State of Green Business

Daimler’s 2030s EV commitment challenges sector to rev up

electric charging
Shutterstock c.I.I.o
A Daimler electric vehicle charging.

Daimler, one of the world’s leading producers of premium cars and commercial vehicles, recently announced a bold new climate commitment to make its entire passenger car fleet carbon-neutral by the end of 2039. The commitment is the most aggressive goal that any global automaker has made to date, and it sends a powerful signal to the rest of the industry that the race to win valuable market share in the burgeoning EV market is heating up.

To meet the pledge, the Mercedes-Benz owner will transform its entire operations over the next two decades — from the 2.4 million cars it produces annually, to its production plants around the world and its supply chain. By comparison, VW aims to make its entire company carbon-neutral 10 years later, by 2050.

These and other commitments from the major automakers — such as Volvo’s aim to phase out pure gasoline cars after 2019 — show a clear transformation for the auto industry. However, the latest announcement from Daimler underlines the need for speed to ensure long-term competitiveness in the transition.  

The challenge is clear: Transportation is the largest source of emissions in the United States. Bloomberg New Energy Finance projects that by 2040, nearly 60 percent of personal cars worldwide will be electric, but other forms of transport, including heavy trucking, will lag considerably. The rate of uptake must accelerate significantly in order to reach zero emissions in the sector by 2050, the timeline outlined by the Paris Agreement.

Luckily, certain companies are beginning to question the tactics of the trade bodies that delay rather than support their progress. As companies’ ambitions outstrip those of their industry representatives, they no longer serve the strategic interests of their members. VW recently threatened to exit Germany’s influential auto lobby group, VDA, amid a dispute over its approach to managing the low-carbon transition.

Many auto companies embracing the zero-carbon future are already reaping the benefits and gaining valuable market share. Tesla’s Model 3 was the best-selling luxury car of 2018 in the United States, responsible for around half of all EV sales in the country. 

In China, growth in EV demand is outpacing the rest of the world with sales reaching 254,000 in the first quarter — a 118 percent increase year-on-year. It’s no coincidence that China is home to the world’s biggest EV maker by cumulative sales, BYD. The exponential demand growth in China will be mirrored around the world as cost curves for batteries continue to decline and performance improves.

While much of the focus is on individual customers, corporate customers are also providing strong demand signals and are helping to accelerate the uptake of EVs. Companies are demonstrating their commitment to EVs through EV100 — a global business initiative designed to fast-track the uptake of EVs and infrastructure, launched by The Climate Group. This includes the world’s leading auto leasing company LeasePlan and the global logistics company DHL. These companies recognize that EVs are increasingly cost-competitive and can achieve ranges that rival many traditional cars.

Automakers embracing the shift to EVs are not only harnessing demand growth and innovation, but responding to strong global policy signals.

The United Kingdom, France, Norway and Sweden have committed to phasing out fossil-fuel powered passenger vehicles completely by the 2030s and increasing emissions regulations, which will also address persistent urban pollution problems. India aims to sell only EVs by 2030, and China has increasing sales quotas for EVs, starting at 10 percent for 2019.

Clear, ambitious policies such as these are vital to ensure the rapid and orderly transition to the zero-carbon transport of the future, and automakers must work with governments to accelerate it. 

Unfortunately, the U.S. federal government is going in the opposite direction. Instead of orienting itself toward the electric revolution, the Trump administration is rolling back emissions regulations and is seeking to undermine the growth of EVs, thereby threatening the country’s ability to develop new industries and create competitive jobs. States are beginning to push back, but automakers need transparent policy at every level of government.

Robust policy, demand signals from consumers, improving technology with reducing costs and strong supply signals from companies such as Daimler, are helping to accelerate the rapid transition to the zero-carbon transport system in the 2030s. Companies and countries that fail to match this ambition will be the losers in this inevitable transition.