Diesels will have just 9% of Europe market by 2030, study says

TURIN -- Diesel engines will account for 9 percent of new-car sales in Europe by 2030 – down from about 50 percent today – as automaker are forced to rely on electrified powertrains to meet tougher emissions rules, according to a study by AlixPartners.

This shift will cause a radical overhaul of automakers' powertrain manufacturing footprint in the region.

“Electrification [of the powertrain] has to come to Europe to meet tougher emission standards and the diesel is going to pay the highest toll,” AlixPartners Vice Chairman Stefano Aversa told Automotive News Europe. “This will cause huge challenges for automakers and suppliers because they will need to change their powertrain manufacturing infrastructure.”

AlixPartners expects that by 2022 the number of European plants manufacturing diesel and gasoline models will decrease to 55 from 62 last year. At the same time, plants that builds electric motors and electrified models will grow to 40 by 2022 from 26 now.

“The financial implications of this manufacturing overhaul are significant but not prohibitive,” said Giacomo Mori, AlixPartners managing director.

Automakers should be able to keep their buildings and retain some conveyors when retooling their plants to make electric motors instead of internal combustion engines, which will keep investment costs down, AlixPartners estimates.

Mori said that, on average, a plant that makes 400,000 engines a year costs 500 million euros to build. A plant that makes the same number of electric motors costs about 50 million to construct and requires about one-tenth of the space needed for an engine plant, which results in significantly lower labor costs.

Diesel's demise

The consulting firm expects stricter European emission standards to progressively increase the costs of diesels engines, which will require expensive after-treatment systems to meet new rules. This will increase the retail price of diesel models, which are less expensive to purchase than most rival models today. It also will make the total cost of ownership of diesels less competitive, whereas today a diesel becomes less expensive to run than its rivals after as little as 30,000km. At the same time, electric vehicles and plug-in hybrids will gain in competiveness because the cost of their batteries will decrease with their range and performance will increase.

Aversa cited several other factors that are expected to boost the shift toward electrified powertrains in Europe:

The growing appreciation by customers of the brisk acceleration that EVs provide will make that feature more important than top-end speeds that are seldom if ever reached.

EVs that are homologated to travel 500km on a single charge will achieve a real range of 300km, which is enough to alleviate range anxiety in most customers.

Software improvements will make it possible to significantly increase the range of an EV during its life cycle, which is something automaker could not do with internal combustion engines.

Infrastructure challenge

AlixPartners estimates that it will cost a combined 30 billion euros by 2030 to develop an adequate recharging infrastructure in four European big cities: London, Paris, Frankfurt and Milan. So far, just 5 percent of that total has been committed.

Paris is expected to require the largest investment, 11.6 billion euros, followed by London (10.2 million), Milan (5.1 billion) and Frankfurt (3.5 billion).

“Automakers are setting a daunting roadmap for electrification in Europe, but without an adequate infrastructure development, their efforts could be pointless,” Aversa said. “Infrastructure development is the big challenge within the electrification challenge.”