Watch out for fake EVs, national regulators told

Carmakers can exploit loopholes in the EU’s new CO2 emissions targets to push sales of fake plug-in hybrid cars over EVs with no tailpipe emissions, T&E has warned. The law credits manufacturers for selling EVs but leaves room for gaming. This could allow carmakers to supply half of all the 'zero and low-emission’ cars needed to comply with stricter CO2 limits with fake ‘electric’ cars.

Under the new targets, carmakers must reduce emissions from new cars and vans by 15% in 2025 and 37.5% in 2030 based on 2021 levels. Selling more EVs than a voluntary sales target allows carmakers to bring the CO2 reduction targets down to 10.8% in 2025 and 34.4% in 2030. But these ‘EVs’ can include plug-in hybrids which are often big SUVs that are rarely charged because of their very limited electric range and they emit as much or more CO2 as diesel or petrol cars do on the road.

By allowing such fake ‘electric’ cars to count towards the EV targets, it has become much easier for carmakers to earn the generous CO2 bonuses that result from over-shooting these targets. T&E’s analysis shows that carmakers can meet the new rules by selling almost 1.7 million ‘fake’ electric cars every year from 2025 and almost 4 million in 2030.

T&E said national governments can prevent the rise of fake ‘electric’ cars by promoting only all-electric, fuel cell and proper plug-in hybrids. Germany’s finance minister recently suggested plug-in hybrids should have a minimum range of 80km.

T&E’s clean vehicles manager, Julia Poliscanova, said: ‘Europe’s CO2 limits for cars could be a breakthrough for e-mobility, but regulators still have a lot of work to do. National governments should limit incentives to zero-emission and long range plug-in hybrid cars only. Otherwise carmakers may go down the road of least resistance and comply with fake ‘electric’ cars that never get charged and spew out as much CO2 as SUVs.’

Moreover, carmakers can register electric cars in 14 European markets to benefit from double-counting credits, only to resell the same cars in more mature markets for EVs shortly afterwards. For instance, a carmaker can register new EVs in eastern Europe, claim the inflated credits so it can sell less EVs overall, and then resell the EVs as new to customers in western Europe the following month. This loophole could result in fewer EVs and more CO2 emissions on the road. The credit multiplier ends once electric car sales reach a 5% market share. T&E warns that safeguarding this is key as it doesn’t limit the potential incentives while limiting uncontrolled gaming of the system.

Julia Poliscanova added: ‘This incentive was supposed to kickstart the electric car market in countries with almost no EV sales. The problem is that the rules were poorly designed and there will be a huge temptation for carmakers to game the system. The Commission can fix this by monitoring electric car registrations every year and cancelling the EV sales credits where gaming of the double-counting provisions is found. At the same time governments should make sure incentives are limited to vehicles that are actually driven on their roads.’

Meanwhile, European carmakers are investing about $163 billion in EV production (although 42% is directed towards China). Volkswagen alone accounts for $91 billion, almost one-third of global investment in EV and battery production. Last month the Volkswagen Group announced that it plans to sell 70 electric models and make 22 million electric vehicles in the next decade. T&E said that while the plan is not perfect it is a clear indication of the future of carmaking and governments should now put in place green taxation and charging infrastructure to aid the transition.

However, taxation should not be based on the new car CO2 emissions test as it is producing unreliable results, new data analysed by T&E shows. It echoes evidence presented by the European Commission last year that carmakers are manipulating the WLTP test to make their emissions look worse until 2021 and thus make CO2 reduction targets in 2025 easier to comply with. By artificially increasing their CO2 emissions now, and then deflating them once the baseline for the 2025 CO2 targets is set, carmakers are weakening the CO2 standards.

A comparison of carmaker average CO2 emissions tested in 2018 under the old NEDC test with figures in early 2019 under the new WLTP test shows the emissions gap jumping between 1% and 81% for different carmakers. While part of this deviation is due to differences in models sold in these periods – for example, fewer electric vehicles, more SUVs – the data does suggest WLTP figures are unstable and confirms governments should not rush into shifting tax systems to the new test. Data from the old test will continue to be available for a number of years and should be used until there is a more robust and independent analysis of the WLTP’s impact.

Many finance ministries, including those in France, the UK, Belgium and Portugal, are currently reviewing their CO2-based taxes because of the switch to the new test cycle and as part of wider efforts to reduce vehicle emissions in line with the EU’s 2030 climate targets. T&E said governments should prepare a comprehensive reform of car taxation.

T&E also commissioned the independent laboratory Emisia to test three vehicles using both NEDC and WLTP. The results expose significant discrepancies between official (type-approval) and independent WLTP tests, with an average difference of 12%. It shows that the WLTP does not bring credible results and on its own will not stop carmaker manipulation of tests.

T&E’s clean vehicles engineer, Florent Grelier, said: ‘The independent tests we commissioned show that the new cars CO2 emissions test will not prevent future test cheating. This means consumers will continue spending more on fuel than they were told, and governments will miss their transport CO2 targets. To close this gap, we need real-world checks, including by independent third parties and the European Commission, and for this information to be available to drivers via accurate labelling.’