As diesels lose European market share to plug-ins, car makers will struggle

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In a recent survey, 40% of car owners said they would consider a plug-in model for their next vehicle. Meanwhile, a majority of auto execs expect electric cars to dominate the market within a decade.

Typically, I think of this as big trouble for oil companies. But car makers are going to face tough times too.

According to Automotive News Europe, a new report from analysts including Jose Asumendi at JPMorgan Chase & Co suggests that diesel models, in particular, are going to face an accelerated decline in their market share. This is thanks, in large part, to fallout from the VW emissions cheating scandal. At both the local and national level, authorities are exploring a raft of new measures to test real world emissions, and to restrict harmful pollutants that cause both local air quality issues and contribute to climate change.

Specifically, the report says, diesel vehicles will drop to 30% of car sales by 2020—down from around half today. And news that EU lawmakers had approved an overhaul of vehicle emissions laws only adds to sense that diesel's days are numbered and gasoline cars may not be too far behind.

But why should automakers care? After all, they can sell battery vehicles just as easily as they sell fossil fuel-powered vehicles, right? The trouble is that battery electric vehicles and plug-in vehicles don't enjoy the same profit margins as their emissions-spewing counterparts. And that's especially true if you have a whole bunch of money tied up in diesel-centric manufacturing facilities, supply chains and technical expertise.

Add the approaching tsunami of fully autonomous vehicles to the mix and I feel confident in making at least one prediction—automotive markets (or perhaps, more accurately, "mobility markets") in 2025 will look nothing like they do today. Whether or not Tony Seba's bold prediction that all new vehicles, globally, will be electric by 2030 turns out to be accurate still remains to be seen. But with each new development, it's looking less and less like pie in the sky.

As diesels lose European market share to plug-ins, car makers will struggle
When you're invested in legacy technologies, a paradigm shift can be expensive.

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