The transition from fossil fuel vehicles to electric vehicles (EVs) is often heralded as a pivotal strategy in the global effort to combat climate change and reduce CO₂ emissions. While the promise of EVs is compelling, the reality is far more nuanced.
My recent analysis at STH Consulting reveals that the environmental benefits of EVs are influenced by a multitude of factors, including production emissions, energy sources, vehicle usage, and end-of-life recycling practices. It is crucial for consumers and policymakers alike to understand these complexities as we forge ahead in the shift toward electric mobility.
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The question at hand
At what point does an electric vehicle become more environmentally beneficial than a diesel vehicle? This question is critical for guiding consumer choices and informing public policy.
Our analysis sought to determine the breakeven point in CO₂ emissions between electric and diesel vehicles across various European countries, measuring both kilometres driven and years of vehicle use. Understanding this breakeven point is essential to evaluate the real-world impact of EVs on our environment.
Key findings from our analysis
1. Production and operational emissions
A key component of our analysis is the assessment of CO₂ emissions associated with both the production and operation of vehicles. Our calculations revealed that the production of EVs results in significantly higher CO₂ emissions compared to diesel vehicles. Specifically:
- Electric vehicles: An electric car generates approximately 16 tonnes of CO₂ during production.
- Diesel vehicles: In contrast, a diesel car produces around 7 tonnes of CO₂.
This substantial difference in production emissions is primarily due to the larger battery size of EVs, which requires more resources and energy to manufacture. However, when considering operational emissions, EVs typically outperform diesel vehicles, particularly in regions with cleaner electricity sources.
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By GlobalData2. Breakeven analysis
To identify the breakeven point — where the cumulative CO₂ emissions of EVs equal those of diesel vehicles — we compared emissions over varying distances. The results varied significantly across countries, reflecting the impact of different electricity generation mixes:
These figures indicate that regions with a low CO₂ intensity in their electricity generation can allow EVs to offset their higher initial production emissions more quickly than regions that rely on fossil fuels for electricity.
3. Emissions over a 3-year lease
Leasing is a prevalent method for acquiring vehicles, often lasting around three years. However, our analysis demonstrated that this leasing model limits the ability of EVs to reach their breakeven point within this timeframe. We calculated the total CO₂ emissions over a typical three-year leasing period, revealing that electric vehicles generally have higher total emissions than diesel cars due to their higher production emissions.
These results highlight that, across all analysed countries, the electric vehicle incurs greater total CO₂ emissions during the three-year leasing period. This is largely attributed to the higher production emissions, which remain unoffset within such a limited usage time.
Our analysis underscores several key factors that complicate the assessment of EVs’ environmental impact:
Electricity generation sources
The CO₂ intensity of electricity generation plays a pivotal role in determining the overall emissions profile of electric vehicles. Countries with lower CO₂ intensity — such as Sweden — benefit from the operational advantages of EVs, allowing them to offset their production emissions more rapidly. Conversely, nations heavily reliant on coal, like Poland, see less environmental benefit from EV adoption.
Vehicle longevity
For electric vehicles to maximise their environmental benefits, they need to be in use longer. The average breakeven time across the EU is approximately 9.2 years, indicating that many current EVs, which have been registered for less than four years, have yet to reach this breakeven point.
Short-term leasing models exacerbate this issue, as they encourage consumers to switch vehicles before the full environmental benefits of EVs can be realised.
Recycling considerations
Another layer of complexity arises from the recycling of vehicle materials. Our current analysis does not account for potential CO₂ savings from recycling at the end of a vehicle’s life. Effective recycling processes can reduce overall emissions and resource consumption, improving the sustainability profile of both electric and diesel vehicles.
Policy implications
To facilitate a successful transition to electric mobility it is imperative that policymakers consider the following strategies:
- Encouraging long-term use: Implementing incentives for long-term vehicle ownership can help ensure that more electric vehicles reach their breakeven points, thereby maximizing their environmental benefits.
- Supporting renewable energy initiatives: Investing in the expansion of renewable energy resources is crucial. Cleaner electricity generation will enhance the operational emissions profile of electric vehicles, further improving their environmental impact.
- Stabilising residual values: Establishing financial mechanisms to stabilise residual values for electric vehicles can encourage longer ownership and mitigate concerns over their depreciation.
- Tailoring policies to regional needs: Policymakers should consider the unique energy profiles and usage patterns of different regions, particularly urban areas where the benefits of EV adoption may be most pronounced due to concerns over air quality and noise pollution.
The way forward
Electric vehicles undoubtedly have a valuable role to play in the mobility market, offering significant potential for reducing CO₂ emissions. However, it would be a mistake to consider them a universal solution. Likewise, it is important not to demonise fossil fuel vehicles entirely, as their utility is and will be still relevant in specific use cases. The choice between electric and traditional vehicles should be guided by the concrete circumstances of each use case, taking into account the local infrastructure and energy availability.
One of the most influential factors in this equation is electricity production. Governments are often shifting the conversation from CO₂ emissions per kWh to economic metrics like the cost of electricity in euros or pounds. This is a misguided approach, as the focus should be on achieving greener energy, not merely cheaper energy. Aligning the metrics with environmental goals rather than economic ones is crucial for making meaningful progress in emissions reduction.
Legislators also tend to rely on subsidies or mandatory measures like quotas, which do not always address the core issue of reducing CO₂ emissions effectively. It is essential for there to be cooperation between policymakers, the industry, and the public to develop long-term strategies that go beyond short-term incentives. These strategies should address the full lifecycle of vehicles and realistically consider the feasibility and impact of proposed actions.
Notes
* On production emissions; the source is our own EmissionBase, which calculates Co2 production emissions based on material composition.
* Average vehicle weight is 1,4t for diesel and 2,0t for electric.
* Average mileage per year used in our calculations is based on Eurostat figures.
Petr Thiel is the CEO of STH Consulting, specialising in data analysis and strategic innovation in environmental practices.
