Electric Vehicles in Europe

For more than five decades, authorities in various nations have searched for ways to motivate improvement in technology related to decreasing pollution from automobiles and in the past few years, international greenhouse emissions standards have been introduced particulary for the sectors that generate high level of emissions like the transport sector (Bergek and Berggren, 2014). Among other industries from 1990 to date, the transport industry in the European Union is Europe’s most challenging climate problem as it is the only sector that has increased its carbon releases amounting to over 26% of the overall EU CO2

releases in 2016 as shown in Figure 1 below where vehicles contributed the most at over 60% of these carbon discharges (Transport and Environment, 2018).

Figure 1: Amount of Carbon emissions from various sectors at as 2016

Source: Figure obtained from Transport and Environment (2018).

            With the projection of increase in number of vehicles from around 750 million in 2010 to 1.5 billion by 2050, the rise prompts both challenges and opportunities to take advantage of newer vehicle technological advancements that are inexorable such as shift to electric vehicles with the intention of general economic development and refining the living standards of the public through reducing air pollution and increasing in job opportunities since the electric vehicle sector is anticipated to expand more than the traditional oil vehicle sector (Todd, Chen, and Clogston, 2013).

            The issue of air pollution by vehicles is experienced in all developed economies and despite the advancements in the combustion engine technology, vehicle pollution in majority of cities is still gauged to be higher than required and detrimental to human wellbeing necessitating some countries and states to implement policies that encouraged technology innovation (Calef and Goble, 2007). Regulations from state laws that involve benefits which are not realized immediately by the public like reduction in air pollution are critical for innovation to ensue and different approaches have been implemented in different nations that include technology enforcing standards, CO2 emission fines, among others (Bergek and Berggren, 2014). Wide stimulated focus on cleaner vehicles such as electric vehicles has been applied in nations and states for example, in California, a technology driven method was applied where the society, media, academic group and all other parties concerned with the legislation was involved resulting to implementation of high targets policies that included development to zero emissions automobiles, enforcing tight compliance dates, and fines for non-adherence though the transport and fuel sectors initiated hostile dispute against the legislation both in public and in law courts while in France, the similar policy was implemented through limited involvement of the society and insignificant discussion from the academic group (Calef and Goble, 2007).

            During the 1980’s, the European Union established the authority for research and innovation policies known as the European Union’s Framework Programmes (EUFPs) and since then several Framework Programmes have been implemented from the first with a budget of 3.8 billion euros to the current which is the eighth Framework Programme whose budget is 77 billion euros and labelled as Horizon Europe or Horizon 2020 that began in 2014 and planned to run for seven years to the year 2020 (Ständer, 2018; Bedsted, Bitsch, Klüver, Øjvind and Jørgensen, 2018). The European Commission suggestions in Horizon Europe are creditable since it emphasizes on the public benefits by being open and concentrate on addressing public necessities through the inclusion of residents, professionals, and decision-makers, among others (Bedsted, et al, 2018).

            More, the European Union has instigated regional innovation policy-creation which has evolved from a place-based approach to an innovation-focused development (Annerstedt, 2018) and thus it is important to understand the influence of these regulations on electric vehicles innovation.

            For many years, the connection between regulation, innovation and competitiveness in the international hemisphere has been deliberated and presently lawmakers have extended their attention to introduce regulation as a way of stimulating innovation (Blind, 2012) consequently prompting the question, to what extent do EU regulations promote innovation in the electric car industry? Carlin and Soskice (2006) introduced the endogenous growth model that defines innovation as the degree of technology progression and enables a theoretical evaluation of the impact of regulation on innovation. Further, innovation is described as the initiation of new resolutions with the intention of tackling issues or take advantage of prospects that are foreseeable in the social and/or economic setting (Edler and Fagerberg, 2017). Using these notions, the study aims at analysing the impact of EU’s regulations on innovation of electric cars and the following section looks at the development of electric cars, the competition in the electric cars sector, and the possibility of failure of electric cars in the marketplace.

2.0 Electric Vehicles in Europe

            State policies have impacted on the energy sector and two primary regulatory approaches have risen that include definite actions to administer the creation and acceptance of low-carbon technologies so as to substitute fossil fuels and broad regulatory measures like the European Emissions Trading Scheme (EU ETS) that concentrates on decreasing the greenhouse gas emissions (Bergek and Berggren, 2014).

            Historically, vehicles have been powered using the traditional internal combustion engine (ICE) though at present the industry has put much focus changing to other power technologies with the first substitute to pure ICE being the hybrid electric vehicles (HEVs) that have attained noteworthy market share in the last few decades, for instance, cumulatively, Toyota has managed to sell over 6 million vehicles of its lead hybrid model, Prius, and nearly 10% of these sales were in the European market (ARF and Mc & C, 2014). Although the selling of EVs in Europe is insignificant in the range of below 1% of overall new car sales (ARF and Mc & C, 2014), projections indicate a substantial rise in EV in the coming one to two decades (Drabik and Rizos, 2018). By 2013, Nissan had sold over 100,000 EVs while Tesla had reached the 25,000 mark on EV sales (ARF and Mc & C, 2014). In 2017, more than 1 million EVs were vended increasing the overall number of EVs to exceed 3 million vehicles showing a rise of more than 50% from the previous year in 2016 (IEA, 2018).

            The regulatory advancements combined with innovation showcased by the vehicle manufacturers express positive views regarding the spread and rise of substitute power technology as the electric cars (Drabik and Rizos, 2018).

2.1 Development of Electric Vehicles in EU

            From early 1990s, the EU has made significant regulatory progress towards reducing harmful emissions from fossil fuel engines estimated at 90% in all new EU vehicles beginning with the EU I level implemented in 1992, then the initiation of Euro II in 1996 that moderately reinforced the standard, Euro III in 2000 was next, then Euro IV in 2005, Euro V in 2009, and Euro VI in 2014 (Bergek and Berggren, 2014). With oil being limited and aiming at decreasing the energy utilization in the region by reducing the dependence on imported oil, the EU has promoted the development of EVs (Todd et al, 2013).

            In 2008, the EU enforced laws that permitted specific levels of CO2 emissions for new vehicles to be implemented in phases with the initial stating at an average of 130 g CO2 /km within the period 2012 to 2015 and the second, reducing to 95 g CO2 /km by 2020 where the policy has spearheaded the introduction and enhancement of several prevailing technologies like the turbo charging, direct ignition, dual clutch transmission, start/stop systems and more advanced valve management systems (Bergek and Berggren, 2014).

2.2 Competition in Electric Vehicles

            Numerous governments all over the globe have laid out plans to position electric vehicles (EVs) as a vital technological strategy to decarbonise the transport industry some nations in Europe such as France and the UK have set forth policies to prohibit selling of petrol and diesel-powered automobiles in upcoming years (Drabik and Rizos, 2018) thereby reducing the competition of electric car sales in these regions.

            Additionally, the EU region provides various advantages on the clean cars like the EV for implementing new technology (Bergek and Berggren, 2014) hence lowering the competition from other types of cars using other forms of power. Subsidised purchase prices, reduction in tax, and distinctive driving rights have been implemented in different nations around Europe to spur demand of EVs. Norway offers substantial subsidies amounting to 17,000 euros when equated to buying an ICE vehicle whereas UK refunds a one off premium of between 4,000 and 7,000 GBP to customers purchasing vehicles emitting lower than 75 g/km, in Netherlands, the income tax is way lower than for ICE vehicles at 4% as opposed to 14 to 20% for ICE vehicles, in Paris, EVs are charged lesser toll and parking fees, in Oslo, EVs are permitted on bus and taxi lanes to reduce competition and increase implementation of EVs (ARF and Mc & C, 2014).

2.3 Failure of Electric Vehicle innovation in the Market

            To reduce the possibility of failure of EVs adoption, the European Commission has publicised its backing for implementation of electric mobility by suggesting an order on the utilisation of substitute power infrastructure that exclusively serves clean fuel transportation and has out forward plans to allow infrastructure creation prompting many states around Europe to fund EV infrastructure and mobility agendas to motivate the supply side like setting up charging stations and providing special parking slots for EVs for instance, Estonia  has constructed EV fast chargers all over the nation to manage the environmental and crowding effect while Amsterdam has provided distinct citywide parking authorisations for EVs to share (ARF and Mc & C, 2014).

            In Europe, the governments have supported the initiation of low-emitting vehicles such as the Transport for London (TfL) programme established in 2006 that aimed at automobile manufacturers to test buses with substitute fuel power which led to wide comparative tests of diesel electric hybrid models from a number of competing manufacturers consequently motivating companies like Volvo to embark on commercialization of their unconfirmed hybrid electric buses (Bergek and Berggren, 2014).

            Sushandoyo and Magnusson (2014) analysed the TfL programme with regards to scale, community perceptibility and scheduling and found the programme to have aided bus manufacturers in Europe and system experts to concentrate on selecting the best model for production and thus reducing the risk of failure in the market.

Conclusion

            The study focussed on looking at the impact of EU regulation on innovation of electric cars and observed a high degree of support from various European nations in following through the adoption of EVs. In spite of the support and growing trend in the number of EVs, the proportion of EVs is still minimal indicating more efforts needs to be put forth in order to expand the market share of EVs.

            The current universal focus on safeguarding the climate provides a great opportunity for further development and spread of EVs in not only the Europe region but in the globe. The limited supply of fossil fuels and instability in their prices lays a good base to promote adoption of EVs since the provided charging places deliver the service at a standardised charge.

            EVs play a significant role in reducing environmental degradation which is highly affected by the transportation industry and thus is critical for all nations in the globe to implement this technology and ensure it is dominating when compared to ICE in their respective areas so as to ensure consolidative efforts towards climate preservation.

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