CDP: Global car industry must embrace low-carbon shift to ensure survival

Traditional carmakers will face multi-million-pound fines and a huge loss in market share to tech firms such as Uber and Google unless they embrace the low-carbon vehicle transition.


That is the conclusion of a new report from CDP, which shows how the twin forces of “low-carbon and high-tech” will drive massive disruption in the global automotive industry.

The study finds that individual car companies could face up to €940m in penalties for failing to meet emissions targets, and that more than 20% of car company profits will shift to tech suppliers and ride-sharing services by 2030.

CDP predicts that EVs could become as affordable as traditional petrol and diesel cars as 2022. Zero emission and plug-in hybrid models are expected to make up a third of new car sales by 2030, representing a potential €1trn market.

CDP’s Paul Simpson said that traditional car firms will need to adapt rapidly to address technological disruption and environmental regulation or risk falling behind.

“The auto sector is the poster child for the future of industry as we know it,” CDP chief executive Paul Simpson said. “Tech and software disrupters have forced this high-emitting industry to innovate at a pace faster than it perhaps feels comfortable with.

“It is promising to see traditional carmakers step up to the mark to meet global shifts in demand for EVs. Only time will tell if new market entrants such as Uber and Google will alter consumer demands in the long-term. Regardless, auto manufacturers should quickly adopt new business models to ensure their survival in the low-carbon transition.”

‘Embrace opportunities’

The CDP report assesses 16 of the world’s largest car companies, comparing them in key areas aligned with the guidelines from Mark Carney’s Task Force on Climate-related Financial Disclosures (TCFD).

BMW, Daimler and Toyota are the best performing companies on climate-related metrics, with Subaru, FCA and Suzuki ranking lowest.

The global car industry has reacted well recent global consumer trends, the research finds, investing more than $11bn in driverless and shared-vehicle companies since 2011, while setting a number of ambitious EV and autonomous vehicle targets. For instance, General Motors is working towards an “all-electric future” and is looking to rollout a fully self-driving ridesharing service by 2021.

But the report does provide a stark warning sign for the motor industry. In Europe, emissions need to fall by up to a fifth over the next five years, it claims, meaning that some companies will need to boost their share of sales from EVs to 20% in order to meet the EU’s 2021 targets.

“Traditional carmakers may see these challenges as threats to existing business models,” CDP senior analyst Luke Fletcher said. “However, to be successful they must embrace the new opportunities and markets that will become available over the coming years.”

Earlier this week, Ford announced it is going “all in” on the electric vehicle (EV) market with an $11bn plan to rollout 40 new vehicles, but that hasn’t stopped Greenpeace for delivering a “2018 Hypocrisy Award” to the carmaker for an alleged stance on fuel efficiency standards.

This followed news that the world’s largest automotive alliance, involving Renault, Nissan and Mitsubishi, had launched a corporate venture capital fund to provide up to $1bn in investment for innovative electrification, autonomous and connectivity projects.

George Ogleby

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie

Subscribe