CO2 reduction potentials for

passenger cars until 2020

Management Summary 113510

Table of Contents 3

Table of Contents

1 Summary ....................................................................................................................... 4

2 Introduction and Methodological Approach .................................................................... 6

3 Automotive Environment Analysis (WP1)....................................................................... 7

4 Technological and Economic Potential Analysis (WP2) ................................................. 9

5 Development Scenarios of CO 2 Reduction Potentials (WP3) ...................................... 12

5.1 Technology Scenarios for the Development of the Reference Vehicles ................. 12
5.2 Lower Technological Limits of the Fleet CO 2 Reduction Potential.......................... 13

6 Validation of Results by Expert Interviews (WP4) ........................................................ 15

7 Derivation of CO 2 Targets (WP5.1).............................................................................. 16

8 Strategic Implications for the German Automotive Industry (WP5.2) ............................ 19

12CE0208
1 Summary 4

1 Summary

In accordance with the objectives of the European Commission, the CO2 emissions in
Europe should be reduced from 141 g CO2/km in the year 2010 to 95 g CO2/km in 2020. This
corresponds to a reduction of overall 32.6 % or 4.6 g CO2/year and represents a challenge
for the European automotive industry. The present study investigates which CO2 reduction
potential can be achieved in the European new vehicle market in light of a technical and
economical realistic background. Furthermore, measures and instruments which are neces-
sary to prevent possible conflicts of interests are identified.

In a first step, the European passenger car market was analysed and the composition of
small (SEG-1), medium (SEG-2) and large sized cars (SEG-3) as well as the concerning
drive train version, like gasoline, diesel, LPG/CNG and electric, were determined as status
quo and the change until 2020 was forecasted. Till the year 2020, forecasts show a market
share of battery electric and plug-in hybrid vehicles, which will change the market composi-
tion with an impact on the CO2 fleet emissions.

In the next step, all technological measures to reduce the CO2 emissions were analysed and
aggregated to technology packages gradually building upon one another with and without
electrification of the drive train, in consideration of the reciprocal effects. Since the corre-
sponding costs for the technology packages can’t be charged completely to the vehicle
manufacturers, they have to be passed on to the end customers. The performed cost/benefit
analysis shows for the private and commercial end users the timeframe, when an amortiza-
tion takes place, considering the individual driving performance and the corresponding fuel
savings per technology package. As long as the amortisation is reached within 5-7 years, it is
expected that the customers will decide for this technology. Within this study, the different
framework conditions are considered within a conservative, a realistic and a progressive
scenario. These differ especially concerning the development of fuel prices and the relation
of the market price of the technology to the manufacturing costs.

Within the realistic scenario, the expected CO2 fleet emissions reach the level of 103 –
108 g CO2/km. Thereby, the end users invest in average approx. €1,900 (market price) in
technologies, which amortise after a holding period of 6 years. The resulting gap of 8 to
13 g CO2/km needs to be reduced by the industry e.g. using eco innovation or flexibility
measures. The additional cost to meet the 95 g CO2/km target value totals to approx. €650 to
€950 (manufacturing cost level) for the vehicle manufacturers.

In the conservative scenario, this means a below-average fuel price development and an
unchanged market distribution towards 2010, the cost/benefit relation for the end user is
lower, so that the target value of 95 g CO2/km would clearly not be reached. Whereas, in the
progressive scenario, based on an above-average fuel price increase, a compliance of the
95 g CO2/km target is possible. The remaining gap would amount up to approx. 8 g CO2/km
and could be closed for example with eco innovations.

12CE0208
1 Summary 5

The assumption of an equipment rate of 100 % for the most developed technology packages
with the highest costs and the forecasted market distribution for 2020 shows the theoretic
maximum achievable CO2 reduction potential. For the conventional technology path (TP3C),
the emissions could be reduced to 90 CO2/km on average and for the hybrid technology path
(TP3H) to 78 g CO2/km. The average technology manufacturing costs (material, manufactur-
ing and development without distribution and VAT) per optimized vehicle aggregate for the
conventional path to €2,687 on average and for the hybrid path to €4,981. Taking only the
technical measures with the best cost/benefit ratio into account, it is possible to achieve the
95 g CO2/km target value for €2,000 of additional manufacturing cost.

All in all, from the technological and economical considerations regarding the CO2 reduction
potentials it becomes apparent, that it is possible to reach the target value from a technologi-
cal perspective using diverse technologies. However, the achievement of the needed high
market penetration of fuel saving technologies will be particularly an economical challenge.
Since the targets set by the EU clearly place the automotive industry under pressure, and
since the pressure is not equally effecting all industry players, selected flexibility measures
offer the opportunity to accelerate the development of needed technologies and incentivize
advanced innovation. Here, super credits, eco-innovations, the credit/debit system and bank-
ing/borrowing, as well as emissions certificates can be taken into account. Additionally, the
passenger car market can be controlled by various fiscal measures related to CO2 emissions.

12CE0208
2 Introduction and Methodological Approach 6

2 Introduction and Methodological Approach

In the white paper entitled “A Roadmap for Moving to a Competitive Low Carbon Economy in
2050”, the European Commission (EC) defined its future vision for a sustainable and envi-
ronmentally-friendly economy. The white paper specifies five core measures which will help
to realize this vision, essentially focusing on emission reductions and efficiency improve-
ments in all sectors of the economy. A central lever for the measures is the reduction of car-
bon dioxide (CO2) emissions, which contribute to global warming. Following the energy and
manufacturing sectors, road traffic currently produces approx. 23 % (14 % passenger and
9 % freight traffic) of all CO2 emissions in the European Union (EU).

In the year 2010, the CO2 fleet emissions were recorded for the first time by the European
Environmental Agency and determined to 141 g CO2/km. The CO2 limits for passenger cars
started to gradually come into effect on January 1, 2012. By 2015, the average CO2 emission
levels for the new passenger car fleet in Europe must be reduced to 130 g CO2/km (-7.8 % to
2010), and an average level of 95 g CO2/km is under consideration for 2020 (-32.6 % to
2010). The actually CO2 target values a vehicle manufacturer has to keep is coupled to the
average weight of its vehicle fleet. If an OEM exceeds the mass specific limits, penalties are
imposed due to the level of overrun. In Germany, the automotive industry typically offers of a
very wide portfolio of vehicles, so that large, heavy and highly motorized vehicles cause the
highest pressure to act on emission reduction.

In order to assess which CO2 levels for the new passenger car fleet in Europe are realistic
from a technical and economic point of view and which measures and instruments are nec-
essary to avoid conflicts of interests, the Federal Ministry of Economics and Technology in
Germany (BMWi) assigned the Institute for Automotive Engineering at the RWTH Aachen
University (Institut für Kraftfahrzeuge – ika) to perform the study at hand.

The methodological approach is structured in different working packages (WPs). In WP1, the
environment of the automotive industry is analysed and a detailed overview of CO2 emission
regulations for passenger cars in Europe, the USA and Japan is presented, along with the
current and expected future development of the EU market size and the corresponding fleet
composition. In WP2, the status quo of technologies is defined. Therefore, a portfolio of
measures to reduce the CO2 emissions for gasoline and diesel drive trains is created. Based
on that, the single measures are analysed due to possible interactions with each other (WP3)
and assembled to development scenarios stepwise building up on each other, according to
the expected technological and economical application probability. For the validation of the
results (WP4), interviews with experts of the automotive industry, as a primary data collec-
tion, are performed. Concluding (WP5), the CO2 fleet emissions for the year 2020 are de-
rived, taking the technical and economical realistic framework conditions into account. Based
on these results, strategic implications for the European automotive industry and politics are
derived.

12CE0208
3 Automotive Environment Analysis (WP1) 7

3 Automotive Environment Analysis (WP1)

The automotive industries in the core markets, Europe, USA and Japan, need to adapt to
tighter CO2 emission and fuel consumption regulations in the future. The official limits have to
be considered relative to their appropriate test cycle. A standardized driving cycle is currently
being developed through the work on the “Worldwide Harmonized Light Duty Test Proce-
dure” (WLTP). Globally, the European Union has the most ambitious future targets for fleet
CO2 emission requirements. Japan closely follows, however the USA lags behind.

The analysis of the current market composition shows that the percentage of small vehicles
is higher in Europe than in Germany. The expected trend for both markets is a further shift
towards small vehicles. Otherwise, a slight growth is expected for SUVs and vans. As for fuel
types, the EU has a significantly higher share of diesel vehicles than Germany, which is
however expected to exhibit growth in the share of diesel vehicles by 2020. As for electric
vehicles, it is estimated that approx. 5 % of the vehicles sold in Germany, and approx. 6 % of
those sold in Europe in 2020 will have electrified drive trains. These percentages include
plug-in hybrids and electric vehicles with range extenders, in addition to battery-powered
vehicles.

The average CO2 emissions of new passenger cars sold in Europe in 2010 was
141 g CO2/km. While analyzing the CO2 emissions of vehicles in Europe, it emerged that the
sports, luxury, SUV, and upper-class vehicle segments were still far from meeting their re-
spective 2015 CO2 limits. OEMs with fleets mainly in the smaller and medium-sized vehicle
segments are relatively closer to meeting the limits. However, OEMs which have a broad
fleet portfolio as well as those with a focus on the medium- and large-sized segments are
further away from meeting their emission targets.

Taking the OEMs’ planning horizons and required development times into consideration, a
European regulation for 2020 should be defined between five and ten years in advance. Pro-
duction cycles have significantly shortened in the past years, and are mainly dependent on
budget, resources and economic conditions. A change of the vehicle platform occurs every
six to eight years, while drive train cycles last between 10 and 15 years. The introduction of
vehicle models and engines is postponed to reduce complexity and reduce the possibility of
mistakes. From a technological point of view, the timeframe needed to realize series produc-
tion and vehicle launch in the market strongly depends on complexity, and ranges between
18 months and five years. Therefore, all OEMs still have in general at least one model-cycle
before the regulations come into effect.

The key results from WP1 are graphically summarized in Fig. 3-1.

12CE0208
3 Automotive Environment Analysis (WP1) 8

Distribution of Vehicle Segments Status quo 2010 Consolidation and Forecast 2020
SEG-3
SEG-1 ( SEG-1 SEG-2 SEG-3

3% 11%
9% 1% 4% 4%
1%

13% 38% 41%

27%
58% 55%

11%

2010 2020
25% SEG-1 (A, B) SEG-3 (E, F, S)
Legend:
SEG-2 ( SEG-2 (C, D, M, J)

Status quo 2010 Consolidation and Forecast 2020

Distribution of Drive Concepts

6% 5% 3% 1% 3% 1% 1% 1% 1% 3%
Gasoline Diesel Electric Other
24 % 27 % 20 % 18 %
43 % 40 %
45 %
60 % 0%
6%
88 % 3%
86 % 5%
39%
75 % 70 % 79 % 81 % 45%
54 % 59 % 52%
52 %
35 % 50%
8% 11 %
A B C D M J E F S Total 2010 2020
SEG-1 SEG-2 SEG-3 Gasoline Electric
Legend:
Diesel Other

225
F
Note: The circular area of M0 S
200 a segment correlates with
the market volume.
SEG-3
CO2-Emissions 2010

J
CO2-Emissions [g/km]

175 (180 g CO2 /km)

E
SEG-1
150 C M D
(122 g CO2 /km) B

125 SEG-2
(150 g CO2 /km)
100 A

75

0
0 1.050 1.200 1.350 1.500 1.650 1.800 1.950
Mass M [kg]

Fig. 3-1: Key findings of the environmental analysis for Europe

[Reference: refer to full report]

12CE0208
4 Technological and Economic Potential Analysis (WP2) 9

4 Technological and Economic Potential Analysis (WP2)

In the second working point, a meta-analysis is performed on the technological potential of

individual measures to reduce CO2 emissions along with their respective costs. The results
are presented and quantified for six reference vehicles with gasoline and diesel engines, in
three consolidated segments, according to Fig. 4-1.

Market Consump-
Share Weight CO2 Cylinder Trans- Power
Segment share Fuel type tion Engine DI
in SEG [kg] [g/km] capacity [l] mission [kW]
2010* [l/100km]
Manual,
69 % Gasoline 1,067 5.4 127 1.2 4-cylinder - 60
SEG-1 5-Gear
36 %
(A,B) Manual,
31 % Diesel 1,194 4.1 111 1.4 4-cylinder x 60
5-Gear
Manual,
33 % Gasoline 1,396 6.8 159 1.6 4-cylinder - 90
SEG-2 6-Gear
57 %
(C,D,M,J) Manual,
67 % Diesel 1,573 5.4 145 2.0 4-cylinder x 90
6-Gear
Automatic,
25 % Gasoline 1,635 9.1 213 2.8 6-cylinder x 170
SEG-3 6-Gear
4%
(E,F,S) Automatic,
75 % Diesel 1,795 6.1 164 3.0 6-cylinder x 170
6-Gear

Fig. 4-1: Technical specifications of the reference vehicles [Reference: refer to full report]
* Gas-powered and electric vehicles (BEV & PHEV) not included

Measures affecting fuel consumption can be split between those which reduce road resis-
tance and others which increase the efficiency of energy conversion. Rolling-resistance re-
ducing tyres, aerodynamic measures and lightweight design reduce the driving resistances,
while engine-related measures such as drive train electrification and gearbox optimization
increase the efficiency of energy conversion. Engine-related measures can be further split
according to the technical conditions of gasoline and diesel engines. Moreover, overall
measures which are independent from engine type were identified, specifically those related
to thermodynamics.

Analyzing these measures shows that not all technically options have an impact within the
“New European Driving Cycle” (NEDC). This creates a limited future possibility for further
“Eco-innovations”. In addition to the measures mentioned so far, the electric drive trains of
battery-powered vehicles and plug-in hybrids are considered in a scenario analysis in the
coming segments of this study.

The technologies which are described in detail in the final report are summarized in an ag-
gregated overview showing potential, costs, and effect on weight per segment in Fig. 4-2 and
Fig. 4-3. The results stemming from the technological and economic potential analysis form
the basis of the calculations regarding the overall CO2 emission reduction potential by 2020.

12CE0208
4 Technological and Economic Potential Analysis (WP2) 10

Gasoline Technologies
SEG-1 SEG-2 SEG-3
Technology Savings Cost Weight Savings Cost Weight Savings Cost Weight
[%] [€] [%] [%] [€] [%] [%] [€] [%]
Direct injection,
3.0 150 0.1 3.0 150 0.1 - - -
homogenous
Direct injection,
8.0 500 0.2 8.0 600 0.2 5.0 600 0.1
Stratified fuel charge
Downsizing (Step 1) 4.0 150 -0.3 5.0 200 -0.3 6.0 250 -0.3
Downsizing (Step 2) 8.0 400 -0.5 9.0 450 -0.5 10.0 500 -0.5
Downsizing (Step 3) 15.0 550 -0.8 16.0 600 -0.8 17.0 700 -0.8
Engine

Cooled-/ High-load-
- - - 4.0 200 0.5 4.0 200 0.5
EGR
HCCI / CAI 10.0 450 n/a 11.0 475 n/a 12.0 500 n/a
Variable Compression 7.0 500 n/a 7.0 550 n/a 7.0 600 n/a
Valve control -
3.0 100 0.2 3.0 100 0.2 3.0 100 0.2
variable (VVT)
Valve control - fully
8.0 300 0.5 9.0 320 0.5 10.0 360 0.5
variable
Cylinder deactivation 5.0 100 0.0 5.0 110 0.0 5.0 120 0.0
Electrification

Micro-Hybrid 7.0 350 0.5 7.0 380 0.5 7.0 425 0.5

Mild-Hybrid 13.0 1,400 3.0 13.0 1,500 3.0 13.0 1,500 3.0

Full-Hybrid 25.0 2,400 8.0 25.0 2,900 8.0 25.0 3,000 8.0
Gearbox optimization /
3.0 30 0.0 3.0 30 0.0 3.0 30 0.0
Downspeeding
Automated
Gearbox

2.5 250 1.0 - - - - - -

transmission
Continously variable
4.0 600 2.0 4.0 600 2.0 5.0 0 0.0
transmission (CVT)
Dual clutch gearbox 5.0 500 2.0 5.0 500 2.0 9.0 0 0.0
7/8/9-Gear automatic - - - - - - 7.0 100 0.0
Friction reduction in
Comprehensive measures

2.0 50 0.0 2.5 60 0.0 3.0 80 0.0

the drive train
Electrification of
3.0 130 0.0 3.0 150 0.0 3.0 170 0.0
auxiliaries
Thermal management 2.0 150 0.0 2.0 150 0.0 2.0 150 0.0
Heat-energy recovery
2.0 400 1.0 2.0 400 1.0 2.0 400 1.0
(Rankine-Cycle)
Heat-energy recovery
(Thermoelectric 2.0 800 1.0 2.0 800 1.0 2.0 800 1.0
generator)
Tyres with reduced
2.0 25 0.0 2.0 30 0.0 2.0 40 0.0
rolling resistance
Aerodynamic
1.5 60 0.0 1.5 65 0.0 1.5 70 0.0
Driving resistances

optimisation
Aerodynamic design 2.0 60 0.0 2.0 65 0.0 2.0 70 0.0
Lightweight constr. -
1.5 130 -2.0 1.5 160 -2.0 1.5 190 -2.0
light (body)
Lightweight constr. -
5.0 350 -0.7 5.0 400 -7.0 5.0 480 -7.0
middle (body)
Lightweight constr. -
9.0 800 -12.0 9.0 1,000 -12.0 9.0 1,200 -12.0
strong (body)
Lightweight constr. -
1.5 120 -1.0 1.5 150 -1.0 1.5 180 -1.0
components
Development state: Series development Series development Pre-development Fundamental research
available by 2014 2014-2018 2018-2022 2022

Fig. 4-2: Overview of technologies to reduce CO2 emissions from gasoline vehicles
[Reference: refer to full report]

12CE0208
4 Technological and Economic Potential Analysis (WP2) 11

Diesel Technologies
SEG-1 SEG-2 SEG-3
Technology Savings Cost Weight Savings Cost Weight Savings Cost Weight
[%] [€] [%] [%] [€] [%] [%] [€] [%]
Downsizing (Step 2) 4.0 200 -0.5 4.0 250 -0.5 4.0 300 -0.5
Downsizing (Step 3) 7.0 400 -0.8 7.0 450 -0.8 7.0 500 -0.8
Combustion control 1.0 100 0.0 1.0 120 0.0 1.0 150 0.0
Engine

EGR - improved
2.0 160 0.0 2.0 180 0.0 2.0 200 0.0
cooling and flow
Variable Compression 4.0 500 n/a 4.0 550 n/a 4.0 600 n/a
Cylinder deactivation 3.0 150 0.0 3.0 160 0.0 3.0 170 0.0
Valve control - fully
1.0 280 0.5 1.0 280 0.5 1.0 280 0.5
variable
Electrification

Micro-Hybrid 6.0 375 0.5 6.0 375 0.5 6.0 375 0.5

Mild-Hybrid 9.0 1,400 3.0 9.0 1,500 3.0 9.0 1,500 3.0

Full-Hybrid 22.0 2,400 8.0 22.0 2,900 8.0 22.0 3,000 8.0
Gearbox optimization /
2.0 30 0.0 2.0 30 0.0 2.0 30 0.0
Downspeeding
Automated
Gearbox

2.5 250 1.0 - - - - - -

transmission
Continously variable
3.0 600 2.0 3.0 600 2.0 4.0 0 0.0
transmission (CVT)
Dual clutch gearbox 4.0 500 2.0 4.0 500 2.0 8.0 0 0.0
7/8/9-Gear automatic - - - - - - 6.0 100 0.0
Friction reduction in
Comprehensive measures

2.0 50 0.0 2.5 60 0.0 3.0 80 0.0

the drive train
Electrification of
3.0 130 0.0 3.0 150 0.0 3.0 170 0.0
auxiliaries
Thermal management 2.0 150 0.0 2.0 150 0.0 2.0 150 0.0
Heat-energy recovery
2.0 400 1.0 2.0 400 1.0 2.0 400 1.0
(Rankine-Cycle)
Heat-energy recovery
(Thermoelectric 2.0 800 1.0 2.0 800 1.0 2.0 800 1.0
generator)
Tyres with reduced
2.0 25 0.0 2.0 30 0.0 2.0 40 0.0
rolling-resistance
Aerodynamic
1.5 60 0.0 1.5 65 0.0 1.5 70 0.0
optimisation
Driving resistances

Aerodynamic design 2.5 60 0.0 2.5 65 0.0 2.5 70 0.0

Lightweight constr. -
1.5 140 -2.0 1.5 170 -2.0 1.5 200 -2.0
light (body)
Lightweight constr. -
5.0 350 -7.0 5.0 430 -7.0 5.0 510 -7.0
middle (body)
Lightweight constr. -
9.0 850 -12.0 9.0 1,050 -12.0 9.0 1,250 -12.0
strong (body)
Lightweight constr. -
1.5 120 -1.0 1.5 150 -1.0 1.5 180 -1.0
components
Development state: Series development Series development Pre-development Fundamental research
available by 2014 2014-2018 2018-2022 2022

Fig. 4-3: Overview of technologies to reduce CO2 emissions from diesel vehicles
[Reference: refer to full report]

12CE0208
5 Development Scenarios of CO2 Reduction Potentials (WP3) 12

5 Development Scenarios of CO2 Reduction Potentials (WP3)

The goal of WP3 is to deduce the CO2 reduction potential of the new passenger car fleet in
Europe by 2020, based on the environmental and technological analyses conducted in the
previous working points.

5.1 Technology Scenarios for the Development of the Reference Vehicles

As a first step, the previously-identified technologies are evaluated and clustered into “Tech-
nology Packages” (TP) based on a structured methodology. The evaluation criteria are CO2
reduction potential, manufacturing costs based on series production levels in 2020 and the
temporal availability of these technologies.

The technologies are initially assessed by cost and CO2 reduction potential (left part of Fig.
5-1). Next, they are clustered into five TPs based on their efficiency and temporal availability.
The temporal availability is assessed based on the stages of development, where each of
series production and predevelopment have two TPs, one for conventional and another for
hybrid technologies. After clustering, it became clear that the mild- and full-hybrid technolo-
gies trail behind conventional measures from a cost-efficiency point of view. They achieve
similar CO2 reduction potentials, however at a higher cost than the combination of several
smaller conventional measures, as shown in the rightmost graph of Fig. 5-1.

Methodology Result

Cost Cost

E1 > E 2 > E3
TP
3H
TP
E3 TP 2H
TP 3C
TP 2C
E2
1
E1

CO2-Reduction CO2-Reduction

1) Primary selection of technologies with high

Temporal availibility
cost efficiency
2) Stepwise expansion of the balance shell of Evolutionary TP TP TP TP TP Revolutionary
a TP up to higher cost technologies 1 2C 2H 3C 3H technologies
3) Consideration of the temporal availibility 2014 2014-2018 2018-2022
and technological interactions

Fig. 5-1: Methodology and qualitative results of the formation of Technology Packages

Eq. 5-1 allows the assessment of the individual reduction potential percentages of the TPs.
This calculation methodology is also applied in similar studies. The product of the deltas of
the relative CO2 reduction potential is taken into account in the calculation. The different ef-
fects of the technologies (such as synergies and reduction effects) are considered by a cor-

12CE0208
5 Development Scenarios of CO2 Reduction Potentials (WP3) 13

rection factor α. The results of the calculations are validated by comparison with vehicle pro-
totypes and expert interviews which were conducted.

Pi = α i∙ [1– ∏nj=1 (1-δj)] Eq. 5-1

Pi: CO2 reduction potential of TP

αi: Correction factor (dependent on TP and fuel type)
δj: Relative CO2 reduction potential of a technology
n: Number of technologies in the TP

The results of the iteratively-performed calculations for the reference vehicles are mapped in
Fig. 5-2. The mapping shows the possible technological developments for the reference ve-
hicles.

220
SEG-3 Gasoline SEG-3 Base
210 1%
SEG-3 Diesel Gasoline
200 SEG-2 Gasoline
SEG-2 Diesel
190
SEG-1 Gasoline
180 SEG-1 Diesel SEG-3 Base
SEG-2 Base 2%
14 % Diesel
170 X % Market share EU 2020 (f orecast) Gasoline

160 TP1G
CO2-Emissions [g/km]

1,425 €
150 TP2CG SEG-2 Base
2,675 € 35 %
SEG-1 Base TP3CG Diesel
140 25 %
Gasoline 3,595 € TP2HG TP1D
TP1G
3,750 € 1,035 €
130 1,145 €
SEG-1 Base TP1D TP2CD
12 %
120 Diesel 850 € 1,975 €
TP2CG TP2CD a1=0.0457
TP3CG 2,295 € TP3HG
TP1G 1,690 €
110 3,045 € TP2HG 6,070 € TP2HD
1,425 €
3,415 € 3,100 €
TP2CG
100 TP2CD TP1D a2=0.0333
TP3CG 1,965 € TP2HD TP3CD
1,490 € 780 €
90 2,665 € TP3CD 2,815 € 3,115 €
TP2HG TP3HD
3,015 € 2,690 €
TP3HG 5,640 €
80 TP2HD
5,535 € TP3HD
2,015 € 5,185 €
70 TP3HG
TP3CD TP3HD
4,585 €
2,350 € 4,345 €
0
0 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 1,450 1,500 1,550 1,600 1,650 1,700 1,750 1,800
Mass [kg]

Fig. 5-1: Visualization of the CO2 reduction potentials based on vehicle mass and segment

5.2 Lower Technological Limits of the Fleet CO2 Reduction Potential

After the technological potential for the defined gasoline- and diesel-powered reference vehi-
cles has been defined and examined, the results are be projected to the overall European
market.

The goal of this process is to define the limits of the CO2 reduction potential as a maximum
theoretically achievable fleet potential, assuming a 100 % market penetration of the defined
Technology Packages. It is assumed overall that the OEMs will select the most cost-efficient
technology configurations. The defined TPs therefore reflect the most probable average con-

12CE0208
5 Development Scenarios of CO2 Reduction Potentials (WP3) 14

figurations of heterogeneous OEMs. The scenarios are calculated for both, the current over-
all market in 2010 as well as the expected market in 2020. For 2010, a base value of
141 g CO2/km is considered. Only taking the expected market changes into account, and
without any technological measures, the CO2 emissions are going to decrease to
132 g CO2/km by 2020. This is based on the expected trend of shifting to smaller cars as well
as a 6 % market share of electric cars and plug-in hybrids.

The lowest limit of technologically feasible CO2 reduction for 2020 is 90 g CO2/km for cars
with conventional drive train technologies (TP3C) and 78 g CO2/km for cars with Hybrid tech-
nologies (TP3H), assuming a 100 % implementation of the Technology Packages and the
realization of the expected market composition. The average technology production costs
(consisting of manufacturing, development and overhead costs) would be €2,687 for conven-
tional drive trains and €4,981 for Hybrids.

Market composition constant (2010) Ø Production cost per vehicle (gasoline+diesel) [€] Market scenario 2020

Ø Production cost per vehicle (gasoline+diesel) [€]

160 100 % 22,500 160 22,500
141 (141) 100 %
TP1 100 % TP1
140 20,000 140 100 % 20,000
TP2 100 % 100 %
TP2
116 TP3 17,500 132 TP3 17,500
120 120 109
CO2-Emissions [g/km]

CO2-Emissions [g/km]

102
95 15,000 97 15,000
100 100 90
Conventional 98 12,500 Conventional 12,500
80 80 93
path path
81 10,000 10,000
78
60 Hybrid path 60 Hybrid path
7,500 7,500
5,029 € 4,981 €
40 40
5,000 5,000
2,971 € 2,942 €
20 2,500 20 2,500
950 € 939 €
1,879 € 2,713 € 1,853 € 2,687 €
0 0 0 0
Base 2010 2014 2018 2022 Basis 2010 2014 2018 2022
Temporal availibility Temporal availibility

Gasoline Diesel Others Electric Total Gasoline Diesel Others Electric Total
Market 2010

Market 2020

SEG-1 25 % 11 % 2% 0% 38 % SEG-1 25 % 12 % 3% 1% 41 %
SEG-2 19 % 38 % 1% 0% 58 % SEG-2 14 % 35 % 2% 4% 55 %
SEG-3 1% 3% 0% 0% 4% SEG-3 1% 2% 0% 0% 4%
Total 45 % 52 % 3% 0% 100 % Total 40 % 49 % 5% 6% 100 %

CO2-Emissions (conventional path) CO2-Emissions (hybrid path)

Ø Production cost per vehicle (conventional path) Ø Production cost per vehicle (hybrid path)

Fig. 5-2 Development scenarios with 100 % Technology Package Implementation in 2020

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6 Validation of Results by Expert Interviews (WP4) 15

6 Validation of Results by Expert Interviews (WP4)

In order to validate the interim results of working points 1, 2 and 3, interviews with experts
from the German automotive industry were performed. The interviewed OEMs and suppliers
verified the core results themselves, while their opinions on the details varied.

The interviewees assessed the Technology Packages themselves, as well as their overall
CO2 reduction potential. They specifically reviewed the individual technologies and measures
regarding their effectiveness and impact. It was noticed that each interviewee followed a
company-specific technology strategy which was in line with his/her individual position and
respective company’s strengths. The interviewees deemed the specified time-horizons for
series production and the temporal availability of the TPs to be realistic and achievable.
Opinions on the manufacturing costs however varied among the interviewees. The costs of
TP1 were valued at slightly lower or slightly higher than the ones presented to them in the
interview, whereas the costs of TP2C and TP3C were estimated to be almost equal to, or
slightly higher than the ones presented to them. However, all interviewees from German car
manufacturers gave significantly higher costs for the hybrid drive train TPs.

Regarding the future market shares of the vehicle segments in 2020, the average replies of
the interviewees varied only slightly from the status in 2010. There was a high level of uncer-
tainty regarding the drive train technologies. This uncertainty became obvious by the large
amount of different responses given, some of which even clearly contradicted the others. The
main uncertainty shown by all interviewees was regarding the actual market success of elec-
tric vehicles.

The interviewees currently don’t see the need to change the load distribution between mass-
and premium-manufacturers, and as such the 95 g target should be set with the same
framework as the 130 g limit.

According to the interviewees, this target should be accompanied by some flexibility meas-
ures in order to provide incentives to develop and introduce low-emission and electric vehi-
cles into the market early on. The most important flexibility measure would be a credit/debit
system which promotes the early adoption of CO2-saving technologies. Moreover, super
credits for electric vehicles should be valid for longer than they are currently planned.

Based on the results of the expert interviews, the identified Technology Packages are kept
unchanged for the following calculations, along with their total potential savings and total
production costs. The retention of the results refers to the whole European car fleet with a
mix of German and non-German car models as well as a volatility in technology costs. How-
ever, the higher costs for hybrid technologies in premium vehicles, which were indicated by
the interviewees, will be reflected in the strategic implications for the German automotive
industry (WP5).

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7 Derivation of CO2 Targets (WP5.1) 16

7 Derivation of CO2 Targets (WP5.1)

As part of the derivation of the CO2 emission targets, an economic model was developed to
estimate the market penetration of fuel-saving technologies as a function of the key frame-
work parameters. Customers will therefore be presented with all possible technology combi-
nations, from the basic configuration to highly optimized hybrid vehicles.

To represent the different development possibilities of the influencing parameters, three dif-
ferent development paths stem out of a scenario analysis. The two extreme factor-
combinations form the conservative and the progressive scenarios, while the current trends
form the realistic scenario, as represented in Fig. 7-1.

Energy and Climate change Positive

mobility costs and CO2-emissions scenario
Present Future
Progressive
Empirical data scenario

Trend
scenario
Realistic
scenario

Negative
scenario
Social Information
development networking Conservative
Time scenario

Conservative scenario Realistic scenario Progressive scenario

 Lower fuel prices  Average fuel prices  High fuel prices
 Market shares fixed to 2010 status,  Market shares 2020 forecast,  Market shares 2020 forecast,
without E-Mobility including E-Mobility including E-Mobility
 Higher production costs  Average production costs  Lower production costs

Interpretation: Interpretation: Interpretation:

The low f uel prices slow down the market Average f uel prices lead to a subdued The high f uel prices lead to increased
penetration of E-Mobility. This hinders the demand f or E-Mobility and f uel-saving demand f or f uel-saving technologies.
recovery of development costs, theref ore technologies. The development will take Through increased production, more learning
increasing the price of such technologies. place as expected. ef f ects can be achieved and passed on to the
customers.

Fig. 7-1: Overview of the different scenarios

In the realistic scenario, given the expected market development, it would be very difficult to
reach the 95 g CO2/km target with a 1,372 kg reference mass for the entire EU vehicle fleet,
as represented in the centre graph of Fig. 7-2. Considering the 40 % to 80 % difference be-
tween the retail price and production cost (ΔPC in the graph), a difference of 8 to
13 g CO2/km from the target limit results. The technology combinations entailed by the realis-
tic scenario result in an average cost increase of approx. €1,900 for end customers. The dif-
ference is small enough to be further reduced by the introduction of eco-innovations and
flexibility methods. In the calculation of the difference, the reference mass M was adopted. If
the mass is not continuously adjusted, the difference would increase even further.

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7 Derivation of CO2 Targets (WP5.1) 17

If the given target values have to be achieved, then the gap of 8 to 13 g CO2/km needs to be
closed with technological measures. Taking only the technical measures with the best
cost/benefit ratio into account, it is possible to achieve the 95 g CO2/km target value for
€2,000 of additional manufacturing cost. Since the end customers won’t take over the com-
plete cost, the additional cost to meet the target in the amount of €650 to €950 (manufactur-
ing cost level) per vehicle need to be covered by the vehicle manufacturers. Thereby, the
vehicle manufacturers with a product portfolio composed by rather large vehicles would have
to cover higher costs in average.

In the past ten years, an average of 3.4 g CO2/km was saved per year. The realistic scenario
assumes that this average improvement in efficiency can carry on yearly until 2020. It should
however be noted that the effort required to maintain this yearly level of improvement does
not remain constant, but rather increases with time.

Conservative scenario Realistic scenario Progressive scenario

 Development of fuel prices in line with  Development of fuel prices based on a  Development of fuel prices based on a
f orecast study – CAGR ca. 2.7 % constant CAGR of 4.7 % to 5.0 % progressive CAGR of 6.5 %
B2020=1.84 B2030=2.41 D 2020=1.78 D 2030=2.35 B2020=2.38 B2030=3.80 D 2020=2.25 D 2030=3.77 B2020=2.71 B2030=5.09 D 2020=2.39 D 2030=4.49
 Market shares fixed to 2010 levels  Market shares in line with 2020 forecast  Market shares in line with 2020 forecast
 Higher production costs: ∆PC 40 – 100 %  Average production costs: ∆PC 40 – 80 %  Lower production costs: ∆PC 20 – 60 %

CO2 f leet values [g CO2/km] CO2 f leet values [g CO2/km] CO2 f leet values [g CO2/km]
140 140 140
135 132 135 135
130 130 131 130 130
127 127
125 125 125
120 121 121 121 120 120
115 114 114 115 115 115
110 111 110 110 105
109 108 105
105 105 105 105 105 105
103 103
100 100 103 100 100 97
98 98
95 95 95 96
96
95
90 90 90
85 85 85

0 0 0
4 5 6 7 8 4 5 6 7 8 4 5 6 7 8
Ownership period in years Ownership period in years Ownership period in years

∆PC 100% ∆PC 80% ∆PC 60% ∆PC 40% ∆PC 20% ∆PC 0%

Fig. 7-2: Results of the scenario analysis

In the conservative scenario, the 95 g CO2/km target could not be reached (leftmost graph of
Fig. 7-2). This is caused by the lack of vehicle electrification, low fuel prices and the therefore
higher costs of fuel-saving technologies. The difference of approx. 16 to 37 g CO2/km would
not be eliminated through additional measures, and this will result in high penalties for
OEMs.

In the progressive scenario, reaching the 95 g CO2/km target is possible (rightmost graph of
Fig. 7-2). The expected market composition in 2020 reduces the starting basis of the calcula-
tions. High fuel prices and lower production costs will make many technologies economically
feasible within the observation period. The difference to reach the target values for the entire
fleet would be a maximum of 8 g CO2/km.

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7 Derivation of CO2 Targets (WP5.1) 18

In the conservative scenario, commercial and private customers would only invest an aver-
age of approx. €1,200 additionally for new technologies. In the progressive scenario how-
ever, customers are willing to invest approx. €2,250 for more expensive vehicles since they
will generate significant savings for them in the future.

The results of the CO2 target analysis depend mainly on just a few factors. Costs and bene-
fits of the technologies define the cost efficiency and the market success of the measures.
Additionally, the technology costs should be in line with the costs of gasoline, diesel, gas and
electricity, to assure that they can economically penetrate the market. The last important in-
fluencing factor is the development of the market and overall economy. This will determine
the fleet composition by 2020, and the possibilities that are available to private and commer-
cial customers for investment in environmental technologies.

The economic analysis of the fleet CO2 emissions shows that a main future challenge will be
to focus new passenger car sales on fuel-saving and highly efficient vehicles. In addition to
developing the technological side, a demand for such technologies must also be developed.
Therefore, the end customers have to be the core target group in the future.

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8 Strategic Implications for the German Automotive Industry (WP5.2) 19

8 Strategic Implications for the German Automotive Industry (WP5.2)

Since the 95 g CO2/km limit set by the EU cannot be achieved solely by the market, the need
for action by OEMs is intensified. OEMs should design individual R&D strategies which meet
their specific qualifications, in order to effectively take part in the CO2 reduction megatrend
and adapt to the resulting technology changes. R&D is becoming more difficult on a single-
player basis, making it necessary to cooperate horizontally with other OEMs and vertically
with suppliers, thus reducing costs and sharing risks. The generation of scaling effects is a
central instrument to counter cost pressure. Economies of scale can also be generated by
modularization, thus increasing the number of common parts across the model range.

The market changes offer suppliers both chances and risks. The risks entailed include a
changing product portfolio due to more CO2- and energy-efficient technologies such as
downsizing or hybrid technologies. On the other hand, this change opens up many growth
opportunities by shifting value from OEMs to suppliers. With the new technologies, new non-
brand-shaping automotive components will become part of the vehicles. The development
and production of such components can be passed on from the OEMs to suppliers. The
OEMs could focus instead on brand-shaping components, overall vehicle concepts, and
brand image. In principle, suppliers also have the opportunity to sell their technologies to
several OEMs and therefore realize economies of scale.

The EC policy has the task to define the CO2 guidelines for 2020 and beyond on a European
level, as well as the corresponding conditions. The CO2 regulations set the relevant corner-
stones of the EC’s white paper “A Roadmap for Moving to a Competitive Low Carbon Econ-
omy in 2050” as well as its white paper on transport policy. The core regulatory challenge at
the EU level is the development of a market for efficient and low-emission vehicles.

The framework conditions and design cycle will be part of the discussion in addition to the
actual value of the CO2 limit while crafting current and future EU CO2 legislations. Since the
targets set by the EU clearly place the automotive industry under pressure, and since the
pressure is not equal on all industry players, selected flexibility measures offer the opportu-
nity to accelerate the development of needed technologies and incentivize advanced innova-
tion. However, it is important to keep in mind that the goal of flexibility measures is not to
weaken the existing CO2 targets. Super credits, eco-innovations, the credit/debit system and
banking/borrowing, as well as emissions certificates can be considered as measures to meet
the 95 g CO2/km target in future. Additionally, the passenger car market can be controlled by
various fiscal measures related to CO2 emissions.

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