Guess cleaner vehicles are just what the consumer ordered. Consulting firm Frost & Sullivan says consumer awareness of sustainable mobility has prompted automakers to develop low-emission vehicles and – quite optimistically – claims that one out of every two vehicles sold in Europe in 2015 will emit less than 120 grams of CO2 per kilometer.

Frost & Sullivan states that diesel-electric vehicles, with their inherently low emissions, will become popular in Europe as emissions drop. However, we'd guess that elevated costs of the technologies found in diesel hybrids will continue to limit their penetration for at least a decade.

Frost & Sullivan assumes that since European automakers – including Fiat, PSA, Renault and Volkswagen – all boast strong diesel portfolios, diesel hybrids solutions are the logical answer to reducing fleet emissions. The technology may make sense, but several automakers have expressed no interest in developing diesel hybrid vehicles. VW even admitted that diesel hybrids "don't make good business sense."

Regardless, Frost & Sullivan predicts that demand for diesel hybrids will hit 300,000 units a year by the end of 2017. Demand may reach that level, but the truth is that that in no way implies that production will, too.
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Frost & Sullivan: Diesel Hybridisation a Significant Trend toward Meeting 2020 Targets of 95 gm/km Set by European Commission

Diesel Hybrids to Reduce CO2 Fleet Average of Cars in Europe


LONDON – 19 September 2011 – Rising consumer awareness of sustainable mobility has prompted automotive OEMs to develop and introduce low-emission vehicles. In 2015, every other car sold in Europe will have CO2 emissions in the range of 101-120 g/km. These cars will not only contribute to a greener environment but will also reduce the CO2 fleet average of cars in the European Union. Diesel hybrids are likely to have a positive impact on the European market and further increase the share of diesel engines in this region. Although the initial costs are higher, diesel hybrids provide higher performance, lower CO2 emissions and better fuel efficiency.

Over the last two decades, Diesel engines have become more popular among European consumers, due to their higher fuel efficiency, lower CO2 emission values and fun-to-drive perception when compared to gasoline engines. Although these factors contribute to the high proportion of diesel engines in Europe, the principal drawback of diesel engines is the challenge in controlling particulate matter (PM) and emissions of oxides of nitrogen (NOx).

"European car manufacturers have adopted different strategies to reduce PM and NOx emissions, and one of those adopted is engine downsizing," says Research Analyst, Bharath Kumar Srinivasan, from Frost & Sullivan. "However, downsizing a diesel engine will result in higher NOx emissions."

Automotive OEMs therefore need to develop diesel engines, which meet low CO2 targets whilst complying with EU emission standards (Euro norms) at the same time. The PSA Group added a hybrid kit to a diesel powertrain and unveiled the diesel Peugeot 3008 Hybrid4 with 200 bhp and CO2 emission as low as 99 g/km. The diesel powertrain produces a power output of 163 bhp and the electric motor generates an additional 37 bhp. Both powertrains are capable of running independently, thus offering the flexibility of using the all-electric mode within cities and making it a zero-emission vehicle.

Diesel hybridisation will be a significant trend toward meeting the 2020 targets of 95 gm/km, set by the European Commission. However, the higher costs of the technologies involved in a diesel hybrid, like the Hybrid4 technology, have been a key limitation to the launch of diesel hybrids. Attractive packaging is therefore expected to be a crucial proposition. "PSA has managed to combine the best of technologies into a single package," Srinivasan explains. "The Peugeot 3008 for instance, a crossover vehicle, allows multi-purpose use and is more practical for covering long distance (inter-city) travel. It therefore has an added advantage over electric vehicles, for which the driving range is often an issue – especially for travel between cities."
With the leading volume brands - Fiat, PSA, Renault & Volkswagen - all having a strong diesel portfolio, a joint development of diesel-hybrid solutions could prove beneficial. Not only does it lower development costs, it also offers the required economies of scale with the potential for large volumes. Alliances between Automotive OEMs are therefore key, as they offer benefits ranging from product development to deployment. PSA's cooperation with BMW for hybrid components and the BMW-Daimler-GM joint development of the two-mode hybrid, although expensive, are successful examples for joint development. However, based on current market perspectives, the demand for diesel hybrids is set to grow to more than 300,000 units only by 2016-17.

The Hybrid4 from the PSA Group is a benchmark for other OEMs in the region that have similar, or in some cases different, strategies for adopting low-emission vehicles. True to its tradition of developing state-of-the-art diesel engines, it is the first OEM in the world that has introduced a diesel-hybrid powertrain. The PSA Group also plans to introduce plug-in hybrids in the future. Another French OEM, Renault, is likely to adopt a different strategy by introducing all-electric powertrains. Fiat, on the other hand, is likely to introduce gasoline 'MultiAir' and diesel 'MultiJet II' engines that include a 0.9 litre, 2-cylinder gasoline engine.

"The fact that high-volume OEMs such as Fiat, the PSA Group and Renault, which have already proven low fleet averages in the range of 125-140 g/km of CO2, are at the forefront of technology development is indicative of their dedication to reducing CO2 emissions," concludes Srinivasan.

About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEOs Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.


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