Diesels may not be as dead as you think, Fleet Europe reports
European OEMs are expecting the internal combustion engine to play a majority role in their powertrain portfolios for the next 20-30 years. That much became apparent from several reports that underlined that fossil fuels will still have a key part to play in the future.
At BMW’s NextGen conference in Munich recently, the emphasis was on electrification and how by 2023 the German premium carmaker will have 25 electrified models in its portfolio, more than half of which will be all-electric.
BMW also revealed its development strategy, which revolves around what it calls ACES – autonomous, connected, electric and services – and includes an accelerated electrification plan.
However, board member Klaus Froelich was quoted by Automotive News as saying: “A best assumption of 20% of electrified sales, including battery-electric vehicles and plug-in hybrids, by 2025 means that at least 80% of our vehicles will have an internal combustion engine.”
And he added that his company expects diesel to survive for at least 20 more years and petrol at least until 2050.
As a result, leading European fleet publication, Fleet Europe, decided to canvass the opinions of rival manufacturer Mercedes-Benz and automotive consultancy, Autovista, to ask for their views on the issue.
EVs only way forward
Electrification is the only way forward for vehicle manufacturers to comply with the emission targets set by the EU. But that does not mean all Europeans will be driving electric cars by 2025. Outside Europe, in markets like Russia, the Middle East and Latin America, e-mobility is anything but on the agenda.
“One thing is clear: the future is electric. But it is also clear that a wide range of our global markets do not yet provide the conditions for the daily use of battery-electric mobility and that is likely to remain so in the next few years,” said Mercedes-Benz.
“That's why today, our main concern is to keep our portfolio in balance. We have several factors in view: first and foremost the reduction of CO2 and thus the fulfilment of legal requirements. Naturally, the requirements of our customers are just as important to us as we want to offer them a suitable mobility offer in the future as well. But we also keep an eye on the efficient use of our resources, the costs and thus the profitability of our company.”
While political correctness prevents them from explicitly admitting it, manufacturers like Mercedes, BMW, JLR and VW Group would like to see diesel engines stick around for as long as possible.
It’s what they have invested in, it’s what helps them achieve CO2 targets and it’s what their biggest clients want to continue driving because of the lower TCO it still offers in the case of high-mileage drivers. It is also the only fuel that works for LCVs and trucks, which in most cases need torque and range.
In the wake of recent controversies, many fleet managers are still uncertain as to what to do with diesel: strike it from the car policy for good or keep it – albeit for only those drivers travelling over 30,000km per annum.
Rationally, they have no reason to shun the fuel now that the Euro 6d-temp/WLTP/RDE is in place and means that the latest diesels are cleaner than ever before,
But what about residual values?
“Looking towards 2025, we expect only the slightest of declines in RVs for diesel-powered engines in Germany; the correction has already taken place,” Autovista told Fleet Europe.
“The biggest corrections should occur in France with medium-to-high single digit percentage declines depending on segment, because there is still an oversupply of diesel used cars.
“Italy, Spain and UK will see substantial single digit percentage declines in our most likely development scenarios, but lower than those anticipated for France.”
After 2025, Autovista believes the development of market shares of diesel and petrol will be supply-driven rather than demand-driven as manufacturers reduce petrol and diesel engines in their portfolios.
Plug-in hybrids
The consensus seems to be that European car makers will be focusing on plug-in hybrids rather than full EVs over the next few years. PHEVs help them lower the carbon footprint of their fleet considerably, they keep the existing industry alive and they are easier for their customers to use.
“By 2025, we expect 15-25% purely electrical share. Conversely, according to this prognosis, at least 75% will still have an internal combustion engine on board - with corresponding electrification," Mercedes said.
"We are systematically implementing our portfolio so that we could reach more than half of our car sales by at least plug-in hybrids or even all-electric vehicles by 2030.”
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