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Decline in Diesel Vehicles - Assessment of Challenges and Options

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March 01, 2019

What is the issue?

  • Across the world, the popularity of diesel as a powertrain for passenger vehicles is on the decline.
  • The government and auto makers in India should work together to ensure a smooth transition to other options.

What are the recent developments?

  • Europe, diesel vehicles' biggest market (53% of all cars sold is powered by diesel), is fast giving up on diesel.
  • France, where diesel cars account for 70% of its overall fleet, saw more petrol cars being sold in 2017.
  • In Germany, the share of diesel cars fell from 48% in 2012 to 33% in 2018.

How is diesel use in India?

  • India’s love for diesel powertrains peaked in 2012-13.
  • That was a time when diesel cars accounted for 47% of all passenger vehicles sold in the country.
  • The trend was driven more by cheaper diesel prices than other reasons, as it was lower than petrol by as much as Rs. 25 per litre.
  • However, government de-controlled diesel prices in 2014.
  • As the price differential between diesel and petrol narrowed, the preferences changed.
  • Today, only 23% of the cars sold have diesel powertrains.

How have the emission norms evolved?

  • Globally, the initial stages of emission norms focussed on carbon-di-oxide emission. E.g. Euro-I to Euro-IV emission norms
  • So diesel engines performed well on this account as they emitted lower CO2.
  • Diesel cars were increasingly promoted in most European countries with incentives.
  • As emission norms evolved, it became clear that particulate matter (PM) and Oxides of Nitrogen (NOx) were equally dangerous.
  • Notably, diesel engines emit higher levels of PM and Nox than petrol engines.
  • So Euro-V norms were introduced in 2010 focussing on reducing PM, and Euro-VI norms came into force in 2015 targeting NOx.

What is the challenge now?

  • Indian government too has decided to shift from BS-IV to BS-VI emission norms from April 2020. Click here to know more.
  • This will directly impact diesel engines the hardest.
  • The manufacturers have to tackle both PM and NOx in one go, with a complex exhaust system.
  • This will lead to cost escalation of up to Rs. 1.50 lakh depending on the size of the engine.
  • Resultantly, only costly SUVs will be able to absorb this cost and less-expensive, small, compact and entry level diesel versions will be out of the market.
  • Manufacturers who have set up large diesel engine capacity will have to compensate for fall in domestic demand by pushing exports.

Is shifting to petrol feasible?

  • Shifting to petrol powertrains will have another challenge for the manufacturers, which is the CAFE norms.
  • The CAFE (Corporate Average Fuel Efficiency) norms came into force from April 2017.
  • It requires cars to be 10% or more fuel efficient between 2017 and 2021, and 30% or more fuel efficient from 2022, in terms of CO2 emission.
  • The move is targeted at reducing the carbon footprint of the automobile industry.
  • Diesel cars had been helping manufacturers meet these norms.
  • But the shift to petrol would increase the CO2 emission and the manufacturers would have to produce more fuel efficient petrol cars or electric/hybrid vehicles.

What lies before India?

  • India will have to promote electrification and hybridisation more seriously.
  • Its vision of 100% electrification of passenger vehicle sales by 2030 may be aspirational but achieving even a third of that target necessitates a massive change.
  • As, in India where bulk of the cars sold is small cars, the cost of electrification may just not work out.
  • Though battery costs have come down substantially over the years, it is still not low enough by Indian standards.
  • Government should move forward with the Faster Adoption and Manufacturing of Electric Vehicles (FAME)-2 norms.
  • This should incentivise the manufacturer rather than the buyer.
  • For goods movement, the only option is to reduce the share of road transportation and to focus on coastal shipping and inland waterways.

 

Source: BusinessLine

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