Little room for hybrids, EVs in Europe for a decade

GENEVA - Hybrid and electric cars are the stars of motor shows, but the expensive technologies could take a decade to really hit European roads as automakers improve petrol and diesel cars to meet short-term emissions targets.

The planned launch of the first zero-emission electric cars from Nissan Motor Co, Daimler AG and Mitsubishi Motors Corp this year, as well as debut of hybrid cars from a growing number of European brands has renewed the buzz around electric powertrains as promising solutions to reducing emissions in carbon dioxide-conscious Europe.

But most automakers gathered at the Geneva auto show this week said the most practical road to meeting Europe's 130g/km CO2 emissions target by 2015 was to improve conventional gasoline engines, downsize their cars, or offer more diesel engines, which are 20 to 30 percent more fuel-efficient than their petrol cousins.

I think the opportunity for hybrids in Europe is quite small, said Hyundai Motor Europe Vice President Allan Rushforth.

While Hyundai Motor has hybrid and pure-electric cars in the production pipeline elsewhere, Rushforth said the introduction of clean diesel engines and improved gasoline cars alone would help South Korea's top automaker reduce its CO2 emissions in Europe to 115g/km by 2015, from 142g/km last year.

Generous subsidies have helped hybrids gain traction in Japan and the United States, but European consumers have favored diesel cars for better mileage and lower CO2 emissions.

With sales volumes so small, at less than 1 percent of the overall European market last year, having hybrid models in its line-up has done little for Japan's Honda Motor Co -- one of the few mass producers of gasoline-electric cars in the world. Its average emissions were above 140g/km last year.

Hybrids don't have the same recognition in Europe as they do in the United States or Japan, Honda Motor Europe CEO Shigeru Takagi told Reuters at the auto show.

Takagi added that while Honda hoped the launch of the new sporty CR-Z showcased in Geneva and Jazz subcompact hybrids would help boost sales, Honda would also have to boost mileage on the Accord and other volume sellers to bring its emissions down.

Honda would eventually also need a small diesel engine to meet targets beyond 2015, he said.

I think the Europeans were in no hurry to launch hybrids because they are not necessarily that much better in terms of fuel efficiency than diesel, said Michael Tyndall, auto specialist at Nomura International.

The cost benefit trade-off doesn't really work for European consumers because a diesel car will be cheaper to buy and the comparative fuel saving is not enough to justify that extra cost, he added.

Hybrid leader Toyota Motor, meanwhile, slashed its emissions to 130.1g/km last year, only trailing Italian small-car maker Fiat, but that was thanks to the penetration of its Yaris subcompact, according to research firm JATO Dynamics.

Toyota sold just 44,000 units of the Prius hybrid in Europe last year, compared with about 210,000 for the Yaris.

Even the Renault-Nissan alliance, which has been the most aggressive in pursuing a zero-emission strategy, said EVs would only go so far to meet European targets.

We're projecting a 10 percent share of the global market for EVs by 2020, and that's said to be a very optimistic target, the partners' zero-emissions project leader, Hideaki Watanabe, told Reuters.

Even at that level, we'd have to work on the remaining 90 percent, which is based on internal combustion engines.

Japan's Mazda Motor Corp is taking just such a strategy, making improvements to its internal combustion engines to raise fuel economy by 30 percent until 2015, and adding hybrid and other electric options beyond that.

HYBRIDS FOR 2020?

Still, automakers say a further reduction in CO2 targets to 95g/km by 2020 would require hybrid technology or zero-emission electric or hydrogen fuel-cell cars, which is why automakers such as BMW and Volkswagen have plans to bring gasoline-electric cars to showrooms, albeit just in the high-end segments for now.

(This) can only be achieved with a mixture of vehicles, said BMW CEO Norbert Reithofer.

You will need electric cars, very good diesels, and hybrids, he said, adding BMW will expand its new 5-series generation to include a full hybrid.

Opel's R&D chief Rita Forst clarified Chief Executive Nick Reilly's recent break with his predecessor's aversion to offering hybrids in addition to the vaunted Opel Ampera electric car that will likely hit showrooms late next year.

She said the German carmaker was in fact planning to add a start-stop system for the Corsa soon as a micro hybrid and did not exclude the possibility that a mild hybrid with brake energy recuperation might also be offered in low volumes.

France's top automaker, PSA Peugeot Citroen, also expects electric powertrains to play a bigger role in a decade.

If you look at the market in 2020 compared to what it is today... our assumptions are that if you add up the electric vehicle and the hybrid it will add up to potentially 15 percent of the market, PSA CEO Philippe Varin said.

(Additional reporting by Helen Massy-Beresford; Editing by Hans Peters)