Ditching small automobiles is unhealthy for shoppers, the surroundings and, in the end, western carmakers, argues Julia Poliscanova.
Julia Poliscanova is senior director for automobiles and e-mobility on the inexperienced NGO Transport & Atmosphere.
As soon as a staple of nouvelle imprecise films, ’60s hippies and European garages, the likes of the Fiat Punto, Volkswagen Beetle, and Citroën Picasso are being discontinued. The Ford Fiesta – a darling of British drivers for many years – will be part of their destiny in 2023.
Western auto execs blame the emissions rules. Ford, Renault, Stellantis, and others declare that small automobiles can’t meet ever tighter European CO2 targets. However compliance is averaged throughout all gross sales, not per automobile.
So, whereas promoting solely petrol and diesel automobiles will land you fines, promoting smaller combustion fashions (that emit comparatively much less CO2) will imply much less electrical automobiles should be bought to stability emissions.
The smaller, lighter automobiles additionally result in extra important economies throughout, given the rising uncooked materials and vitality prices.
Even when the emissions targets are set at zero, as would be the case in Europe and California from 2035, a bigger battery mannequin is counted the identical as a small one, successful you no brownie factors for promoting huge.
With rising prices of dwelling, demand for small, inexpensive automobiles in Europe stays robust.
Gross sales of small (phase B) automobiles in Europe are anticipated to extend each in quantity and income. Drivers within the UK at present wait 12 months for his or her new Fiesta, an indication that it’s not shopper demand that’s responsible for Ford’s choice.
So what’s going on?
The shift to bigger automobiles in Europe lengthy predates the electrification push. Information compiled by T&E reveals the unfold between smaller and bigger segments has not modified a lot in Europe, however inside segments, hatchbacks and sedans have given strategy to bigger SUVs. So, Picassos and Puntos usually are not changed by RAM 1500s – as an alternative, they flip into compact SUVs.
The common weight of a European automobile has elevated by 100kg and the scale by 6% within the final 10 years.
SUV-isation is as a lot a function of the combustion engine market as it’s of electrics: whereas half of all battery electrical automobiles bought this yr are SUVs, diesel and petrol automobiles are simply behind at 46%.
Automobile dimension is king with regards to business earnings: SUVs, on common, promote for nearly 60% extra in Europe, based on Jato. And Ford’s technique to enhance its earnings and shift to SUVs is the rationale for axing the Fiesta.
Auto bosses seem like culling small automobiles in pursuit of revenue. VW, Stellantis and BMW have all introduced that they’re shifting in direction of promoting fewer automobiles and specializing in extra premium, high-end fashions.
That is exhibiting up within the carmakers’ financials: whereas gross sales volumes are down because the pandemic, the earnings of BMW, VW and Stellantis grew by 15-30% final yr, with double-digit margins.
However exiting smaller automobile segments just isn’t excellent news for the surroundings, drivers or the European business.
Bigger automobiles put extra strain on the planet as they want extra materials to be constructed and extra vitality, be it oil or electrical energy. 4 Tesla Mannequin 3s (customary vary) will be made out of the 200 kWh battery pack of a GMC Hummer EV.
For drivers, this implies costlier fashions and better operating prices, particularly at a time of excessive vitality costs.
Giant automobiles, quite than electrical, are costly: a one-tonne electrical mannequin prices round €20,000, whereas a two-tonne one comes with a price ticket of €45,000-60,000, based on the EV Database.
In the end, Western carmakers may come to remorse this. Whereas they’ll make extra revenue on each SUV bought, the small automobile phase is the place the quantity is.
As Fiestas and Picassos disappear, fashions by BYD, Nice Wall Motor and SAIC’s MG are taking their place. Most income from small automobiles bought in Europe is anticipated to be generated in China, due to European fashions and Chinese language manufacturers being produced there.
This could be Chinese language producers’ launching pad into Europe earlier than going high-end. Western mass-market manufacturers may get up at some point having misplaced most of their market share.
Given the stakes, regulators ought to guarantee European small automobiles don’t disappear. Ideas like low-cost leasing in France are a superb begin and may assist small, inexpensive electrical fashions produced in Europe.
Subsidies for electrical automobiles ought to assist entry-level fashions “made in Europe”. Total effectivity and battery sizing ought to be addressed by way of devoted European guidelines and nationwide tax programs.
The price of dwelling disaster and runaway inflation imply demand for small, modestly priced automobiles is right here to remain. Slightly than blaming local weather rules, western carmakers ought to restore their Twentieth-century staples to allow them to thrive in an electrical age.