Tesla (TSLA) got the top score of CT-1 from Moody’s on the transition readiness to a low-carbon future. Moody’s looked at 20 global automakers on CTAs scale (carbon transition assessments) to find how are they met low-carbon emission regulations. Also, the firm rated automakers on a 10-point scale ranging from CT-1 to CT-9.
Moody’s scores on Tesla and others
Moody’s concluded that most firms are weakly positioned to move to electric cars. This is because it involves investment in research and development of technology. Plus, making safer electric cars ready for commercialization is a long and steep path.
To no surprise, Tesla, an all-electric car manufacturer, topped the rating. Also, Beijing Automotive, BMW, Geely Automobile, Honda, and Toyota Motor scored great as per the Moody’s report. However, on average, most other automakers got a CT-6 score. Additionally, this shows their unpreparedness for low-carbon emissions.
Nevertheless, changing rules make it vital for global automakers to move towards electronic cars. The vice president and senior credit officer at Moody’s, James Leaton said, “Our new assessment gives us a way of monitoring progress in aligning with the low carbon transition. 2020 is set to be a critical year for automakers proving whether they can deliver electric vehicles at scale to achieve compliance in Europe and China.”
Carbon emission targets in Europe and China
The EU (European Union) plans to get 20% of its energy from renewable sources by 2020. Also, it plans to lower the effect of greenhouse gas emissions by 20% compared to 1990 levels. EU says that it’s on track to achieve its 2020 target. Also, it put in place a 2030 target of lowering emissions by 40%.
Europe will launch Euro Standard 7 in 2020. OEMs (original equipment manufacturer) are required to bring down CO2 emissions from the current 130 gm/km (Euro Standard 6) to 95 gm/km. They have to use technological enhancements to get the stated target. However, OEMs who aren’t able to meet the goal will have to pay a premium of 95 euro/gm for extra CO2 emitted. So, automakers will have to ramp up efforts to meet these standards or face high costs.
Also, China will launch China Emission 6 in 2020. Per policy changes, the country plans to phase-out subsidies to the new energy cars. So, automakers will have a long, hard road ahead with fewer government subsidies. Already, some regions are implementing the new emission standard in the run up to next year’s goal.
Tesla’s China venture
Tesla has already started trial runs at its Gigafactory 3 in China. The company makes Model 3 in that factory. Tesla’s electric cars are all set to add to the country’s carbon emissions reduction targets.
Tesla is betting big on its China foray as it expects better demand for its electric cars on competitive pricing. Plus, local production will lower the shipping cost for the company. The company saw a rise in its sales in China in Q3 2019.
Ford Motors takes on electric cars
Electric cars play a big role in meeting changing emission regulations. Ford Motor (F) is making inroads for electric cars in Europe. Also, the company plans to launch a series of electric cars in the region.
By 2022, the company expects most revenues to come from electric car sales in Europe. The company plans various versions and types of electric cars. The cars will range from sedans to SUVs and plug-hybrids to fully electric cars. Recently, the company started making an electric Puma Crossover. To learn more, read Ford Starts Producing Its Puma Crossover.
Fiat, GM, and Ferrari are hopeful about electric
Further, the recent merger of Fiat Chrysler Automobiles (FCAU) and PSA Groupe is expected to create a large electric car company. Though Fiat’s former CEO didn’t see electric cars resolving the auto industry’s issues, PSA’s CEO Carlos Tavares believes in the future of electric.
Also, General Motors (GM) expects electrification to play a big role in the auto industry’s future. Its website says, “GM is laying the foundation for an all-electric future with its new electric vehicle architecture and the largest collective EV charging network in the U.S.”
Though automakers are moving towards electric cars to lower carbon footprints, Tesla leads the race with its electric cars ready to contribute to changing emission regulations.