14 ★ FINANCIAL TIMES Friday6 March 2020
P E T E R C A M P B E L L A N D J O E M I L L E R
Peugeot ownerPSA nda BMW re lead-a
ing the race to cut car emissions in
Europe,pullingaheadofVolkswagen.
Only two months into the new CO
regime, the early winners and losers are
becomingclear.
PSA, one of the most electric-shy car-
makers, is already compliant withEU
rules launched in January, the company
said this week.BMW, an early leader
thatwasslowtofollowthesuccessofthe
i3 with fresh battery models, said it is
alsoaheadoftheEUtargets.
At the back of the pack, German rival
Daimler s lagging behind targets, whilei
Volkswagen, which has put electric cars
at front and centre of its strategy, is
banking on a steep rise in electric sales
toclearthebartomeettherules.
The targets come at a time of
squeezed sales in main markets, threat-
ening to undermine profitability by
forcingcarmakerstosellbatterymodels
thatbooklittleornoprofit.
On top of this, coronavirus as put ah
virtual halt to trading in China, the
industry’slargestmarket.
The CO2 rules force carmakers to
lower average emissions in their vehi-
cles sold in Europe to 95 grammes of
CO2 per km, or face fines that could run
intobillionsofeuros.
Each manufacturer has itsown CO
target,basedontheweightofvehicles.A
business selling smaller cars such as
PSA, therefore, has a lower CO2 target
than a company with a heavier average
vehicle, such asMercedes-Benz wnero
Daimler. The targets for each company
vary from about 91g/km to just over
100g/km.
In preparations for the rules,manu-
facturers have revamped electric sales
strategies and tried to eke efficiencies
outofexistingpetrolanddieselengines.
“We have been CO2 compliant from
day one,” saidMaxime Picat, head of
Europe at PSA, which owns thePeugeot,
Citroën,Vauxhall nda Opel rands.b
Hesaidthecompanyaimstomeetthe
rules month by month, giving itbreath-
ing space in case sales of some models
fall off. PSA beat its individual target of
93g/kminJanuaryandFebruary.
BMW,an electric pioneer withthe i
car , is below its own target of 104g, chief
executiveOliver Zipse aid. He addeds
the soon-to-be released Mini Electric
had received7,000pre-orders.
Both companies have released some
pure electric models, but pinned their
hopes on a flexible manufacturing sys-
tem that allows them to offer hybrid or
electricversionsofcurrentmodels.
BMW’s Mr Zipse said the flexible sys-
tem allowed the company to balance
production with demand. Electric and
hybrid sales at the German carmaker
were 40 per cent higher in January and
February compared ith the samew
periodayearearlier,hesaid,accounting
foronein10models.
The company has also managed to
keep below its emission target, despite
sticking with its high-performance
M-badged models, whichare extremely
profitable.
Their flexible approach is in stark
contrast to VW, which will build its own
dedicated electric models from theground up using a skateboard or chassis
system. Its self-imposed target for the
whole group, which includes brands
rangingfromSeat ot Porsche,is99g.
While the company plans to flood the
marketwithitsbattery-poweredID3car
towardstheendoftheyear,thevehicle’s
release has been plagued by troubles
over its software, VW’s chief executiveHerbert Diess said last week.
The company’s Audi brand, which
had production of its e-Tron SUV stall
because of battery supply issues, is fac-
ing another hurdle. While businesses
keen to reduce their overall emissions
have helped the company sell 30,
e-Tron cars to date, retail customers
needcoaxingbyshowroomstaff.
“We have to take the hassle away,
from installing charging solutions at
home or offering a charging card, offer-
ing the total ecosystem,” saidHildegard
Wortmann,Audi’s board member for
sales. “There is a lot of communication
needed to get somebody to that stage
where they have a full understanding
that you never drive that much that you
needtohaverangeanxiety.”
The reality is that sales ofelectric
cars , which remain below 5 per cent of
sales in almost all European markets,
areonlythathighbecauseofsubsidies.
“So far we are still selling our electric
vehiclestogreenaddicts,”saidPSAchief
executiveCarlosTavares.
In part, the companies are helped by
rules that ease manufacturers into the
new regime. This year, the most pollut-ing 5 per cent of vehicles are not
included in the calculations, while elec-
tric cars gain “supercredits” that allow
themtocountdoubletowardtargets.
The value of the credits drop next
year and the year after, while from 2021
allcarsalesareincludedinthemix.
Daimler, which last month reported
its worst performance in a decade,
unveiled three new short-range plug-in
hybrids this week, which can manage
roughly70kmonasinglecharge.
“This should cover more or less most
of the trips that people take on a daily
commute basis,” said chief executive
Ola Kallenius. The group requires a
hugecuttoitsemissions,whichlastyear
were a fleet-wide average 138g, to reach
itstargetofjustabove100g.
“It’s part of a very steep ramp up of
electrification of Mercedes this year,”
Mr Kallenius added, noting that the car-
maker would quadruple the number of
electric cars and plug-in hybrids it sold
this year, and produce 50,000 of its flag-
ship electric car, the EQC,in 2020. But
he admitted compliance in 2020 and
2021 will be a “particular challenge”. “I
thinkwewerewithinstrikingrange.”BMW and PSA
pull ahead in
drive to cut
car emissions
Early winners and losers emerge as groups
scramble to hit tough European CO2 targets
A PSA employee
works on
assembly of an
Opel Grandland
X sport utility
vehicle at the
Sochaux plant in
eastern France
Stefan Wermuth/Bloomberg‘We have to
take thehassle away,
frominstalling
chargingsolutions at
home oroffering a
chargingcard’
PSA leads the way on reducing emissions
Grammes of CO per kmSource: Redburn PSA Renault BMW Fiat VW Daimler COMPANIES
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MARCH 6 2020 Section:Companies Time: 5/3/2020- 17:45 User:jon.wright Page Name:CONEWS3, Part,Page,Edition:USA, 14, 1