EU should improve EV incentives, Volvo head says

15 April 2012

Swedish carmaker Volvo says it is "sceptical" about the speed at which the electric vehicle (EV) sector is developing and is calling on the European Union authorities to galvanise the market, writes Jon Eldridge. Speaking at a roundtable debate in Brussels last month (20 March), Stefan Jacoby, president and chief executive of Volvo Car Corporation, said that the move to EVs "will take longer than we have anticipated". "A joint collaboration with all the stakeholders is the only way we can succeed in this transformation," he added. The comments echoed those of Thomas Fleischer, director of government affairs and European affairs issues at Volvo, who made a call for more public support in Europe for EVs. He stressed the "big need for incentives" and argued that existing support is "insufficient and not harmonised" across Europe. The roundtable discussion featured representatives from the European Parliament, European Commission, academia and environmental groups. The debate took place in the context of a European Commission transport white paper, which sets out a long-term vision for transport to cut carbon emissions by 60 percent by 2050 if EU climate change goals are to be achieved. The paper also calls for the use of conventionally fuelled cars in cities to be halved by 2030 and then completely phased out by 2050. At the discussion, Laure Chapuis of the Commission’s department for energy and transport said that the development of EVs is a "high priority" for the Commission but "local initiatives are important . . . [in order to] build up critical mass for the development of solutions". To meet the EU targets, the issue of congestion in urban areas should not be ignored and public transport should be promoted. The Commission is also "considering plans for a minimum infrastructure across Europe for alternative fuels," Chapuis added. Hitting targets Fewer than 50,000 battery EVs were sold globally in 2011, the equivalent to a market share of 0.1 percent, and the debate focused on the realistic expectations for electromobility. Jos Dings, director of Transport and Environment (T&E), a Brussels-based federation of environment organisations campaigning for more sustainable transport, warned against overestimating what EVs could achieve in terms of environmental benefit. "The big news over the past three years is the much bigger and deeper carbon cuts that we can achieve with conventional cars," he stated. Dr Joeri Van Mierlo of the Vrije Universiteit Brussel emphasised that "it takes time to shift from one technology to another because cars last a long time, and this makes it difficult to change a vehicle market".  At present, cost is another big consideration, he added. His studies have shown that an EV bought today only reaches "parity" with conventionally fuelled vehicles by 2020. According to Martin Callanan MEP, the Commission’s targets are realistic if there is the desire to achieve them. However, he warned that enthusiasm for carbon reduction over the last few years has been "waning" among EU member states. "We have to see where the market takes us," he said. Volvo, which sponsored the debate, appears to be hedging its bets. The company launched its V60 Plug-in Hybrid this year to demonstrate its "determination to be a leader in electrification". However, the Swedish car manufacturer concedes that high battery system costs mean that the market share for EVs is unlikely to exceed 1 percent by 2020. As head of Volvo, Stefan Jacoby is putting his money on hybrids rather than all-electric vehicles. "Plug-in hybrids will be the future for the next 15-20 years. I don’t see a future for pure electric vehicles in the coming years". Volvo is calling for greater co-operation among the vehicle industry, governments, infrastructure providers, electric energy providers and scientific institutions in order to retain Europe’s technological leadership. "In the US and China, the governments are providing massive amounts of incentives for research. We need this from our governments in Europe," Jacoby said. "We need a clear European direction as to where to invest this money [for research]." Optimistic outlook Marita Ulvskog MEP countered the overly "pessimistic" attitude regarding EV growth and maintained that the sector was set to benefit from the incentives that are already in place. "If the energy mix in Europe is a good one, then we can have a good mobility market in Europe in 10 to 15 years," she said. The current high price of oil could also play a role in consumer choices. "Perhaps the most rational incentive could be the price of oil," said Jos Dings of T&E. "Governments could look at duty." Martin Callanan, however, pointed out that duties on oil already generate significant revenues for European treasuries, and thus European countries could become reluctant to make further moves towards a low carbon economy. "Governments aren’t going to be so keen to promote incentives for cheaper electric vehicles," he said. Callanan added that issues of compatibility remained an obstacle and that standardisation of charging and plug points is needed across Europe. Rapid charging, however, is not at present a "mature enough" technology to offer to Volvo’s customers, according to Jacoby. A version of this article was published by EV Update.