Bosch Says Its Diesel Breakthrough Could Revive Sales.
“We strongly believe in the future of diesel. We’ve shown a technically feasible solution that can end the controversy”
German engineering giant Robert Bosch believes it can save diesel from its death throes, but critics aren’t convinced that this will be anything more than a brief pause on the way to oblivion.
Bosch said in late April its new exhaust system slashed deadly nitrogen oxide emissions from diesel engines far below legal limits taking effect in 2020 and can help automakers avoid city driving bans which threaten to doom the technology. The new process optimizes thermal management of exhaust temperatures, slashing nitrogen oxide emissions to one-tenth of the legally permitted limit, and doesn’t require new hardware. The system keeps emissions stable even at cold temperatures.
This was seen by some as a possible silver bullet to save European auto manufacturers from the prospect of financial mayhem as their strategy of using diesel to meet ever-tightening European Union (E.U.) fuel economy standards was blown apart by the VW dieselgate emissions cheating scandal, and health reports showing deadly emissions from diesels were responsible for killing thousands every year. Failure to meet these standards would result in swingeing, solvency-threatening fines.
This adverse publicity has led to a quickening slide in demand for diesels, which until 2015 accounted for every other auto purchase in Europe. Politicians and environmental groups, particularly in Germany, also sought to ban diesels from city centres in the name of protecting public health.
Short on detail
The announcement by Bosch, which was short on detail, was seen by some as more of a publicity strategy for a company heavily invested in diesel technology. Others reckoned the new technology would only be suitable for use in larger diesel engines, which would be great for the likes of BMW, Audi and Mercedes, but not much use to mainstream manufacturers. The benefits to fuel economy were said to be less than diesel, while many believed that even if the breakthrough was viable, the damage to diesel from bad publicity meant that it was too far gone to be retrievable.
Not so, says Bosch.
“We strongly believe in the future of diesel. We are sure we’ve made a point here and shown a technically feasible solution that can end the controversy surrounding diesel,” said Bosch spokesman Florian Flaig.
Investment researcher Jefferies said in a report the Bosch technology doesn’t fundamentally alter the outlook for diesels. It estimated the extra hardware cost at less than 100 euros ($119), including a larger Urea tank to help dissolve the harmful emissions. The higher running temperature of the device meant the efficiency gain in CO2 over gasoline engines was only 15%. Jefferies said the technology was probably not viable for small engines of 1.6 liters or less.
Viable for longer
“This suggests diesel could be viable longer for German (premium manufacturers) but falls well short of Bosch’s claim that ‘There’s a future for diesel’,” Jefferies analyst Philippe Houchois said.
Bosch’s Flaig reiterated the company view that the technology is a breakthrough for diesel, and it would be attractive for fleet buyers. The CO2 gain over gasoline cars was 15% which matched current diesels, while costs were about the same.
“From a Bosch perspective, the now shown prototype technology could be standard in diesels within two years,” Flaig said in an email exchange.
The technology would be viable for smaller diesels as well as bigger ones.
“We presented the technology in a car with 1.7 liters which we believe will be standard for future diesels. We do not see a big market for diesels in small cars. But we still see huge potential in the compact class. But of course the system is scalable up to premium SUVs – and those are sold worldwide,” Flaig said.
Bosch involvement in the dieselgate scandal isn’t clear, but it has set aside $1.5 billion in possible fines.
Fitch Ratings analyst Emmanuelle Bulle was sceptical.
“It’s not clear what the impact will be on the overall market and there’s a suspicion that it is more of a marketing announcement at this point,” Bull said in an interview.
In an initial reaction to the news, Fitch had said the development had the potential to reverse some of the adverse publicity surrounding diesels, and if it was viable, would take the pressure off manufacturers to invest huge sums in electric cars.
“Diesel has been tarnished by the VW scandal and I think they (Bosch) are moving to polish up the diesel business because the company is a leader in diesel technology,” Bulle said in the interview.
“The image of diesel has possibly been irretrievably tarnished by the VW scandal and this technology is being further impaired by political developments that now switch away from diesel and towards electric technology which is perceived as cleaner. Hence, even new diesel technology that was proven to work might not revive it,” Bulle said.
“It’s now down to the regulators to set the tone. It is going to be difficult to get back to the old world of diesels, but maybe manufacturers hope that if customers keep hearing that diesel is now good, maybe they will believe it and come back. It really depends on the reaction of manufacturers but more on regulators and politicians,” Bulle said.
Bulle said forecasts for the future takeup of new technology are clouded because forecasts of electric, plug-in hybrids, diesels, gasoline and maybe even fuel cells vary so wildly.
“Manufacturers plans for huge investments in technology hang in the balance,” he said.
Will it work?
LMC Automotive analyst Al Bedwell described the Bosch device as a development of current engineering, rather than new technology.
“As is often the case with these studies, Bosch has so far applied the technology to one test vehicle, and although the hardware involved is commonly available, it was likely selected for maximum effect. It remains to be seen whether the same performance can be extracted from other applications. There are reports that at least one German (manufacturer) is starting to deploy this Bosch system on its latest diesel cars. When we have more information on the performance of those vehicles, it will be easier to judge whether this is indeed a significant step forward for diesel,” Bedwell said.
It might not matter if the Bosch system works, if public opinion has been turned against diesels.
“Bosch seems to have made a concrete breakthrough, but it is very unlikely in itself to be the saviour of diesel, not least from a technology point of view. Rather, public awareness of the cleanliness of new diesels and the cooperation of legislators is the key to saving diesel,” he said.
Bedwell said this technology could allow larger cars and SUVs to continue to use diesel engines for longer. But medium and particularly small cars will disregard diesel.
Sales of diesel-powered cars and SUVs in Europe sagged by nearly 8% in 2017 to a market share of 43.7%, the lowest in 8 years, as the threat of penal taxation, city driving bans and damaged second-hand values undermined buyers’ confidence, according to JATO Dynamics Ltd of Britain.
15% by 2025?
Diesel sales peaked at 55.5% in Europe in 2011, Automotive Industry Data said. Some experts have predicted this could slip to 15% by 2025.
Diesel sales have traditionally been much higher in Europe than in the U.S., because the around 30% advantage in fuel economy is very important with fuel taxes rising to as much as 70% in some countries. Since 2000, many European governments actively sought more diesel sales with lower tax at the pump and other incentives, because their fuel economy and therefore lower CO2 emissions was said to be less harmful to the climate. But recent studies have shown emissions from diesel cars can be deadly in city centres, so governments are trying to reverse this policy.
Bosch’s Flaig thinks the public perception of diesel could change, after a study at the so-called Neckartor area of Stuttgart, which has a bad record for diesel pollution.
“If the technology we presented was standard in diesel vehicles our research shows that the impact of diesel car Nox-emissions would be negligible and have nearly no impact on air quality in cities,” Flaig said.
We now await more details from Bosch and perhaps the support of manufacturers who might embrace the technology. More important though will be the view of politicians and regulators.