Future low carbon vehicles ‘offer prospect of cash savings for drivers’

Future low carbon vehicles ‘offer prospect of cash savings for drivers’
17 March 2013


  • Report published by Cambridge Econometrics and Ricardo-AEA based on a research project convened by the European Climate Foundation
  • Technical and macro-economic study focuses on light duty vehicles – cars and vans
  • Results show that overall, the cost of technologies required to meet proposed European 2020 CO2 regulation will be more than off-set by fuel savings

The study, carried out jointly by Ricardo-AEA and Cambridge Econometrics, aimed to analyse the economic impacts of decarbonizing light duty vehicles.  As part of the study, the impacts of the European Commission’s proposed 2020 CO2 regulation for cars and vans have been assessed. The analysis showed that a shift to low-carbon vehicles would increase spending on vehicle technology, therefore generating positive direct employment impacts, but potentially adding €1,000-€1,100 to the capital cost of the average new car in 2020. However, these additional technology costs would be offset by fuel savings of around €400 per year, indicating an effective break-even point for drivers of approximately three years. At the EU level, the cost of running and maintaining the European car fleet would become €33-35 billion lower each year than in a “do nothing scenario” by 2030, leading to positive economic impacts including indirect employment gains.

Data on the cost of low carbon vehicle technologies has largely been sourced from the auto industry itself, with the study supported by a core working group including Nissan, GE, the European Association of Automotive Suppliers (CLEPA), and the European Storage Battery Manufacturers Association (Eurobat).

Fuel price projections for the study were based on the IEA’s World Energy Outlook, while technical modelling was carried out using the transport policy scoping tool SULTAN (developed by Ricardo-AEA for the European Commission) and the Road Vehicle Cost and Efficiency Calculation Framework, also developed by Ricardo-AEA. Macro-economic modelling was done using the E3ME model, which has previously been used for several European Commission and EU government impact assessments.

This report focuses on efficient use of fossil fuels in internal combustion- and hybrid electric vehicles. It will be followed by a second report, which will focus on further reducing the use of fossil fuels by also substituting them with domestically produced energy carriers, such as electricity and hydrogen.

The report of this study ‘An Economic Assessment of Low Carbon Vehicles’ is available for download from the news and media section of the Ricardo web site www.ricardo.com.


A full copy of this press release together with the report ‘An Economic Assessment of Low Carbon Vehicles’
 is available from the links at the top right of this page.