural issues remain a concern within the continent such as a lack of available charging points for vehicles, and the sustainability of subsidies for purchasing EVs.

This all comes at a time when EV demand is rising globally. In China sales of new energy vehicles (NEVs) have continually risen in 2020, with sales and production moving to record highs last month of 138,000 and 136,000 units, respectively. Similarly, ride sharing firms such as Uber and Lyft, are taking steps to reduce their environmental footprint, with the former aiming for all rides in the US, Canadia and major European cities to take place in EVs.

Change afoot

That said, many projects announced this year are looking to change the issues of both supply and infrastructure in Europe. In terms of supply of raw materials, the EU has been providing services and in some cases funds to certain projects such as Cinovec's lithium project in the Czech Republic or Savannah Resources' project in Portugal. Norway's Elkem has recently received funding for its graphite project in Kristiansand, while Cornish Lithium in the UK has made a number of preliminary steps to establish a zero-carbon lithium source.

Some key infrastructure steps are also being taken. Earlier this year, Germany pushed forward on its climate plan by introducing a carbon tax to help shift consumers away from combustion engines in the long run. The country is also putting billions of euros worth of funding in removing diesel from its transport network. Similarly, the UK government in May announced it would be setting a target of having 6,000 high-speed, open-access electric vehicle (EV) charging points on major roads in England by 2035.

And in terms of the commercial aspect, many of the largest auto firms have committed to building EVs and batteries within the continent. Tesla announced earlier this year that it would be building a new Gigafactory in Berlin, Verkor said it would build a 50GWh battery plant in France and Daimler is building a new battery facility in Bitterfeld-Wolfen, Germany.

By Yusuf Khan