Manufacturers are investing billions of euros in developing new diesel technology to meet the needs of millions of customers who are not ready to switch to an emission-free future.
The additional costs involved add to other substantial investments, including electric vehicles, autonomous technology and mobility services.
Daimler plans to invest €3 billion in petrol and diesel technology at a time when German politicians are discussing the end of the fossil fuel era.
There is pan-European political support for an accelerated shift away from fossil fuels, but with alternative fuels accounting for less than 1% of the new car market, manufacturers have to invest for today’s consumer as well as future customers.
Thomas Weber, a member of Daimler’s development board, told Automobilwoche that the firm is consciously developing multiple powertrains to meet a growing range of customer needs, including petrol, diesel, plug-in hybrids (PHEV), electric vehicles (EV) and hydrogen models.
‘They all have their justification and future prospects,’ he said.
Bernhard Heil, head of propulsion technology, said that Daimler would invest €1.1 billion in developing new diesel engines and a further €1.9 billion in new petrol engines planned for launch in two years’ time. Current diesel models will also require more than €1 billion in development work.
At the same time, the firm is developing 10 hybrid models to go on sale by the end of next year that require fossil fuel engines.
Heil added: ‘Combustion engines will still play an important role for a long time.’
Alongside this investment, Daimler has a longer-term plan to develop a range of electric vehicles under the new EQ brand, with 10 models planned by 2025. This requires a €1 billion investment in battery production including a new factory in Germany. Daimler forecasts EVs and PHEVs should account for 15-25% of its sales by 2025.
Executives at PSA Group believe that diesel will still generate significant sales beyond 2020 and it will play a critical role in the firm meeting its official emissions targets.
Gilles Le Borgne, research and development director of PSA Group, told Autoactu that next generation diesels would cut emissions and improve fuel economy, without cars costing more.
Manufacturers are mandated to cut average CO2 emissions from new car emissions to 95g/km by 2025 or face substantial fines. They recently met a target of reducing average CO2 emissions to 130g/km by the end of 2015, based on official emissions tests.
Diesel will be used more extensively in plug-in hybrid electric vehicles, Le Borgne said, adding that customers would ultimately decide which technology would win. Until then PSA Group would make sure diesel is part of a wide range of powertrain choices.
Diesel accounts for around half of all new car sales in Europe and although its proportion of total sales is declining, Autovista Intelligence analysis for the Diesel Intelligence report indicates that it will still represent 35-45% of the market in Europe by 2024.
CO2-based vehicle taxes are a key factor in the popularity of diesel and governments tend to favour gradual changes to avoid disrupting markets, which means that any new policies are likely to only bring gradual declines in diesel demand.
Masamichi Kogai, chief executive of Mazda, added that the driving experience should not be forgotten when considering consumer demand for fuels.
He says consumers will still want an emotional connection with their cars, adding they will continue to choose petrol and diesel for experiences that ‘lift the spirits and relieve stress’.
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