WLTP hits hard, here and now
If you think that you needn’t worry for another year or so, think again. The correlated NEDC values that are used as a taxation basis today by way of a transitional measure are much higher than the old NEDC values – without anything fundamental having changed to the car. What is happening – and why?
On September 1st 2017, WLTP replaced NEDC as the official type approval procedure to measure fuel consumption and CO2 emissions. At the same time, the RDE (Real Driving Emissions) test was introduced to verify whether the NOx and PM emissions measured in lab conditions also stay within certain limits on the road.
WLTP and RDE are a thorn in the OEMs’ side. Especially the RDE test requires considerable investments to make engines comply with the Euro 6c and 6d standards. Adding an AdBlue (selective catalytic reduction, or SCR) system to diesel engines is the only way to keep NOx emissions at bay. As to petrol engines, they need a particulate filter (OPF) to comply. Regarding WLTP: a more realistic test cycle means higher CO2 emissions, but the Euro 6c and 6d emission standards do not impose limits here.
From NEDC to NEDC correlated: strike one
That does not mean that the WLTP has no consequences for car manufacturers – on the contrary. For starters, new models are in a disadvantageous position vis à vis the existing models – as long as the latter haven’t made the switch to WLTP.
To compensate the effect of the WLTP - according to Autovista, the average CO2 increase is 25% - the EU has introduced something called CO2MPAS. This is a formula to extrapolate a virtual NEDC value from the real WLTP value. The extrapolated value, a.k.a. correlated value, is used in the member states as a taxation basis – at least until January 2019.
Indeed, car manufacturers today communicate two CO2 figures for their all-new models – and for the existing ones as soon as they switch to WLTP. This switch mostly coincides with a technical update in view of the euro 6c emission standards. Instead of adopting to WLTP in one swoop, OEMs take it step by step, until all of their cars are ‘converted’, by September 1st 2018 at the latest.
However, this is where the real problem occurs. Reality shows that these correlated NEDC values are much higher than expected. An example. Since March 2018, BMW introduced AdBlue to the bulk of its diesel engines to meet the emission standards and by the same occasion switched to WLTP for the models involved. It turns out that the updated X1 16d now has a correlated, i.e. WLTP-derived NEDC value of 118 g/km. The 'old' 16d boasted a much more favourable ('real') NEDC value of 104 g/km.
From NEDC correlated to WLTP: strike two
The (temporary) CO2MPAS method already increases official CO2 values by 10 percent on average compared to the old NEDC values. But the second blow is yet to come, and it will strike at least as hard. In January 2019, carmakers will no longer publish a correlated NEDC value, but only the WLTP rating, to avoid confusion among consumers. From then on, taxation should be based on WLTP.
The ACEA-created website wltpfacts.eu mentions that “national governments should adjust vehicle taxation and fiscal incentives to WLTP values, respecting the principle that WLTP should not have a negative impact on consumers”. But what if they don't? Worst case scenario, WLTP seriously disrupts car policies and entire markets. The only vehicles that would escape unscathed, are in fact electric cars.
Car policy conundrum
In any case, NEDC remains the taxation basis for the time being, whether it is ‘true’ NEDC (existing models that have yet to be updated) or ‘correlated’ NEDC (new models launched since September 2017). Models that have a WLTP type approval see their CO2 rating rise by 10 to 15 grams (10 percent on average) compared to before.
That is good news for the treasury, but very bad news for consumers and companies alike. Taxation will go up, making vehicles more expensive overnight without anything having changed to the car, apart perhaps from the adoption of an AdBlue system (diesel) or particulate filter (petrol). CO2 based vehicle categories will have be reviewed entirely. Also, some cars simply don’t fit into an employee’s budget anymore.
So how to cope with the painful and unintended consequences of WLTP, and ‘NEDC correlated’ in particular? You could just wait and see which way the cat jumps, but chances are it will scratch you in the face – and make you bleed more than when you approach your leasing company or fleet management partner today to analyse the effects and respond.
Perhaps the time has come to consider alternative solutions, like CNG, hybrid or even electric. With the introduction of WLTP, they may offer a better TCO outlook than conventional cars. Maybe WLTP will push companies to consider replacing their current cars by mobility budgets, or by smaller ones. Car policies will require overhauling and with connectivity and electrification in mind, it is probably a good idea to take a long-term approach.
Picture: Mercedes EQA concept, the "electric A-Class", as shown at the IAA in 2017. Zero-emission vehicles are the only ones that escape unscathed from the WLTP.