DAIMLER SAYS UNCLE!

Daimler announces emissions recall of 3 million diesel cars in Europe

 

Daimler, which is being investigated for emissions cheating, announced a voluntary recall of more than three million Mercedes-Benz diesel vehicles in Europe.

It said it had already launched a service action for other models and that in order to effectively improve the emissions of additional model series, Daimler has now decided to extend the service action to include over three million Mercedes-Benz vehicles.

The Stuttgart-based company said the action would cost the company some €220 million and be free of charge for customers.

“In this way, Daimler is making a significant contribution to the reduction of nitrogen-oxide emissions from diesel vehicles in European inner cities,” it said in a statement.

The recall would start in coming weeks and, “due to the large number of vehicles”, take “a longer period of time”.

Daimler had manipulated the engines of around one million diesel vehicles to make them appear less polluting, raising echoes of competitor Volkswagen’s dieselgate scandal.

Daimler sold vehicles with higher levels of damaging emissions than allowed for almost a whole decade between 2008 and 2016, in Europe and the United States.

Daimler used a similar defeat device to Volkswagen, which in 2015 admitted to manipulating emissions readings on some 11 million diesel vehicles worldwide.

Software in the motor runs the emissions treatment system at a higher setting when it detects the vehicle is undergoing regulatory testing.

Daimler said Mercedes-Benz had developed a completely new diesel engine family that could meet stricter EU emission regulations to come.

“The public debate about diesel engines is creating uncertainty – especially for our customers,” CEO Dieter Zetsche told us. “We have therefore decided on additional measures to reassure drivers of diesel cars and to strengthen confidence in diesel technology,” he said. “We are convinced that diesel engines will continue to be a fixed element of the drive-system mix, not least due to their low CO2 emissions.”

Wealthy consumers willing to pay for innovative, customizable, high-performance, technologically advanced vehicles are driving the super luxury vehicles market. Growth is augmented by high demand for sport utility vehicles (SUVs) and crossovers that are both practical and luxurious. As super luxury vehicles are more profitable than their mainstream counterparts, original equipment manufacturers (OEMs) are maximizing the use of flagship vehicle platforms by offering state-of-the-art luxury features, infotainment, safety, and driving technologies at a premium price.

To gain a competitive advantage, OEMs should focus on building vehicles with significant convenience features in addition to maximum customization options. Super luxury vehicles are expected to be among the first to feature level 4 autonomous technologies by late 2018 and level 5 by 2020 as customers are eager to pay for advanced features that are unique and luxurious.

From a regional perspective, the United States, Middle East and China sell the most super luxury vehicles, with US manufacturers focusing on electric vehicle technology and European manufacturers looking toward improving passenger comfort and autonomous technology adoption.

Electric cars become popular, but their future belongs to their transformation to solar cars. New research on electric mobility reveals Chinese OEMs produced 43 percent of EVs worldwide in 2016 and highlights other trends in supply and demand. China has increased its lead in electric-vehicle (EV) production. Chinese OEMs produced 43 percent of the 873,000 EVs built worldwide in 2016. And the country now has the largest fleet of EVs on the road, overtaking the US market for the first time.

Since 2010, we have measured the overall “maturity” of various countries with regard to the supply of and demand for electric vehicles (EVs). In our Electric Vehicle Index, we use two equally weighted dimensions: the demand for and use of EVs, and, from the industry (supply) side, the economic significance of the value created via electric vehicles.

Demand indicators analyze the share EVs have of an overall market. They also look at incentives, such as subsidies, the existing infrastructure, and the range of EVs available. Supply indicators determine how successful the respective automotive sector is in each country regarding electric mobility. This involves analyzing factors such as current and projected shares of the global production of EVs; it also incorporates key components such as e-motors and batteries.

China extended its industry leadership by making gains across all dimensions of the supply side of EVs, including current and projected production of EVs and their components, such as lithium-ion battery cells and electric motors. One important factor is that the Chinese government provides subsidies to the sector in an effort to reduce fuel imports, improve air quality, and foster local champions. Whereas Chinese OEMs accounted for 40 percent of EV production in 2015, this increased to 43 percent in 2016. Leading Chinese EV manufacturers all ranked among the top ten global EV producers in 2016. Given the rapid increase in production capacity by domestic suppliers, China’s lithium-ion battery-cell players increased their global supply share, reaching about 25 percent in 2016. This is mainly at the expense of Japanese companies, which lost significant market share year on year—though they still accounted for the greatest share in 2016, with around 48 percent. South Korean suppliers expanded their position and now hold 27 percent of the light-vehicle battery-cell market.

Overall, Germany and the United States also perform well in the industry, with no major changes in EV production share (23 percent and 17 percent, respectively). However, these countries saw slight losses with respect to electric-motor production due to China’s expansion.

In addition to its leading role in EV supply, the market for EVs in China held steady in 2016. For the first time, China has overtaken the US market in the total number of EVs on the road. Cumulative EV sales reached 650,000 units in 2016, and the country increased new registrations for EVs by 70 percent year on year, to around 350,000 units. In comparison, Europe saw a sales increase of only 7 percent during the same period, after doubling them the prior year. The stagnation of the European market largely stems from a big drop in new registrations in the Netherlands, attributable to changes in the incentive scheme for plug-in hybrid vehicles. In the United States, EV sales were at 160,000 in 2016, a 37 percent increase.

The sales dynamic in China has been supported by a launch of many new EV models. Roughly 25 new EV models were introduced to the market in 2016. Overall, Chinese customers can now choose from around 75 EV models—the most of any market.

While China outperforms in absolute terms, the country does less well if considered in relative terms: in 2016, EV penetration in the overall light-vehicle market was only 1.4 percent. Norway outperforms here; about one in four cars sold in the country in 2016 was electric. Generous incentives are provided to EV customers in Norway, making EVs more affordable than cars with internal combustion engines. The Netherlands also has relatively high penetration, with an EV share of 5 percent, though sales decreased in 2016 (falling by 48 percent year on year). Sales dropped in 2016 after the country announced it would increase the company car tax for plug-in hybrids. Most other markets still do not exceed the 2 percent threshold. Japan was also affected by very low sales in the second half of 2016. These examples show that e-mobility development varies significantly by country.

Despite the newly introduced EV-purchase incentives in Germany, EV sales increased only 3 percent since the official launch of the purchase premium in May 2016. The German government and the respective OEMs currently offer EV buyers as much as €4,000 for purely battery electric vehicles in an attempt to increase sales. But so far the effect has been limited. South Korea also recently increased EV incentives by around €1,600 to stimulate the market, while several other nations announced plans to reduce or phase out subsidies. China, for example, will slowly switch from direct subsidies to nonmonetary incentives after 2020. Currently, it retains one of the most powerful EV-stimulus mechanisms. Certain cities have made EVs exempt from license-plate lotteries and significant registration fees that apply for cars with internal combustion engines. This is a huge lever to make EVs more attractive, especially among younger first-time car buyers. Other countries that have been reducing or phasing out subsidies include Denmark, France, Portugal, and Norway.

To support the EV dynamic, China has quickly expanded its EV-charging infrastructure, reaching 107,000 public EV-charging outlets by the end of 2016—an increase of 118 percent year on year. Japan and the Netherlands are also investing significantly to build additional charging stations, while progress remains comparatively slow in France, Germany, the United Kingdom, and the United States.

Last year saw an uptick in EV sales in key markets, in line with announcements from several OEMs on new EV strategies and upcoming models. It seems that China, in particular—driven by the involvement of the government and its policies, which affect EV buyers as well as vehicle and component manufacturers—is pushing ahead to develop its EV market and industry. As market share grows and as governments make the issue a priority in many regions, electric mobility will remain high on the agenda of the auto industry in years to come.

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