The EU’s 2035 Target IS The Certainty That The Industry Needs
8 hours ago
Transport & Environment (T&E) 1 Comment
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Some car execs suggest a return to the combustion engine will restore Europe’s competitiveness. They couldn’t be more wrong.
By William Todts, Executive Director
Henry Ford apparently once said, “if I had asked people what they wanted, they would have said faster horses.” A hundred years on his successor, Ford CEO Jim Farley, says Europe is risking the future of its auto industry. He puts the blame on unrealistic green regulations and uncertainty. He, like other car CEOs, suggest a return to the combustion engine will restore Europe’s competitiveness.
He could not be more wrong.
The internal combustion engine is dying. Combustion engine sales have fallen by 4 million units per year since 2019. They will never recover, not in Europe, not globally. Meanwhile battery electric car sales have surged by 600% in the EU. Sales of vehicles with a plug are approaching 30% market share in Europe. Not quite the levels seen in China – where more than half of new cars now have a plug – but remarkable growth nonetheless.
EVs were always cheaper to run than combustion cars. Thanks to cheaper and better batteries, we are now approaching purchase price parity, making electric cars an affordable solution for a growing number of Europeans. Technology is still improving, meaning that EVs will continue to get better and cheaper.
The real race is not between the US and Europe. It is between western automakers and Chinese ones. If western car brands want to have any chance of competing in China and emerging markets that are going electric fast, they need a strong home market.
Without regulation there will be no transformation of the legacy auto industry. Instead, scrapping the EU’s car CO2 rules would lead to lower investment and rentseeking. Yes, that might boost short-term profits but it also ensures oblivion in the longer run.
Europe following the path of Trump’s America and gutting the very regulations that underpin the electric vehicle transition would be a fatal error.
Instead, the bloc should double down on its EV ambitions and help create the conditions for the transformation of one of its most important industries to succeed.
Faster electrification of the company car segment is a key part of this. It would not lead to lower car sales, as car lobbyists portray. Instead it would help create a market for the world class EVs that French and German carmakers are rolling out. Belgium is a case in point. It has gone from EV laggard to leader in no time only by switching its company car policy.
Carmakers like BMW are asking the EU to pursue a multi-powertrain and multifuel strategy. This may sound good politically but it makes no sense industrially speaking. Plug-in hybrids are the symbol of how expensive and ultimately futile this approach would be.
Indeed, with their expensive powertrain and battery, PHEVs combine the worst of both worlds, industrially speaking. To add insult to injury, EU data shows plug-in hybrid cars emit almost as much as pure combustion engine cars.
What about biofuels? Wastes like used cooking oil and animal fats don’t grow from the ground and the crop biofuels that do, such as corn, soy and palm oil, require vast amounts of land. These are absurdly complicated and unreliable solutions, especially when you consider an affordable and scalable alternative is available in electric.
Mr Farley bemoans the lack of certainty. The EU’s 2035 target is the certainty that the industry needs. The EU needs to show leadership and stand firm on the plan in the face of industry pressure. Slowing down the shift to electric is the biggest risk facing Europe’s auto industry. Will the EU choose horses?
Article from T&E.
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