This blog post is based on the findings of the project Analysing the aggregate impact of global non-state and subnational climate action, and is a joint output in collaboration with PBL Netherlands Environmental Assessment Agency and Data-Driven Envirolab.
Car manufacturers have responded to recent national government policies and market signals by setting ambitious targets for electric vehicle (EV) sales, which has resulted in higher estimated EV shares in some countries than could be expected from government policy alone. However, more ambition is needed from both governments and manufacturers to stay on track to reach net-zero emissions by 2050. Other actor groups such as cities and retail companies could also be more heavily involved in the interaction with national governments to accelerate the necessary transformation in the passenger cars sector.
The ambition loop between governments and businesses
To achieve the transformation to net-zero emissions, governments, companies and other actors must work together and push each other to reach higher climate ambition by establishing a positive feedback loop – or ‘ambition loop’ (Figure 1). The ‘ambition loop’ facilitates ambitious private sector action by providing a level playing-field consisting of ambitious targets and policies, backed by a predictable regulatory environment and clear timelines. At the same time, governments are keener to strengthen targets and policies if they know business leaders are already taking action.
Evidence of an ambition loop between governments and car manufacturers
The change currently underway in the automotive sector illustrates the first steps of an ambition loop. This ambition loop towards transformative changes is especially important because emissions from passenger road transport worldwide totalled 3.6 Gt CO2 in 2018, a figure that keeps rising every year. Rapidly decarbonising passenger cars (but also freight trucks) is therefore of crucial importance on a global pathway to net zero emissions by 2050. The IEA suggest that EVs should represent 75% of new car sales by in advanced economies and the Climate Action Tracker’s Paris Agreement Compatible Sectoral Benchmark suggests at least 95%.
The first policies in support of electric mobility were put in place in the 1990s, but these did not gain much traction. In the last decade, however, policymakers around the globe have put forward more ambitious policies to incentivise a low-carbon transition in the transport sector. In addition, an increasing number of car manufacturers across the globe are setting EV sales targets in the past few years. We map key developments in the transformation towards electric mobility in Figure 2.
National governments in the European Union (EU), the United States of America (USA), and China have started to introduce EV policies around 2010.
- In 2012, the EU added allowances for low-emission vehicles credits as part of its 2009 CO2 standards for new passenger cars. Per the latest EU regulation from 2019, car manufacturers can meet relaxed targets if their share of new electric cars exceeds 35% by 2030.
- The USA passed a bill on EV subsidies in 2008, and California – having already introduced a low carbon fuel standard in 2009 – recently introduced a ban on the sales of new fossil fuel cars by 2035.
- China introduced EV subsidies in 2014, and currently stimulates the uptake of EVs as part of its CO2 performance standards for cars.
Car manufacturers are stepping up to the challenge of decarbonising road transport.
- Tesla was founded in 2003, released its first electric car in 2008, after four years of research and development, and is today the largest EV manufacturer.
- Other car manufactures started to respond to government policies and market signals after 2015 and have set EV sales targets: Honda aims for 66% new electric vehicles share by 2030, and BMW and Daimler AG for 50%.
- More recently, a number of manufacturers including General Motors (GM), Daimler AG, Honda, Volvo, Jaguar, and others announced to end the sale of internal combustion engine vehicles within the next twenty years.
Cities, regions and other businesses are also pledging to the deployment of electric mobility.
- The ZEV Alliance comprises of 18 jurisdictions and collaborates with other governments to increase zero emission vehicles deployment.
- A group of large corporations recently launched the ZETA 2030 initiative to collectively advocate for 100% EV sales by 2030, and recently joined the EV charging initiative.
- The We Mean Business Coalition, including several US car manufacturers, called the US to cut greenhouse gas emissions by 50% below 2005 by 2030.
In some countries, car manufacturers have already overtaken governments’ EV sales targets. This is a sign that the ambition loop between governments and companies is in motion. This conclusion is supported by the 2021 report ‘Global climate action from cities, regions and businesses’ (Figure 3) that analysed the impact of EV sales targets from car manufacturers on greenhouse gas emissions in the EU27+UK, the USA and China. We compared these EV sales targets with domestic policy targets. If car manufacturers fulfil the EV sales targets outlined in their sustainability reports, national EV shares in the EU27+UK, USA and China would exceed EV shares that can be expected from current government policies (Figure 4). This will, however, only result in substantial greenhouse gas emissions reduction if the renewable capacity in the electricity system increases in a parallel effort.