WLTP: a disruptive influence? Autovista Group s response to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP)

Size: px

Start display at page:

Download "WLTP: a disruptive influence? Autovista Group s response to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP)"

Jewel Francis
5 years ago
Views:

1 Autovista Group s response to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) 1

2 Contents Foreword 3 Explanation and timings 4 Why it matters 4 Testing burden 5 OEM impact 6 Technological impact 7 Dealer impact 8 Industry provider impact 8 Fleet impact 9 Vehicle taxation impact 10 Autovista Group response 11 2

3 Foreword Is WLTP a disruptive influence on the automotive industry? Under development since 2008, the objectives were to provide a standard global emissions testing procedure, and deliver a protocol that better reflects real-world driving while accommodating state-of-the-art vehicle technologies. Fast forward to 2017, and a sophisticated and demanding regime has been created ready for implementation in the European Union. However, with the United States leaving the working group, and China, Japan and India yet to commit to timelines and requesting local adaptations, the goal of a truly worldwide test may not yet be fully realised. It remains to be seen if the sophistication of the new regime will herald an era of transparency and close the growing gap between official and experienced fuel economy, or whether the complexities and volume of information involved combined with new data from the Real Driving Emissions test and special low emission zone regulations will confuse consumers and reduce confidence. Communication will need to be carefully managed, but it is an opportunity for the automotive industry to make amends with the public and demonstrate that it is striving to deliver on air quality targets. From vehicle manufacturers through to government, finance, fleet, retail, consumers and service providers, there is no doubt that WLTP impacts almost every part of the automotive landscape, and is poised to change the rules of 'the CO 2 game. This new Autovista Group whitepaper explores the challenges and outlines how we are responding to the new system. Samuel Keates Head of Specification Data and Group WLTP Lead Autovista Group 3

Explanation and timings From September 2017, OEMs need to test and publish consumption and emissions results for new type approved vehicles according to the Worldwide Harmonized Light Vehicle Test

4 Explanation and timings From September 2017, OEMs need to test and publish consumption and emissions results for new type approved vehicles according to the Worldwide Harmonized Light Vehicle Test Procedure (WLTP). This system replaces the New European Driving Cycle (NEDC) which many OEMs had optimised their vehicles for. The NEDC regulation will be phased out with WLTP gradually coming into force and being mandatory for all passenger vehicles from September Ultimately, those that have both been tested with limited standard equipment and have been optimised for the NEDC test will see the greatest difference in their fuel consumption and emissions figures. This could have significant implications from September onwards. Why it matters According to a scientific study carried out on behalf of the Joint Research Centre (JRC) of the European Commission, the change in the vehicle testing regime from NEDC to WLTP will lead to a wide-ranging increase in emissions figures. The fact that the change in the method of measuring vehicle fuel consumption will naturally alter CO 2 emissions figures is widely known. However, according to a scientific study published on 11 May, the change in the testing system will result in an average ratio of 1.19, representing a delta between WLTP and NEDC of 23.1g CO 2 /km. This is in line with German trade journal Kfz-Betrieb, which reported in March that: Initial investigations have shown that an average increase in emissions is expected to be 20 percent. The scientists do not consider this to be an absolute rule, however, and the data show that there is clearly a decline in the ratio between the two measurement modes from the moment when the CO 2 values expressed in NEDC increase. In fact, the authors have identified a threshold of 250g CO 2 /km. From this emission level, the ratio becomes less than 1, which means that the WLTP values should be lower than those expressed in NEDC for vehicles above the threshold. The authors have also indicated that the upward reassessment of CO 2 emissions will be greater for petrol-powered vehicles than those powered by diesel. 4

5 Testing burden ACEA has warned that the shortage of testing facilities for type approval will become acute as real-world WLTP testing begins. The switch to the new test, which aims to better replicate realworld driving and replaces the NEDC test, is expected to increase the burden on existing compliance test facilities, where there is already a shortage, to 6-8 times current levels, according to ACEA. Manufacturers already undertake around 40% of type approval tests for new car models at their own facilities, or in third party laboratories under strict monitoring by their national government s type approval authorities and ACEA says this practice should remain as part of the new ecosystem. While ACEA fully support the introduction of the real-world WLTP, which it says will restore trust in the emissions testing system post-dieselgate, it has deep concerns about several aspects of the EU s revised proposals for the type approval process, particularly relating to this shortage of testing facilities. It is also raising concerns surrounding proposals for access to repair and maintenance information (RMI) and safe access to in-vehicle data. The report by the European Parliament s Internal Market and Consumer Protection (IMCO) Committee on revising the type approval system whereby national authorities give certification to the OEM for the sale of the new car type across the entire European Union proposes that EU member states must oblige to take 20% of new car models off the road for testing in labs to ensure compliance with the new legislation. ACEA warns: This would place a massive burden on national authorities, with some countries having to test tens of thousands of vehicles for conformity, adding that it has grave concerns about how this would work. It adds that even if this 20% new car test requirement were dropped, the 6-8 times additional burden from WLTP would still leave testing facilities extremely stretched. This permanent high demand would almost certainly place even greater reliance on in-house testing capability and put the entire system under immense strain. Finally, prior to the new type approval process coming into effect, ACEA calls for market-boosting measures to ensure that it remains 'cost-effective.' It hints that the emissions burden is becoming severe, and even has fundamental technical barriers; We should ensure that the new system remains practicable and implementable for our industry. 5

OEM Impact It is premature and rather speculative to comment on the extent to which specific brands and models will be impacted by the introduction of the WLTP system but major shocks could be on

6 OEM Impact It is premature and rather speculative to comment on the extent to which specific brands and models will be impacted by the introduction of the WLTP system but major shocks could be on their way when manufacturers start to publish their results. Under the new WLTP scheme, test results for all model variants are expected to rise. The manufacturers that had developed the most sophisticated methods in order to optimise their results naturally have the most to lose. Not only will their WLTP emissions and fuel consumption results be proven to be higher than previously reported, but they could exceed figures for competitor models that they previously outperformed. Furthermore, cars that were previously tested with limited equipment fitted as standard also stand to see sharp rises in their fuel economy and emissions figures. For example, premium brands tend to have substantially higher optional content than the volume manufacturers. This naturally made many test cars much lighter and, in turn, more fuel-efficient and less polluting than the cars that were actually registered and used on the road once common optional extras such as multizone air conditioning, larger wheels and electric seats were fitted. These optional extras can of course account for several hundred additional kilograms in weight, which in turn increases CO 2 emissions and fuel consumption. Japanese and Korean OEMs could stand to benefit as their strategy has typically been to compete by offering higher levels of specification as standard on their cars than their European peers but at a similar price point. Under the new scheme, cars will be tested with their optional equipment fitted to present a clear view on achievable realworld driving emissions and fuel consumption for each level of specification that is offered. 6

7 Technological impact In order to achieve better emissions results and comply with EU brand-average emissions targets, key technological developments are expected. First, increased usage of lightweight materials such as carbon fibre is expected in order to reduce the weight of vehicles and in turn their emissions under WLTP. Whereas this lightweighting approach will indeed help to reduce consumption and emissions, the use of more expensive materials could result in both higher car prices and costlier replacement parts which in turn would cause a rise in insurance premiums. Going forward, flexible vehicle architectures and manufacturing facilities will allow the company to decide at short notice which models and volumes to produce with what type of drive: combustion-powered, plug-in hybrid or fully electric, depending on demand. In 2017, the BMW Group expects sales of its electrified vehicles to exceed 100,000 for the first time in a single year, with the all-electric BMW i3, BMW i8, BMW iperformance plug-in hybrids and the plug-in hybrid MINI Countryman all contributing to the figures. Another technological impact is that manual transmission gear ratios may be reconfigured to achieve better test results and improved driving dynamics with the built-in advantage for automatic transmissions in the NEDC test being reduced. However, the most notable change is the acceleration of the electrification strategies of vehicle manufacturers. BMW for example is looking to develop its internal combustion engines to meet stricter emissions regulations and is pushing forward with EV development at a rapid pace. However, aside from the disruptive influence of WLTP, this also follows the decision by the Chinese government not to drop or delay plans for a quota on EVs, meaning the company needs to have a number of models available by Currently, the automaker only offers the BMW i3 as a pure electric model but has confirmed plans to offer electrified versions of all 13 models in its range by

8 Dealer impact The different WLTP testing rules could make it especially confusing for consumers, as it may mean optional equipment pushes vehicles into different tax bands depending on what the driver adds at the dealership. Optional extras such as sport suspension or audio systems could increase a vehicle s weight and alter its ride, therefore adding to emissions. This may end up costing manufacturers even more as the European Commission has stated that any increase in costs must not be passed on to the consumer. However, the WLTP test does not provide for any testing of 'dealer-fit' accessories and this may incentivise manufacturers to move increasingly to dealer-fit only options - especially those which are easy to retrofit such as tow bars. While this adds to logistics and manufacturing complexity, avoiding the CO 2 uplift from these options could save a significant amount in tax on an individual vehicle. As a case in point, German manufacturer BMW is already looking to streamline its manufacturing process, offering fewer engine variants and less equipment options in order to offset its high research and development (R&D) spending through Industry provider impact In addition to the impacted areas already detailed, it should be noted that there are a number of major suppliers to the industry who are embedded in many business systems and processes. These may be internal systems, such as dealership management systems (DMS), or external systems, such as specification web services, which span across businesses, sectors, and even countries. It is of utmost importance that these suppliers are fully aware of the WLTP changes, anticipated impacts and timelines. They need to ensure they roll out the changes in a way which their customers can incorporate in a timely and cost-efficient manner. Otherwise, there could be global, industry wide disruption in those businesses who rely on them. 8

9 Fleet impact In reality, there are no clear financial implications of the WLTP introduction for fleet owners in the short term. Although there are concerns about vehicles being reclassified in different taxation bands, no European government has yet committed to assigning tax bands to new vehicles based on the WLTP results and so vehicles will not necessarily face tax hikes in the near term. This is essentially why Jonnaert, Secretary General of ACEA, suggested that EU member states go for a one shot introduction of WLTP-based tax regimes from January 2019, from when all new vehicles will only be tested under WLTP, although end-of-series vehicles will have an extra year s exemption. when some cars are NEDC-tested and others are WLTP-tested with NEDC-calculated figures. In those cases where calculated figures are higher than the true NEDC-tested figures for the same car, this could result in some cars that previously fitted within a policy being excluded. Ironically, this is despite the cars being more environmentally friendly than their predecessors in some cases. If this is not accommodated, it could see some car policies force drivers to switch unnecessarily to a lower vehicle segment. Similarly, although the new WLTP regime will introduce additional transparency for fleet managers to make a more informed purchase decision based on the more accurate emissions and consumption figures, the performance of the cars themselves is not expected to change and so the actual consumption costs should remain the same. Nevertheless, the data and systems transition to support the more sophisticated process of determining a particular vehicle's emissions will require some effort. One area that will require adjustment is fleets with vehicle choice measures or restrictions based on CO 2. As WLTP figures are expected to be higher than NEDC, fleet managers will need to decide either to raise the limits, or keep the limits the same and use WLTP as an opportunity to toughen the rules. This will be particularly complex in the transition period, 9

10 Vehicle taxation impact Currently, 19 EU member states apply CO 2 taxation to cars based on the values from the NEDC test. One major concern is that the different CO 2 figures produced could cause an increase in the tax paid by drivers to keep their cars on the road and it is expected that WLTP will see an increase in the registered CO 2 levels that vehicles emit as they will be pushed harder than under standard laboratory conditions. Vehicle manufacturers are concerned that the higher CO 2 levels registered through WLTP will cause irregularities in the levels of tax that need to be paid. Manufacturers are now warning EU governments that while vehicles are likely to produce higher CO 2 levels in WLTP, no more emissions than normal will actually be released and therefore tax bands should be amended to reflect the higher numbers. In Germany, the Federal Government has already introduced a draft bill which amends the Motor Vehicle Tax Law, whereby the new WLTP cycle will serve as the basis for the measurement of carbon dioxide emissions from September 2018 onwards. OEMs anticipate tax rises as a result but the German Association of International Motor Vehicle Manufacturers (VDIK) asserted late in March that the change in the car tax calculations cannot malign new vehicles. In the UK, the Government is expected to adapt the new vehicle excise duty (VED) regime, which was introduced on 1 April, along with the tax on company cars, to the new WLTP CO2 figures from as early as April However, pressure from industry bodies bracing for the change, combined with Government preoccupation with Brexit, could likely see that timeline extended. It is not that easy however, as the WLTP testing will be phased in, with only new models which require type approval being tested in 2017, while existing vehicle models will only be subject to the stricter programme from September This means that vehicles will receive both NEDC and WLTP figures, reportedly until December 2021, in order to ensure the public are aware of the changes. To make things even more complicated, optional extras are also included in the tests, with vehicles in a variety of guises having to undergo the WLTP simulations. Nevertheless, while WLTP-based tax systems need to take this in to account, NEDC-based systems do not as the conversion from WLTP to NEDC strips out the impact of optional equipment. Even so, it must be reiterated that NEDC figures calculated from WLTP are typically higher than true NEDC figures and new models launched under WLTP-testing rules with calculated NEDC figures will be at a competitive disadvantage. This applies to the newly launched second-generation Opel/Vauxhall Insignia for example. In a press conference in April 2017, Erik Jonnaert, Secretary General of ACEA, made it clear that consumers may come across two different values for emissions figures as manufacturers switch from NEDC to WLTP after September In order to maintain transparency, especially concerning the issue of how WLTP will be integrated in car labelling, Jonnaert suggested that EU member states go for a one shot introduction from January Jonnaert also stated that governments ought to make sure that the switch will not lead to increased taxation of the same vehicles, especially as tests will not impede performance. 10

Glass s and Autovista Group response Although there are no immediate financial implications as a result of the introduction of WLTP, Autovista Group will naturally be monitoring WLTP developments and

11 Glass s and Autovista Group response Although there are no immediate financial implications as a result of the introduction of WLTP, Autovista Group will naturally be monitoring WLTP developments and reporting on them as new figures are announced. The new WLTP figures will also be reflected in products and services which currently display or deliver fuel consumption and CO 2 data. This will provide users with the transparency to help make more informed decisions. The impact of the new WLTP figures on residual values and total cost of ownership (TCO) will also be reflected accordingly as data becomes available. WLTP will result in two types of fuel consumption and CO 2 data existing in future: many manufacturers do not plan to release this information to third parties. We plan for Type 2 values to be available in online data feeds, products and services only, with fuel consumption and CO 2 data and subsequent taxation calculations responding to the selection of options based on new vehicle configuration or existing vehicle identification e.g. via VIN and VRM lookup. Specifications for these changes will be available in the coming months, and both sets of values will be integrated into our products during 2018, with the date for final completion timelines subject to adjustment of national taxation schemes by governments. 1. Static range values that will be assigned by the manufacturer to each variant offered for sale. They will represent a range from the best case to the worst case, and give a general indication of the potential performance of the vehicle. 2. Dynamic calculated values, which will be determined for each individual configuration of a variant along with a selection of optional equipment. Autovista Group plans for Type 1 values to be integrated in our primary data feeds, products and services alongside the continuing NEDC figures. Type 2 values are more complicated, in that they cannot be represented in offline data feeds due to the volume of the underlying engineering data, and the fact that 11

Specification Data & Group WLTP Lead, Autovista Group Autovista Group 5 th Floor, Wellington House

12 Autovista Group s response to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) Author: Neil King, Senior Data Journalist, Autovista Group Contributor: Samuel Keates, Head of Specification Data & Group WLTP Lead, Autovista Group Autovista Group 5 th Floor, Wellington House 125 Strand London WC2R 0AP w: e: insights@autovistagroup.com t: +44 (0)

WLTP. The Impact on Tax and Car Design

WLTP. The Impact on Tax and Car Design WLTP The Impact on Tax and Car Design Worldwide Harmonized Light Vehicle Testing Procedure (WLTP) The impact on tax and car design The Worldwide Harmonized Light Vehicle Testing Procedure (WLTP) is set