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Dominant SUV market share in both ICE and BEV diminishes emissions savings promised by current EV market penetration
The growing market share and increasing size of SUVs are undercutting the carbon footprint reduction driven by the growing shift to EVs, says a new report by research partnership the Global Fuel Economy Initiative (GFEI).
The transition to EVs has catalysed a 4.2pc rate of reduction in the energy used by the average light-duty vehicle (LDV) on the road between 2020 and 2022, the reports says. However, with the average weight of an LDV reaching an all-time high of over 1.5t, the emissions savings of the EV transition are being eaten into by increasing vehicle size.
“The shift to larger vehicles has damaged progress on climate, energy security and diversification, as energy demand and CO2 emissions could have fallen by over 30pc between 2010-2022 if vehicles had stayed the same size,” GFEI says.
In other words, if current EV market penetration was combined with the average 2010 weight and resultant emissions profile of all cars, including e-SUVs, CO2 emissions would now be 30pc lower than they are today, the report calculates.
SUVs now represent the largest share of the new car market at 51pc of registrations, having “[overtaken] sales of conventional cars” for the first time in 2022. But the shift towards SUVs is also felt within the EV market.
Despite EVs having markedly lower specific energy consumption versus competing technologies, the report explains that “like all vehicles, specific energy consumption for EVs also increases with increasing vehicle weight (and therefore also with the segment shift towards SUVs), even though these increases are less pronounced than for other powertrains”.
And on top of this, EVs are on average 13pc heavier than equivalent ICEs, the report says, as larger vehicles require bigger batteries to reach ranges that are commercially viable. This in turn places unnecessary reliance on critical minerals and the battery supply chain, one expert says.
“Reversing the trend towards bigger and heavier vehicles is key to achieving more sustainable mobility. This applies also for electric mobility, to make the market for EVs more equitable and inclusive — and to reduce the need for critical minerals and more electricity,” says Dan Sperling, director of the Institute of Transportation Studies at the University of California, Davis.
So not only are greater emissions from heavier ICE cars offsetting the carbon savings from a growing EV market share, but if EVs at their current market penetration were also lighter, less energy-intensive batteries could be used to deliver the same range and performance.
Profitability
However, the fact remains that SUVs are the most profitable segment for automakers across all fuel types. And with the high capital commitment required for a legacy OEM to ramp up EV production, few automakers make a profit on EVs until several years into their ramp.
As such, minimising losses on EVs as production reaches scale and the cost curve evens out is crucial to the strategies of many OEMs. US legacy players Ford and GM have both recently opted for adaptive approaches which will allow them flexibly to match supply to demand to avoid over-committing to capital allocation on their EVs. Ford’s already sizable losses on its EVs widened by another 15pc during the third quarter.
GM, for example, produces one compact EV, the Chevrolet Bolt, which is the company’s best-selling EV. But the firm is mostly rolling out mid-size and large BEV SUVs and e-pickups across its various brands, and has recently announced its re-entry into Europe led by the Cadillac Lyriq SUV.
So perhaps electric SUVs are the price to be paid for many OEMs being able to produce EVs at all at this relatively early stage in many automakers’ EV strategies. Without e-SUVs, BEV manufacturing would be a much less commercially attractive proposition for certain OEMs, who may otherwise have resisted producing EVs altogether.
And “without EVs, savings would have been 40pc lower at the global level”, the report concludes.
Novel solutions
The research calls for governments to set caps on vehicle size through “the introduction of a cap on vehicle footprint, in absolute terms and as a sales-weighted average, paired with net declines going forward, to limit and then reverse the SUV shift”.
“Footprint-based regulations could be better than weight-based ones, as the latter would need differentiated treatment for different powertrains (namely for EVs, due to battery weight), subject to uncertainties due to varying energy density across different battery technologies. This solution that would surely meet opposition from automakers, especially in the US,” the report argues.
“Regulations on footprint could have positive implications for equity, as they would reduce the scope for continued size increases, thereby addressing challenges arising from the transformations occurring in automotive markets,” it continues.
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