EU regulation on CO 2 emission standards for cars. Curb weight vs. footprint: Consequences

1. EU regulation on CO2 emission standards for cars.Curb weight vs. footprint: Consequences •  Best correlation between weight and CO2 • Due to physical laws unlike e.g. footprint weight has a direct influence on CO2 emissions. • The correlation is twice as high for weight compared to footprint (0,54 vs. 0,25). •  Transparent parameter • Simple system (based on one parameter only) and easy to monitor. • Easy to implement in the supply chain (direct accountability for every component) •  Footprint would “punish” positive additional features • Safety features increase weight and thus CO2 -a footprint-based system would give the same CO2 target to a car with or without side-impact protec.-tion etc. • Diesels and hybrids cause additional weight which is overcompensated by lower consumption – a weight based system gives stronger incentives for their use •  Corrections for vehicles with different bodies not necessary • Footprint disadvantages are comparably high for small vehicles e.g. Smart. Complicated cor-rections would be required. • Footprint will set the same target for different car concepts, e.g. sedan, hatch, van etc.. Conse-quently, design of cars is restricted. Weight-based system 500 450 400 350 300 250 200 150 100 50 0 800 600 2.200 2.400 3.000 2.000 2.600 2.800 1.800 1.600 1.000 1.200 1.400 curb weight [kg] Footprint-based system 600 500 400 300 200 100 0 20 25 30 35 40 45 50 55 60 65 70 75 80 Footprint [thd. cm2]

2. EU regulation on CO2 emission standards for cars. Curb weight vs. footprint: Consequences Average 1.295 kg = Target 130 g/km • All Cars with the same weight / footprint receive identical targets • In the case of weight this means that 1.295 kg lead to a target of 130 g/km • For footprint its 3,9 m2 • The probability of giving unfair targets is twice as high for footprint compared to weight • For weight the span between the cars with the highest and the lowest emissions who having identical weight and therefore an identical target is only 130 g/km • For footprint the span is 270 g/km. • The higher the span, the higher is the “built-in-unfairness” of the system. • Weight is the most neutral parameter. Weight system 500 450 400 350 300 250 200 130 g/km 150 100 50 0 600 800 2.200 2.400 3.000 2.000 2.600 2.800 1.800 1.600 1.000 1.200 1.400 curb weight [kg] Average 3,9 m2 = Target 130 g/km footprint system 600 500 400 300 270 g/km 200 100 0 20 25 30 35 40 45 50 55 60 65 70 75 80 Footprint [thd. cm2]

3. EU regulation on CO2 emission standards for cars. Vehicle weight: Development in the EU and Japan. Empirical data from Japan do not support the concerns, that a weight-based system will lead to heavier cars. Even as the Japanese fuel regulation is based on weight classes which would probably makes, from an outer perspective, an increase of weight more attractive than the proposed linear system in the EU. According to the proposal presented by the NHTSA this year the future US fuel regulation will be based on footprint to consider the consumer’s preference for larger pick-Ups.

4. EU regulation on CO2 emission standards for cars.Consequences of increases and reductions in weight Due to the fact that any increase of weight results in lower CO2 emissions performance standards than caused by physical laws or shown by empirical data an incentive for adding weight to a car is not given. A heavier car has higher CO2 requirements to fulfill than a lighter car. Additional weight increases the required reduction of CO2 emissions, less weight means lower reductions.

5. EU regulation on CO2 emission standards for cars.Development of steel and aluminum prices. 1. Steel and aluminum prices have more than doubled in 5 years. 2. BMW 2007 spent over 1 Bn € on steel and over 700 Mio € on aluminum 3. Increased raw material costs of suppliers also indirectly impact on OEMs. 4. The increase in steel prices negatively impacts on the car industry’s profitability. 5. There is no realistic perspective for a reversal of the trend of increasing prices. 6. Therefore all options for reducing cost and thereby weight) are used. There is no reason for car makers to waste money by increasing vehicle mass