CAFE zero? It’s complicated…
27 October 2019
I caught up with Honda head of car Phil Webb this week, at the reveal of the new hybrid Jazz. Honda had an extra surprise for us during the event: it will bring forward its target of only selling electrified new cars from 2025 to 2022.
A big factor behind the decision is 2020’s tough CO2 targets, colloquially known as CAFE (corporate average fuel economy). For those selling more than 300,000 vehicles a year in Europe (which actually excludes Honda), the range-average target is 95g/km. Those who miss it get fined €95 per g/km CO2 over target… per car sold.
The fines could be staggering. Earlier in 2019, JATO calculated Volkswagen, assuming no improvements, could pay almost €9.2 billion – over €2,500 per car sold. PSA could pay almost €5.4 billion. This is why the drive to electric is gathering such momentum.
But for OEMs, the reality is incredibly complicated. Honda showed the Jazz Crossstar at the Amsterdam reveal. It’s an SUV-infused Jazz, with a taller ride height, roof rails, and other tweaks that will slightly increase its CO2 over a standard Jazz.
But if Webb discovers it’s popular, and he takes 1,000 Crosstar, “I will have to sell 300 more Honda e (pictured above) to offset it.” Call it spreadsheet science: for every force, there has to be an equal and opposite force – because “Honda will not pay fines”.
It makes model planning even more complicated. Not only do customers, retailers and OEM targets have to be considered, but so too do overall CO2 emissions. “You have to now factor it in from the start. You don’t just focus on volume and profit, you must target CAFE too.”
This explains moves such as Vauxhall’s recent vow to sell more (lower-CO2) diesels in 2020. Certainly, it explains why 2020 will be the year of the EV. It will surely impact other decisions, as OEMs focus daily on keeping CO2 within range.
CAFE is coming. And so too is an extra dimension for everyone involved in new car retailing to consider. Get ready to crunch an extra set of numbers as part of the science of selling new cars…