Ford counts on hybrids to comply with stricter European emission targets

Ford of Europe says that its coming broader range of hybrid models will permit it to comply with stricter European Union emission targets set for 2020-21 without the risk of paying fines.

Many other automakers — led by the region’s largest player, the Volkswagen Group — are preparing an offensive of battery-powered vehicles that comply to meet the EU's latest CO2 emissions reduction targets.

Ford will take a different route, counting more — like Toyota — on hybrids rather than battery electric vehicles.

Ford of Europe will not need big numbers of full-electric cars to comply with the new EU target because of its offensive in hybrid vehicles, Steve Armstrong, the automaker's regional chairman, told Automotive News Europe this month on the sidelines of the Go Further company event.

Ford is ramping up its launch of hybrids — with a special emphasis on plug-in hybrids such as the new Kuga compact crossover, which the company said emits 29 g/km of CO2 under the NEDC testing regime. Under an EU credit system favoring plug-in vehicles, any car emitting less than 50g/km of CO2 will count as two vehicles in 2020, 1.67 vehicles in 2021, 1.33 in 2022 and one by 2023.

Ford surprised the industry with the Kuga plug-in hybrid's particularly low emissions level. The Kuga is closer to a midsize sedan such as the Toyota Prius plug-in hybrid, which emits 28 g/km, than a similarly sized SUV, such as the Peugeot 3008 plug-in hybrid, which emits 49 g/km.

Tough target

To help tackle climate change, the EU has mandated automakers selling cars in Europe to reduce industrywide fleet CO2 emissions to 95 grams per km by 2021 from 120 g/km last year. Each automaker has a different target based on the average mass of its vehicles. Ford of Europe’s 2021 target is 95.4 g/km, according to calculations by PA Consulting in Germany.

Before the release of the Kuga plug-in hybrid emissions data, PA Consulting had estimated that Ford of Europe in 2021 could pay €430m ($485m) in fines as it forecast average emissions at 99.8 g/km, 4.4 g above Ford’s target.

The fine is €95 p/g of CO2 over the limit, multiplied by the number of cars sold in 2020 and 2021, although 5% of the highest-emission vehicles will not be counted in 2020. In 2018, Ford sold 1,007,846 units in the EU plus countries in the European Free Trade Association, according to JATO Dynamics.

PA Consulting said that although it had not yet reassessed Ford’s emissions forecast to include the Kuga plug-in hybrid, it remains dubious that the automaker could close the gap entirely just with plug-in hybrids.

“With other SUVs increasing their share in the portfolio, Ford will face both a slightly higher CO2 target as well as a higher CO2 emission across their entire fleet. This means that Kuga plug-in hybrid could make a small positive impact depending on CO2 performance under the EU's new WLTP/RDE test cycle conditions and sales volume, including the multiplier as part of regulation,” said Michael Schweikl, an automotive expert at PA Consulting and an author of the company’s annual report on automakers’ progress toward emission targets.

Big Atkinson engine

For the Kuga plug-in hybrid, Ford chose a large-displacement engine of 2.5 liters, turning to the highly efficient Atkinson cycle. Toyota follows a similar route with the Prius plug-in, which has a 1.8-liter Atkinson engine. In contrast, the Peugeot 3008 is powered by a traditional a 1.6-liter gasoline engine.

The Kuga is part of a Ford plug-in hybrid offensive in Europe that also includes a plug-in hybrid of the Explorer large crossover and models of the Tourneo Custom van.

“Plug-in hybrid is a very expensive technology, so it makes sense on heavier, bigger, higher-CO2 vehicles where it does more for CO2 reduction and the premium is not as big as small cars,” Roelant de Waard, Ford of Europe’s head of sales and marketing, told Automotive News Europe. “The Kuga is the smallest, but still a pretty sizable vehicle.”

Ford also will offer mild hybrids and hybrid variants on more mainstream models such as the Fiesta subcompact and Focus compact. Ford already sells full hybrid versions of its Mondeo sedan and station wagon.

Market potential

De Waard said Ford expects 40% of Kuga sales to be electrified from the start but said it is hard to predict the exact share of mild, full and plug-in hybrids.

“I’m happy with the choice [of electrified drivetrains in Kuga] because it’s hard to predict policy and we can respond anywhere,” he said.

Ford does not think it should need to persuade customers to buy into plug-in hybrids.

“It’s not so much that we have to persuade,” de Waard said. “In some countries, the tax system persuades them. In Germany, the BIK [Benefit in Kind tax credit system] for plug-in hybrids is half. In France, a very steep CO2 taxation curve will generate a lot of demand. Then there are countries where there is no such thing, and customers will be less interested and they may be better off with a full hybrid.”

Small number of BEVs

Ford’s Armstrong said the company will need only small volumes of full-electric cars to comply with the coming EU emission targets.

A full-electric version of the Transit large van will be launched in 2021, Ford said, making it the second all-electric vehicle to be announced by the company for Europe.

The first full-electric car will be an SUV, likely to be named Mach E, which will go on sale next year.

Armstrong said the Mustang-inspired SUV will have a 600-km range under the EU’s WLTP test cycle.

This Ford EV is expected to be unveiled by year end and positioned to compete with Tesla’s Model Y, which the automaker says will enter production in early 2021. Tesla already announced a price list for the Model Y, which in Germany will start at €58,018 ($65,550). An all-wheel-drive variant of the Model Y will cost €4,000 ($4,500) more, Tesla said.

Ford sold a full-electric version of its previous Focus but dropped it because of slow sales.