Navigant Research Blog

Germany’s Progress Doesn’t Match Ambitious Emissions Plan

— April 1, 2016

Springtime landscape over natural oilseed rape fieldGermany, a longtime leader of energy efficiency and renewable energy, is poised for another significant policy move in clean energy with a new proposal that would reduce greenhouse gas (GHG) emission in the country by 95% from 1990 levels by 2050.

Germany’s National Energy Efficiency Action Plan (NEEAP), which is updated every 3 years, already requires stringent energy savings goals as part of the European Union’s (EU’s) Energy Efficiency Directive (EED) for member states. Germany’s current national target set forth in its NEEAP aims to achieve 40% GHG emission reductions from 1990 levels by 2020 and 80% reductions by 2050. Germany’s environment ministry expects to present the new proposal to the cabinet by this summer.

Increase in Emissions

Many countries increased GHG emissions reduction goals prior to or as a result of the Paris Climate Summit in late 2015. Countries were not required to set a specific carbon emissions level, but were instead allowed to create a reduction target and strategy. Germany was not alone in increasing emission reduction targets, but based on the slow progress achieved in recent years, it will be difficult to further reduce emissions.

The country saw increases in emissions in both 2012 and 2013 but did experience a 4.6% reduction in GHG emissions in 2014 compared to the previous year. It has been suggested this decrease can be attributed to the warmer than usual winter weather in Germany during that year. In 2013, Germany’s GHG emissions were the highest of the EU member states, representing 21.17% of the EU’s total emissions. The targets seem almost out of reach without substantial changes in how energy is produced and consumed in the country during the next few years.

Germany’s GHG Emissions

Germany GHG(Source: Clean Energy Wire)

Meeting the Self-Imposed Targets

Germany is not naïve to the fact that it is currently not on track to hit its 2020 reduction targets, let alone the reductions required by 2050. The country is focusing on energy efficiency as a means to achieve these goals. It is expanding power generation from renewables such as solar and wind power, but so far these have proven insufficient to the task. However, renewables accounted for 27.8% of power consumption in the country in 2014, up from 6.2% in 2000.

Self-imposed GHG emissions reduction targets, both in Germany and elsewhere, must be enforced for the policy changes to have an impact. While the country is working to reduce emissions and is optimistic in its ability to reach these targets, its ultimate success (or failure) could largely be influenced by the actions taken in the next few years.


Tesla’s Affordable EV Finally Sees the Light of Day

— April 1, 2016

EV RefuelingWho would have thought that a small, roofless, two-seat, self-propelled machine could inspire a revolution in the way humans move about? Strangely enough, it has happened twice now, first in 1886 when Karl Benz drove his Patent-Motorwagen for the first time, and again at the dawn of the 21st century when AC Propulsion founder Tom Gage built the tzero. In each case, the revolution wasn’t instant. It took 22 years before Henry Ford’s Model T moved the car from wealthy early adopters to the masses—the electric vehicle (EV) will need a similar timeframe to make a real dent in the marketplace. Tesla Motors hopes its freshly revealed Model 3 will be the Model T for a new century, but will it succeed?

Founded in 2003 after Martin Eberhard and Elon Musk drove the tzero but failed to convince Gage to put it in production, Tesla had a plan to change the world with electrons. The Tesla Roadster used a Lotus chassis as the starting point for an electric sports car inspired by the tzero. Tesla steadily increased its volume and revenue to fund subsequent more practical and affordable models. Despite failing to meet its self-imposed deadlines, the company has largely stuck to the plan, going from Roadster to Model S to Model X.

Increasing Production

Having successfully increased production by more than an order of magnitude from the Roadster to the Model S, Tesla now hopes to repeat that trend with the Model 3. To that end, the new model is priced starting at just $35,000 before tax incentives, which brings the brand into an entirely different marketplace. Where the Model S and X take on high-end models from Audi, BMW, and Mercedes-Benz, the Model 3 is priced almost directly opposite the Chevrolet Bolt, a 200-mile EV to be priced at about $37,000 when it goes on sale in late 2016.

Tesla Model 3

Tesla Model 3 Unveil

(Source: Tesla Motors)

Unfortunately, while Tesla was the first to market with battery EVs that could easily exceed 200 miles on a charge, this time around, Chevrolet has a head start of at least a year. When I first interviewed Martin Eberhard in 2007, the goal was to have an affordable mass-market EV in the 2012-13 timeframe. As Tesla now knows, building cars is a lot harder than building software, and the Model 3 is scheduled for a late 2017 launch. A base Model 3 may cost as little as $25,000 after federal and state tax credits. However, at its current sales pace, any further delay means that Tesla is likely to hit 200,000 total sales by mid-2018, triggering a phaseout of the federal incentives and raising the net price.

A Tougher Marketplace

In addition to the challenge presented by the Bolt, with gas prices under $2 per gallon, the Model 3 also faces a much tougher marketplace for fuel-efficient cars. New EVs must attract customers on their own performance, design, and reliability merits. Tesla has proven it can compete on the first two, but reliability remains an open question, especially as production volumes climb. Finally, there is the question of profitability, something Tesla has failed to achieve to this point. Without highly profitable gas-fueled trucks and SUVs, Tesla is at a disadvantage.

As we approach the 20-year mark from the birth of the tzero, Navigant Research’s Electric Vehicles Market Forecasts report projects sales of nearly 2.9 million plug-in vehicles globally by 2024. The zero emissions revolution is almost upon us—Tesla has certainly worked hard to bring the transformation to the world, but whether the timing works in favor of the Model 3 or the Bolt to be the new Model T remains to be seen.


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