Tougher pollution controls for diesel cars in Europe will hit sales of smaller models, analysts say.
The EU is set to introduce stricter testing of harmful emissions such as NOx in the wake of the Volkswagen emissions scandal.
The move will force automakers to accelerate development of costly after-treatment technology, thereby reducing the appeal of diesel-powered subcompact and compact cars, said Al Bedwell, powertrains analyst for LMC Automotive.
Financial analysts Bernstein said in a Sept. 22 report that the costs of additional technology to comply with the tougher standards will make diesels uncompetitive in small cars with low price points.
A study by management consultants Roland Berger forecasts that diesel cars will disappear from Europe's subcompact segment by 2030. In the compact segment, diesel's share will fall and by 2030 over 70 percent of vehicles in the segment will be equipped with gasoline engines. Diesel's share in the medium segment will decline to 55 percent from 64 percent, the study said.
Automakers and suppliers will have to undergo a radical re-think to prevent the diesel engine from "disappearing from our streets entirely," Roland Berger Partner Thomas Schlick said in a statement.
The EU's technical committee of motor vehicles agreed on Oct. 28 to allow automakers more leeway on passing upcoming Real Driving Emissions (RDE) tests. The EU plans to introduce the EU6c regulation in 2017 requiring RDE tests as an additional type approval requirement. This will make it more difficult for new cars to pass tests for pollutants such as NOx.
Industry association ACEA said automakers have not been given enough time to conform to RDE standards and a "substantial" number of diesel models will have to be phased out earlier than planned.
The technical committee's draft regulation on RDE must still be approved by the EU Council, the bloc's top decision-making body, and the European Parliament.
The real world tests are aimed at eliminating the discrepancy between health-harming NOx emissions currently measured only in a laboratory for type approval and those measured during normal vehicle operation. RDE involves driving the car undergoing tests on roads with a portable test machine monitoring tailpipe emissions.
Automakers likely will find it more difficult to pass RDE tests, according to the International Council on Clean Transportation (ICCT). An ICCT study showed that cars, one each from Hyundai, Volvo and Renault, had very high NOx emissions and would be very unlikely to pass the RDE test if the criteria were applied today.
"It is widely accepted that the real-world NOx emissions of diesel passenger cars are substantially higher than the certified limit," ICCT said.
An earlier study commissioned by ICCT was the catalyst for Volkswagen's admission that up to 11 million cars sold worldwide had software that could fool diesel emissions tests. The software turned on full pollution controls only when a car was undergoing testing in a laboratory.
VW, Ford at risk
RDE will be bad for automakers that rely on cheaper, lighter and maintenance-free lean NOx traps (LNT) to reduce polluting emissions. Automakers favoring LNT in Europe include VW, Ford, Mini and Volvo.
To do well in the RDE test, automakers will most likely have to ditch the LNT for urea-based selective catalytic reduction (SCR), according to Austrian engine specialists AVL. SCR technology is less convenient for car owners because urea tanks must be refilled regularly.
The added costs of SCR would make diesels less appealing in smaller mass-market segments, LMC’s Bedwell said.
Analysts from Exane BNP Paribas have estimated that the costs of pollution reduction technologies have risen to 1,300 euros per vehicle for Euro 6 from about 700 euros to meet Euro 5 emissions targets. The Euro 6 NOx limit is 80 mg per km, compared with 180 mg/km under Euro 5.
Roland Berger said investments to make diesel cars clean enough to meet new pollution tests will only make sense in the medium and upper segments where diesels can deliver a reduction in CO2 emissions of up to 35 percent compared with comparable gasoline-powered models. In smaller vehicles, diesels produce 15 percent less CO2 than comparable models with gasoline engines.
Roland Berger said the popularity of diesel engines continues to be mainly a European phenomenon. More than half of the 12.5 million vehicles sold in the EU in 2014 were equipped with a diesel engine. In the U.S. market less than 3 percent of the 14 million new vehicles were diesels. In China less than 1 percent of the 18 million sales were diesel cars.
Luca Ciferri, Reuters and Bloomberg contributed to this report
