Europeans face crisis with EV
Authorised to speak on behalf of his colleagues and competitors, PSA Group CEO, Carlos Tavares told reporters the industry should no longer be criticized for inaction now that consumers will be able to find a zero-emission model in showrooms that suits their needs.
The diminutive Opel Corsa-e and the sleek Porsche Taycan celebrated their public debut at the show, while Volkswagen added the cherry on top with its vaunted ID3, the first in a family of affordable, mass-market EVs that are designed to be sold in the millions.
But auto manufacturers used the show to make clear that product availability is only one factor, and customers must now complete the environmental equation by switching to the new technology.
“Having electric vehicles in the dealerships is not going to be enough,” Tavares warned, calling on a coordinated society wide approach that includes a major ramp-up of charging infrastructure and meaningful financial incentives.
“Freedom of mobility is something fundamental to our democracy,” he said. Thus far, the industry has had trouble moving the needle of change.
High sticker prices, limited battery range and a sketchy charging infrastructure have conspired to hold down EV demand. Sales volume barely registered a blip in the first half of this year, with battery-electric vehicles accounting for just 1.5 percent of the European Union’s car market. Plug-in hybrid electric vehicles achieved roughly half that.
Social critics chide the transportation sector for not making any meaningful progress over the past two decades to reduce its absolute CO2 footprint. The shift in demand from more carbon-friendly diesels to gasoline cars in 2017, along with a rising market share of SUVs, reversed a decade-long trend of falling new-car CO2 emissions. Last year, industrywide emissions actually rose by 2 grams, to 120.4 g/km.
In response, the EU Parliament mandated in April a drastic 37.5 percent decrease in new-car emissions by 2030. That means the industry must now slash its emissions level to roughly 60 grams per kilometer on average — a dramatic reduction — or face steep noncompliance fines.
Had the industry remained stuck at its 2018 levels through 2021, it would be liable for fines of nearly $40 billion, all combined. Opel CEO Michael Lohscheller implied this was a reason behind General Motors’ August 2017 sale of the Opel business to France’s PSA Group, when he admitted three months later that his company was on track to miss its target with “potentially dramatic consequences.”
But now April’s EU legislation poses an entirely new dilemma.
Volkswagen Group CEO Herbert Diess warned that his entry VW model, the 141-inch-long Up city car, has reached the point where it can no longer economically remain CO2-compliant by 2025.
The only solution, the Austrian executive emphasized here last week, is to launch BEV and PHEV models. Diess even asked for understanding from the leader of an environmental advocacy group who was protesting at the show that VW continues to live from its conventional car business.
“We plan to electrify 50 percent of our fleet in the next 10 years, and that is a huge challenge, so it is unfair to say it’s just a fig leaf,” said the Volkswagen boss, when she accused the carmaker of “absolute greenwashing.”
In fact, the ambitious new EU fleet targets mean Diess must now factor in a vehicle’s CO2 impact when calculating the profit potential of a new model. A high-margin vehicle that is a significant CO2 emitter will end up being substantially less lucrative as a result.
A study published last week by European automaker association ACEA suggested a very strong correlation between economic prosperity and uptake rates for battery-powered cars. Norway, a non-EU state and the EV poster child with its 45 per cent EV market share, boasts a per capita GDP that is twice as high as the bloc’s average, for example.
But to get where Europe wants to be, with mass acceptance of EVs, sizable infrastructure investment will still be necessary, automakers point out. The companies estimate they will need 2.8 million charging points at least by 2030.
At the moment, there are not even 145,000 available across the EU. And three-quarters of them are located in just four of the 28 EU countries — Germany, the UK, France and the Netherlands.
Almost all member states with fewer than one charging point per 100 kilometers of roads have a share of BEVs and PHEVs of less than 1 percent, they say.
Public incentives also will be needed.
Mercedes-Benz sales Chief Britta Seeger has argued in favour of imposing fees on emission-intensive vehicles, such as luxury sedans and SUVs, to raise revenue to help finance the purchase of EVs.
She believes a policy of taxing one segment of products to foster support for another segment would “help get people enthusiastic about making a switch.”
The heat continues to be turned up on the European industry.
The EU is now preparing legislation that will commit the bloc to a goal of carbon neutrality by 2050. Incoming EU Commission President Ursula von der Leyen has made a “European Green Deal” a cornerstone of her agenda, including its plan for a carbon tax on imports.
“There is no alternative,” said Hans Michel Piech, a nonexecutive director on the Volkswagen Group board and large shareholder, referring to the industry’s electrification. “Neither for us nor for our competitors.”