Powertrain investments and strategies have never been as important for OEMs as they are now. Battery electric vehicles are expensive to develop, but if you don

The editor's week

Powertrain investments and strategies have never been as important for OEMs as they are now. Battery electric vehicles are expensive to develop, but if you don't go down the electrified route you risk being left behind as the electrified market grows. In Europe, there's also the tighter EU 2021 average CO2 (95g/km) target to consider - OEMs who miss them could face big fines and it's going to be harder still to hit them as diesel share continues to fall (estimates suggest that at the end of 2018, the industry in Europe was averaging around 118g/km - so there is considerable work to do). Dieselgate and ongoing uncertainty over tax policy for diesels could not have come at a worse time from the point of view of hitting that 2021 target.

The fines can't easily be dismissed either, as they ramp up with every 1g over on a multiple of European sales volume (EUR95 per vehicle). It gets expensive for the big players if they are very far off meeting the target. Being agile and having powertrain options to play with is going to be increasingly important and it is interesting to note how manufacturers coped with the new WLTP emissions standard last year. PSA was certainly one of the better performers and is already pretty advanced in its strategy for 2021.

INTERVIEW - PSA's Maxime Picat

And, of course, there are the dynamics of technology costs associated with investments to consider. It's not standing still and higher volumes will mean that unit costs for electrification come down - that's clearly going to be the direction of travel. How quickly though, is a tough question to answer. You would not want to be caught with big fines though, especially in a region that is competitively very tough anyway (and likely entering a down phase for the TIV - Total Industry Volume). Some OEMs will be particularly vulnerable.

EVs to be on cost parity with ICEs by 2022 - report

Until next time...

Dave LeggettDave Leggett
Managing Editor

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