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DOSSIER I Green Fleet Management

Powertrain wars Did you know that the top selling powertrain in America was the Electric Vehicle (EV)? To put that statement into context you have to realise that the author of this article, Dean Bowkett of EurotaxGlass’s, is referring to 114 years ago.

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he EV fall from favour was caused by a combination of factors including better roads, which encouraged longer journeys and thus highlighted the range limitations of EVs, the discovery of cheap domestic oil and the mass production of internal combustion engines (ICEs) which meant a typical EV could be two to three times the price of an ICE powered vehicle.

The Lohner-Porsche Semper Vivus, the first functional hybrid vehicle was launched at the beginning of the 20th century. Even the hybrid powertrain is not a new invention as Ferdinand Porsche combined two ICEs with two generators at the start of the 20th century to create the Lohner-Porsche Semper Vivus, the first functional hybrid vehicle. Meanwhile Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) are merely alternative fuel types for the long standing ICE with both able to trace their first usage in vehicles back to the 1930s and 1940s which just leaves fuel cells as the only truly new technology being considered for automotive use, doesn’t it? Well not strictly speaking as the first fuel cell dates back to 1839 and Welsh physicist and barrister William Grove whilst the first actual fuel cell vehicle (FCEV) was an Allis-Chalmers Fuel-Cell Tractor built in 1959. So whilst there is no truly new powertrain solution, recent fears over climate change has created a renewed interest in low emission transport and resulted in billions of euros being invested in producing cleaner ICE solutions and a stronger interest in Battery Electric Vehicles (BEVs) and FCEVs. This leaves us with a challenge to understand what will become the successful power source for the 21st century motorist and therefore what will have the highest demand in the used market resulting in the best residual values?

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The obvious starting point is to look at the demand in the new vehicle market. 97% fuelled by diesel and petrol Despite the media attention around alternative powertrains, diesel and petrol ICE remains the dominant choice within the big 5 European automotive markets, France, Germany, Italy, Spain and the UK (Fig. 1), accounting for c. 97% of passenger car (PC) and light commercial vehicle (LCV) registrations. 2004 was the turning point for diesel-fuelled vehicle sales when they overtook petrol sales and since then, the importance of diesel engines has grown, only interrupted by the infamous scrappage schemes initiatives introduced during the credit crisis period of 2008-10, where billions of euros where spent to stimulate new car sales which favoured smaller and petrol-dominated segments. The impact was short-lived and by 2011 the diesel engine hit an all-time high. With the current downsizing trend, a diminishing difference between diesel and petrol prices, in those markets where diesel fuel was historically cheaper, and improved ICEs delivering better petrol fuel economy, the trend has seen a reversal in 2013 as the petrol market share has started to rise, up 1.8pp vs. a fall of 2.0pp for diesel. Fig. 1: Market Share of Powertrain Types, PC and LCV; France, Germany, Italy, Spain, UK; 2003-Oct 2013 100% 98% 96%

56% 54% 52% 50% 48% 46% 44% BEV

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Full hybrid

CNG

LPG

Diesel

Petrol

Source: IHS Automotive (Copyright IHS Global GmbH, 2013. All rights reserved)

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Dossier Green Fleet Management 2014