What Does Volvo’s Latest Announcement Really Mean?
Generally, new cars get faster, more economical, and more reliable.These improvements are the results of ongoing R&D conducted by manufacturers, but this could be about to change.
Volvo CEO, Håkan Samuelsson, recently announced that the latest incarnation of their diesel engines may be the last. Instead, Volvo will be focusing their R&D on electric cars. Volvo is renowned for their use of diesel engines and currently doesn’t produce a single EV, so, why the sudden shift?
European Carbon Emissions Standards
Regulations to reduce the amount of carbon that combustion engine vehicles produce is, apparently, one of the reasons behind the move. The carbon produced by vehicles will need to drop from the current level of 130g/km to 95g/km. Even meeting the current emissions standard appears to be too difficult for some manufacturers.
Cheating Emissions Tests
Who could forget Volkswagen’s “diesel dupe”? Unable to meet strict carbon dioxide emission levels, Volkswagen installed software that could alter their car’s emission levels during testing. This resulted in one of the biggest automotive scandals in recent history.
Renault is also under investigation for similar emissions cheating. The entire senior management of the French automaker has been implicated by prosecutors.
It’s not just European car manufacturers that are involved with ‘dieselgate‘. Mitsubishi, Fiat Chrysler, GM, and Daimler are all in various stages of investigations. The depth of the fraudulent behaviour won’t be known until all investigations are complete.
New Regulations in China
A big factor in Volvo’s recent announcement is, most likely, new EV regulation in China, which could be in place by 2018. The regulation would require car manufacturers to make up 8% of their sales in China with EVs. If the manufacturers failed to meet this quota, they would have to buy expensive “credits” from competitors who overshot.
The regulation is still being drafted, so the numbers are not certain, but it is coming. The quota is expected to rise to 12% by 2020. Volvo is a Chinese owned company, so these regulations are particularly important going forward.
Volvo won’t be the only manufacturer affected. China is a major market for the majority of automakers, meaning these regulations could significantly increase EV output across the board.