New regulations that could pass in the European Union might phase out plug-in hybrid electric vehicles (PHEVs) much sooner than previously anticipated, according to Reuters. This could be a huge blow to automakers who had PHEVs as part of their transition strategy to EVs.
Proposed regulations wouldn’t allow automakers to label PHEVs as “sustainable investments” starting in 2026. Currently, hybrids are treated the same as EVs, which has helped the automotive industry invest billions in electrification. According to the Reuters' report:
“Current drafts of the EU's sustainable finance taxonomy, a list of economic activities that from next year will determine what can be marketed as a sustainable investment, exclude manufacturing of PHEVs from 2026. That could deter the army of investors seeking assets with green credentials. It could also potentially restrict public funding, if governments moved to align their spending with the taxonomy.”
The EU wants to accelerate the transition to EVs. If the new regulations are passed, it could make it harder to sell PHEVs in the EU within just a few years even though the charging infrastructure still has a long way to go.
In addition, some large environmental groups in the EU aren’t supporting the green credentials of PHEVs anymore. According to the Reuters' report:
“One study, from the International Council on Clean Transportation last September, said PHEVs' fuel consumption and CO2 emissions are up to four times the level they are approved for because people do not charge them often enough.”
“Julia Poliscanova, senior director for vehicles and e-mobility at European NGO Transport & Environment, said its own research showed that when driven in combustion-engine mode, hybrids' CO2 emissions were higher than conventional cars' - they're heavier than combustion-only cars so used more fuel. ‘From the perspective of environment and climate, today's plug-in hybrid technology is worse than what it is replacing.’”
Some automakers are of course not happy with this news because they want to sell PHEVs until at least 2030. When asked about not classifying PHEVs as sustainable investments anymore, CEO of Bentley Adrian Hallmark said:
“It's crazy to do this by 2025 because effectively you kill demand today.” “For most people, a battery-electric car is not yet practical,” he added.
Stephen Neugebauer, chairman of the European Green Vehicles Initiative Association and BMW’s director of global research said:
“Will all customers buy battery electric vehicles in 10 years or nine years? We don't think so.” “Why? Because sometimes you have to make a long-distance trip, you go on holiday, you have to pull a trailer. And for this, you need public charging infrastructure. And this will still be a critical issue,” he added.
Håkan Samuelsson, CEO of Volvo Cars, which is an automaker that aims to be all-electric by 2030, admits that he's disappointed that policymakers don’t see the value of PHEVs anymore and is more focused on pushing the EU to invest heavily in its charging infrastructure. He said:
“If we in the car industry invest in electric cars, and do that very rapidly, I think our credibility to ask for investments in the charging network increases.”
Automakers who are using PHEVs as a transition vehicle to EVs aren’t going to like the new regulations if passed. But instead of fighting for PHEVs, they could push to accelerate EV adoption, and more importantly, push for a better charging infrastructure to be built sooner.