Increasing number of driving bans in Europe

Dear Friends & Shareholders,

In Europe, a growing number of cities are imposing, or contemplating, driving bans to reduce air pollution. While diesel vehicles are expected to bear the brunt of these bans, older petrol cars will also be affected. In Paris and Madrid, for example, the roads are already being closed to cars with diesel engines. Soon Barcelona, Rome and London will also want to completely ban vehicles with internal combustion engines.

Traffic sign, first area-wide urban diesel ban – Stuttgart, Germany

According to Bloomberg, a news agency, 24 cities in Europe have or will impose driving bans affecting around 62 million people, roughly the number of inhabitants of the whole of France. Even today, more and more cities are imposing restrictions on particularly polluting vehicles in order to ensure reasonable air quality.

In February 2018, the Federal Administrative Court in Germany ruled that diesel driving bans to maintain air purity are generally permissible. Cities such as Stuttgart, Cologne, Hamburg and Berlin are taking steps to free heavily trafficked roads or even entire city centres from older diesel vehicles. In Essen, the Administrative Court has even closed the A40 motorway for cars with high exhaust emissions.

Higher toll in London

London hasn’t closed its streets for older cars yet; however, it now asks their drivers to pay an additional environmental toll of 14.50€ ($16.00) per day on top of the existing city toll of 13.35€ ($14.80). An estimated 40,000 cars are affected by the new toll including older diesel vehicles, older gasoline engines and motorcycles. This extends beyond light duty vehicles as buses and trucks with high exhaust emissions face a levy of around 115€ euros ($130) per day.

Ultra Low Emission Zone – London, UK

The cities are not alone as the European Union is also acting against air pollution from cars. From 2021, the average upper limit of 95 grams of carbon dioxide per kilometre will apply to new car fleets. Until then, car manufacturers will have to make great efforts to comply with these emission levels or they will face fines in the billions. So far, fleet consumption at Daimler and BMW, for example, has been 134 grams and 128 grams, respectively. Without the increased production of hybrid and purely electric cars, compliance with the upper limits will hardly be possible.

Driving bans on environmentally harmful vehicles are far from being an exclusively European phenomenon. In the USA, the city of Seattle plans to completely ban the sale of vehicles with combustion engines from 2030. States such as California are pursuing similar measures. In China, major car manufacturers will be fined if they fail to meet certain quotas to produce cars with little or no emissions. After the People’s Republic stimulated demand primarily for low-emission vehicles, this is now happening on the supply side.

BYD Auto sells more electric cars than any other firm in the world.

The shift away from cars with combustion engines towards hybrid and purely electric vehicles is only just beginning. Even in China, where the government has been subsidizing electrification for years, electric cars have only reached a market share of around four percent. This means that there is still plenty of room for improvement in the world’s largest car market. I don’t have to tell you what this means for the required battery raw materials.