Friday, 22 February 2008

Macro-Level Trends – City Vehicle Access Charging - Stuttgart vs London vs The World

Porsche AG & GB have, in the interests if their clients and business, decided to rebuke the Mayor of London’s insistence that many Porsche owners will have to pay a dramatically increased (now £25) Congestion Charge, as cars such as Cayenne and 911 emit what are now measured as relatively high levels of CO2 and pollutants. Porsche hopes that its protest will enable a debate that will ‘highlight the folly of the plan’, giving the Mayor’s office 2 weeks to respond before requesting a judicial review from the High Court.

Such a clash was always on the cards, from the earliest days of the inter/intra-urban scheme, as the initiative to differentiate the levels & types of offenders – and penalise accordingly – was to be rolled-out. It first started with a rise in Resident’s Parking Fees in West London for the ‘high-polluting’ 4x4 brigade, a newly introduced (as of Feb 4th) Low Emissions Zone across all of London, a clamp-down on HGVs and MCVs, aswell as the ongoing nationwide higher rated road fund license fees, now accompanied by the £25 shock revelation due for introduction in October ’08.

Reading between the lines, it appears that the Mayor expects that luxury car owners will be mostly resigned to paying the extended charge for their ‘privilege’, and such as scheme would prompt premium auto-makers to advance their efforts in providing low emissions variants using hybrid powertrains (that attract charge exemption) or alternative ‘clean’ traditional combustion and propulsion solutions. (The Lexus RX400h and LS600h already bypass the regulatory charge on the basis that they are notionally low-polluting hybrids – a notion that many ‘greens’ have protested against given the cubic capacity of the IC engines)

But of course many of London’s Porsche owners, like their 4x4 counterparts, simply see the initiative as Ken Livingstone’s over-taxing of the ‘easy prey’ wealthy, claiming that the tax revenues and real-world pollution reduction have done little to improve City life for both those using public transport and car drivers alike.

The truth is that what we presently witness are the extremes of proposal and proactive debate; London is indeed at the vanguard of implementing such congestion charging schemes that are presently being tested, deployed and planned elsewhere – from New York to Paris to Hong Kong and beyond. And as such it is treading the path of greatest resistance to see what is ‘wearable’ (in terms of taxation and prohibition) by car drivers, businesses, fleet operators and ultimately taxi providers.

But at its heart the Porsche vs Ken Livingstone furore is really reactionary polar opposite interests, standing firm to a great extent to be critically being seen to take a hard-line by associative stakeholders (inc. Porsche GB’s London clientel). If it reaches court, Porsche will describe the heavy R&D expenditure undertaken to provide Cayenne and the up-coming Pan-Am spin-off with hybrid units, it’s constant efforts to clean-up its IC engines and other technological advances such as ‘recaptured braking’ it shares with other German premium VMs and their technically advanced supplier-base.

We expect the planned £25 charge will be contested by other car-makers such as BMW, Mercedes, Audi, Jaguar, Land-Rover to name obvious marques, joining forces as a powerful voice via the SMMT and European trade associations, in an effort to contain Livingstone’s plan with a far reduced levy of perhaps £10-15, which still provides substantial additional revenue over and above the current £8 flat fee,

Automakers recognise that the London model is setting a possibly world-wide precedent, and must act to ensure that overly zealous punitive penalties are not imposed both in London and eventually elsewhere. Of course they may seek to find new sales possibilities which could of-set the impact and costs of their ‘guilty’ vehicles, so it may be a case of watching this space to see what propositions the likes of Porsche could offer, from tree-planting to charge-absorption.

Of course there is a small crop of car-makers who see this seismic shift in local government policy as an opportunity. As described in a previous post, Tesla perhaps the most obvious and poignant given its ambitions of an electric large luxury saloon codenamed White Star; that would seek to displace the likes of BMW’s 5 series and Mercedes’ E-Series, as the eco-friendly, tax-exemptive alternative; presently seeking $250m in funding and US government grants to produce the car.

‘Green Financing Funds’ have come to the fore in recent years, typified by solar and wind farms and technologies, but is it an arena that the Mayor maybe prepared to invest London’s municipal funds into, if they embrace new-technology vehicles? And wouldn’t the world renowned London Taxi Cab be a perfect showcase for such a venture….perhaps the Mayor through London Taxis International (Manganese Bronze & Geely) and possibly Tesla, should start considering the possibility of leading by example? As many critics, no doubt including Porsche, will point out, present day cabs although compliant are hardly leading the (hybrid/electric) charge.

The London Taxi is being touted by LTI-Geely as the possible transferable icon to all major global cities, and since they too are implementing or seriously considering urban charging, then the advanced London Cab could be a prosperous undertaking in a well planned, forward looking, Private-Public Finance Initiative.