A variety of technologies for reducing new passenger car type-approval CO2 emission levels are available, including eﬃciency improvements of combustion engine vehicles and transitioning to electric vehicles. Three scenarios were modelled in order to assess the required investment cost per vehicle as well as associated savings from a consumer and society perspective for diﬀerent type-approval CO2 reduction targets:
Adopted policies: Manufacturers comply with the currently established reduction targets of 15% by 2025 and 37.5% by 2030 but make no eﬀorts to go beyond the necessary levels of CO2 reduction. The remaining potential of internal combustion engine (ICE) vehicles is untouched and electric vehicle market shares stagnate from 2030 onwards.
» Lower ambition: Current reduction targets are strengthened to 20% by 2025 and 50% by 2030. In addition, a 70% target for 2035 is introduced. Manufacturers tap some of the remaining ICE potentials (reducing CO2 by about 1% annually) and further increase the market share of electric vehicles, so that battery electric vehicles (BEVs) account for about half of new car sales by 2035.
Moderate ambition: New car CO2 reduction targets are strengthened to 30% by2025, 70% by 2030, and 100% by 2035. To comply, vehicle manufacturers have to greatly exploit the remaining potential of ICEs (at a rate of about 4% type-approval CO2 reduction annually between 2021 and 2025, including a reduction in vehicle mass and transitioning to mild hybrid vehicles). Plug-in hybrid electric vehicles (PHEVs) are phased out quicker than in the Lower Ambition scenario. BEVs reach a market penetration of about 50% by 2030 and 100% by 2035/
Higher ambition: All new cars achieve zero tailpipes CO2 emissions by 2030. This means a rapid transition towards BEVs with the remaining ICE potential being fully exploited in the transition years.
For all scenarios, direct manufacturing costs increase compared to 2021, from about €400 in the adopted policies scenario in 2025 to about €1,700 in the higher ambition scenario in 2030 (Table 1). By 2035, incremental manufacturing costs decline compared to 2030, mainly due to improved learning for electric vehicle technologies.
Fuel cost savings throughout the lifetime of the vehicle balance these initial investments in improved vehicle technologies. From a consumer perspective, for 2025, the moderate ambition and higher ambition scenarios provide the most favourable cost-beneﬁt: initial technology investments are fully paid for within four to six years of ownership, due to lower fuel cost. For 2030, the higher ambition scenario ensures the quickest payback period (two years) and the highest savings. By 2035, technology investments are recouped within one to two years for all scenarios except the adopted policies scenario, and savings are highest for the moderate and higher ambition scenarios.
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