Analysis: the wind is blowing against electricity…

Beyond the media coverage-searching announcements, such as when Flanders wants to stop marketing combustion engine vehicles in 2029, all on its own, more and more voices are being heard: electricity is not THE one and only solution to ensure sustainable mobility! Electric vehicles are not as virtuous as some would have us believe… and they could very quickly be responsible for much greater and more lasting pollution than a fifteen year or older diesel-powered car.

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Carlos Tavares is Stellantis CEO and pleads for a return to common sense on the part of the European authorities. Otherwise, the automotive industry would face inextricable difficulties… and destroy it, allowing China to lay its hands on it for peanuts!

Manufacturers and suppliers blow their own trumpet

A recent Price Waterhouse Cooper report on behalf of CLEPA (the European Association of Automotive Suppliers) shows that the transition to electric power could soon become a social bloodbath. CLEPA  says that a combination of technologies is a much better way of reducing emissions than banning internal combustion engines altogether. According to the study, by 2040, no less than 500,000 jobs could be lost at carmakers, parts manufacturers and suppliers in the automotive industry. And these losses will not be offset by the creation of new jobs linked to the production and assembly of electrical components. There would only be around 226,000 new jobs created and, therefore… a net loss of 275,000 jobs! This scenario could become a reality if the European authorities decide that only « zero emission » vehicles can be sold after 2035, in order to reduce the level of emissions by 55% and thus keep the 2021 pollution level by 2030. Instead, the OEM association calls for a multi-technology approach to reduce emissions: hybridisation, green hydrogen and renewable fuels. Such an approach would still allow emissions to be reduced by up to 50%, while maintaining current employment levels. According to the PWC report, 1,700,000 people work for automotive suppliers in Europe, with an additional 1,200,000 jobs at carmakers.  This does not even include some 1,200,000 people working in the production of tyres, batteries, body parts and chemicals, as well as some 3,200,000 people employed in the maintenance and repair sectors. The study shows that the development of the electric vehicle industry will lead to a significant and rapid decrease in the number of jobs, especially from 2030 onwards. From the current almost 600,000 jobs in the OEM sector, this number is expected to fall to 513,000 in 2030 and shrink even further to just 153,000 in 2035. The biggest job losses would be in Germany (121,000), Italy (74,000), Spain (72,000) and Romania (56,000).

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There’s a sharp contrast between this car production line from the early 1950s, with a large and poorly qualified workforce…

Methodology

The study looks at the impact of different powertrain technologies on the added value that OEMs can provide, the effect on employment and, eventually, the effect on reaching targets aiming at reducing pollution. Most of the value added to an electric vehicle comes from its batteries: from the raw materials used in cell manufacture to the assembly of the battery itself and recycling it at the end of useful life. However, this industry is still in its infancy in Europe… and although several industrial complexes are in the pipeline, very few are currently operational. The study highlights the risks of an “electric only”  approach and « the dangers for the hundreds of thousands of workers who are working hard to provide technological solutions for sustainable mobility, » says Sigrid De Vries, Secretary General of CLEPA. She adds « the needs of society are too diverse to be satisfied with a single imposed solution. A regulation open to a range of technological solutions, such as hybridisation, green hydrogen and renewable fuels, will allow research to flourish and innovative solutions to be used, in order to maintain the current level of mobility in the decades to come”. The study boasts a « technological mix » that would still allow CO2 emissions to be reduced from the current level of 95 gr/km to 20 gr/km in 2040, while creating around 200,000 jobs per year. Switching to electric- only would mean no emissions at all by 2040 but… with the loss of 275,000 jobs, while « zero emissions by 2030 » would be even more radical with no less than 360,000 job losses.

Audi e-tron Production at the CO2-neutral plant of Audi Brussels
… And the production of electric cars, which could lead to a social bloodbath in Europe!

Stellantis, BMW, Volkswagen, Porsche, Hyundai-Kia… against politically-enforced electrics

Carlos Tavares has always been very clear regarding electric vehicles. For him, they are definitely not the right solution. Moreover, it is a political will that enforces it. It would be much better if it was a technology that imposed itself for cost reasons, ease of production, ease of use, etc. « With the European energy mix, an electric vehicle has to travel 70,000 kilometres before compensating for the CO2 footprint created by the manufacture of the battery. In the end, is it better to accept very efficient  hybrid cars fitted with internal combustion engines, so that the car remains affordable, or is it necessary to have 100% electric vehicles that the middle classes cannot afford (…)?” The cost of electric vehicles is a huge burden for manufacturers. He said that external pressure on carmakers to accelerate the transition to electric vehicles is a potential threat to jobs and vehicle quality. Manufacturers have to manage the higher production costs of these vehicles. Governments and investors want manufacturers to accelerate the transition to electric vehicles but the costs are « beyond the limits » of what the industry as a whole can bear. Mandated electrification represents additional costs of around 50% over the production costs of combustion engined vehicles. And, of course, it is impossible for manufacturers to pass on this increase to the final consumer because the middle classes will not be able to pay. Manufacturers could either raise their prices and reduce sales or accept lower margins. In both cases, cuts will have to be made somewhere… Carlos Tavares believes that this is an absolutely essential social debate. In the meantime, Stellantis has unveiled a new turbodiesel engine… BMW has just announced that it will continue to invest in the design and production of six and eight cylinder petrol and diesel engines. Volkswagen remains cautious about the schedule for stopping the marketing of vehicles with internal combustion engines. Herbert Diess pleads for a « staggered » introduction of electric models on the market. The brand goes even further, questioning the pure and simple abandonment of good old-school  engines. Even though Toyota just introduced a dozen new electric models, its boss, Akio Toyoda, remains cautious. He does not want to stop producing conventional engines, either. Another recent and disturbing fact is that Hyundai-Kia stopped investing in hydrogen technology! The reason for this is certainly that development costs are not yet sufficiently compensated by revenues and profits linked to these vehicles sales. Porsche is investing heavily in the development of synthetic fuels that would allow continued use of internal combustion engines while drastically reducing their emissions.

Porsche Mobil 1 Supercup, Test Monza 2021
Porsche, like Mazda and other manufacturers, believes in the future of e-fuels, synthetic fuels. They could make it possible to continue to run combustion engines while drastically reducing their pollution levels. In addition, they could easily be distributed through the current network of petrol stations, at prices that would remain accessible for middle classes.

Politicians are getting involved…

Laurent Wauquiez, president of the French Republicans, has taken up the cause: for him, imposing electric cars is absolutely crazy, no less! « It shows clearly what a non-rational and ideological ecological approach brings about. He joined Carlos Tavares in advocating an approach based on facts rather than ideological preconceptions. He also questioned the lack of a long-term recycling plan for electric batteries. Edgeways, he also pointed to the enormous cost of electric vehicles for middle classes… For example, there is an additional cost of about 40 to 50% between a car powered by an internal combustion engine and the same one equipped with an electric motor and batteries. « But that’s not the end of it as running an electric car means electricity is needed! Believing that electricity is green by virtue and nature is completely wrong. If, as in Germany and soon in our country, we continue to get rid of nuclear power stations, we will be producing electricity from coal-fired power ones. The result for the planet is catastrophic… To put it plainly, the electric car is far from being the perfect ecological vehicle that we are told it is. Ending research to improve internal combustion engines is undoubtedly a stupid idea. Laurent Wauquiez continued his analysis talking about jobs: « Europe doesn’t seem to care for employment in its strategies. All too often, a mixture of naivety and the ideology of poorly digested free competition wreak havoc. Who actually produces electric batteries? China. Which electric vehicles brand are at the forefront now? Tesla of course, the Asian brands just wait around the corner to get bigger and, of course , the French brands are far from being among the front runners. Even worse than that, the production of  combustion engine vehicles generates work for a whole chain of subcontractors with many French small and medium businesses involved. Electric vehicles are mainly based on the battery and the added value is no longer with us.

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Laurent Wauquiez, leader of the French Republicans, supports Carlos Tavares and, as part of the electoral campaign for the next presidential elections, is proclaiming loud and clear that electric cars are madness! Will he be followed and heard?

And he sums up his thinking: « 1) the government – and if we are honest almost all of Europe – is choosing to go all electric, even though the environmental balance sheet is far from positive; 2) in France,  if we were consistent with ourselves, we should be reviving the production of decarbonised electricity and supporting nuclear power. However,  we are closing Fessenheim and we have been floundering on this subject for a long time; 3) the middle classes are going to foot the bill; 4) we are going to finance all this with government-backed financial aids but, in the end, it is our taxes and our debts that will pay for that; 5) We are preparing massive job losses in the French industry and we are opening our doors wide to our international competitors. Industrialists tell us so, experts tell us so, reason tells us so too, but the government and Europe don’t want to hear… because, as is too often the case in politics for my taste, what predominates is communication and appearance. Here is a wonderful topic : stop massacring the middle classes, don’t waste public money, defend our companies and, above all, our jobs. Be ecological on rational and scientific grounds rather than for the bad reasons, like showing off. Politics can be so simple when based on common sense. At the same time, Italy, the Czech Republic and Romania are questioning the ban of combustion engines… True, in the Czech Republic and Romania, many jobs are at stake, such as at Skoda and Dacia. The Czech Prime Minister, Andrej Babis, did not beat about the bush, declaring that it was « fanatical ecologists » who had decided to ban combustion engines from 2035. The car industry represents more than a quarter of the national industrial production; besides Skoda, there are Toyota and Hyundai factories in the country.  In Italy, it is the Minister for Ecological Transition, Roberto Cingolani, who remains cautious and wants to put various safeguards in place. The whole ‘Motor Valley’ is in danger… Italy’s international image is Ferrari, Lamborghini, Maserati, Pagani… These vehicles don’t cover high annual mileages and the national authorities are banking on an exemption to safeguard the activity and know-how of these craftsmen.

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BMW said recently that the company carries on studying and developing six and eight cylinder petrol and diesel engines… Will the latter be only available on some more permissive markets than Europe ? The car industry is a major contributor to states budgets. Certainly the one that evolved most profoundly to reduce its environmental impact in recent years and… the one on which pressure is strongest. One might almost wonder if its disappearance is not desired and/or wanted!

And the scientists too!

Recently, a UCL professor, Francesco Contino,  compared electric vehicles to… the “photovoltaic bubble”, no less. According to him, energy production won’t be a problem but he advocates multiple solutions, including the use of synthetic fuels. Will his ideas find an echo in the Belgian political world? Nothing is less certain, unfortunately… The University of Kyoto, in Japan, conducted a study which shows that internal combustion powered vehicles pollute less than electric ones… In Switzerland,  hybrid vehicles are being questioned for their official consumption values and what the fuel they use day in day out…

Why so many people don’t see the switch to electric power as ideal?

1° First of all, there is the current shortage of electronic components. Not so long ago, several specialists were saying things wouldn’t get back to normal before the third quarter of 2021. Now, it seems more reasonable to expect problems to remain for at least the rest of this year! New car deliveries waiting times are well over six months and, in some cases, closer to twelve months. Manufacturers are postponing the launch of several new models or reorganising production based on  models and versions that bring in the most money. As electric cars require even more electronic components than a combustion engine one, delays will inevitably get longer… and postpone the switch to electric mobility. Not to mention the almost total dependence on China and the awareness of the ecological and human impacts of rare raw materials exploitation! Dangerous working conditions, super low wages, health hazards, environmental damages or  children exploitation all concur to disqualify electric cars. Strangely enough, there seems to be a broad consensus on these aspects, in order to avoid highlighting these disturbing facts.

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In Congo, children are exploited for cobalt mining… which is under China’s control, like the whole battery supply chain, from raw materials to complete car batteries.

2° The geographical disparities are enormous and, quite clearly, the demand is not there. Even if  various European countries governments ‘push’ electric cars with subsidies and other supporting measures, even if certain manufacturers conduct opinion polls that would seem to indicate the opposite, as if they themselves needed convincing… In the vast majority of cases, buyers do not want an electric car and feel forced into it, more than anything else.  The six countries with the highest GDP in Europe (Germany, UK, France, Netherlands, Italy and Spain) account for more than two thirds of the continent’s demand for electric vehicles. This gives the image of a two-speed world… not only in opposition to the idea of a united and caring Europe but it also creates the risk of creating a number of additional difficulties for manufacturers. Let’s think in terms of strategic planning and choice of products to be launched on the various markets. Converting all new vehicles to electric drive would de facto mean giving up on supplying entire markets. Manufacturers also realise that it is not enough to stop the production of internal combustion engines from 2030 or 2035 onwards to artificially create a demand for electric vehicles, « forcing » consumers to buy electric cars. Indeed, as long as the prices of these cars are high and remain inaccessible to a majority of buyers, their market share will remain tiny. Moreover, the inexorable rise of raw materials, energy products and lithium prices is definitely not helping things.  The risk is simple to understand : the middle classes would no longer be able to buy combustion engined vehicles, wouldn’t buy new vehicles and would hang on to older cars for as long as possible. To some extent, that’s already happening at the moment, with a drastic fall of new car sales and a surge on second-hand market demand and prices. Switching production to electric- only is is a huge gamble and risk for carmakers :  sales are likely to fall by more than 50%.  Let’s also be clear, all governments need the money from excise duties and other taxes on petrol and diesel… electric vehicles will have to be taxed in order to maintain the financial balance.

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Lithium is also mined… with incalculable environmental impacts. Demand will explode in the next few years and could cause the destruction of many natural environments and irreplaceable ecosystems.

What next?

Is a strategic overhaul of the transition to the electric age possible? Is a complete and total turnaround possible? We are still a long way from that… for the time being, many still see ‘electric mobility’ as the  best solution for the future. On the other hand, the rose-tinted glasses vision of the electric car, presented as the one and only solution to reduce CO2 emissions and therefore global warming, is changing. This approach was born due to the objective convergence of the most radical environmentalist demands and the interests of certain car companies – first and foremost Volkswagen, after Dieselgate – which have bet all the family silver on the electric shift, risking their survival if the hoped-for conversion of the market does not materialise. All manufacturers are now forced to go electric… needless to say, very few (if any!) are ready for a total transition to zero emissions by 2025! Most of them are worried about the consequences at different levels: balance sheets and profit, sales, employment levels… Most companies could well be at risk and their survival put at risk if the transition to all-electric would be too quick for them to adapt. In other words, there is a good deal of hypocrisy in continuing to believe that some objectives can be achieved within the deadlines decided purely on political reasons by the authorities. And it is not the guilt-inducing, punitive, stigmatising and plainly tax-based ecology that will improve the image of electric cars among the population. Banning older still perfectly working cars here and sending them elsewhere is a real nonsense. That is stupidity and  wretched hypocrisy…  At the same time, green activists and parties fight against programmed obsolescence and back circular economy.

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Toyota was the pioneer of hybrid vehicles and took some time to switch to electricity power… the brand just unveiled a dozen new electrically-powered models, in order to maintain its dominant position on the world markets. Nevertheless, Akio Toyoda, the company’s boss, remains cautious and does not put all his eggs in the same basket. Unlike Renault-Nissan, for example, the group’s brands, (Toyota and Lexus), still keep internal combustion engines under wraps, just in case…

Why excluding cars from it? Not to mention jobs losses and difficulties which poorer families have to face. Unless there is a hidden agenda and a real desire to get us back to carts and horse-driven contraptions. Let’s not forget that animals pollute as well… It is commendable that the car industry as a whole, should be heard by the European Commission.  More balanced solutions should be adopted. Forcing electric cars on the buyers also runs the risk of slowing down the development of electric cars. It would be better to include them in a package that does not exclude other technologies (internal combustion engines, synthetic and biological fuels, hydrogen, etc.) in order to achieve the objectives set for reducing CO2 emissions. Common sense would suggest that ICE propulsion – including diesel – should be maintained and extended beyond 2035, at least for certain uses. Are we to conclude that even the Commission has understood this,  opening a consultation on the future of mobility?  Between now and then, we can expect major changes and technological developments in batteries: reduction in weight and size, a better autonomy or new, less polluting materials for their manufacture, a  production relocation to Europe in « gigafactories », etc., as well as in smart grids and electricity production.  We can also expect cars to be lighter, more aerodynamic and, above all, more affordable!  Even if SUVs naturally lend themselves more easily to electrification, they remain a nonsense in relation to the needs of the majority of users who are confined to urban areas. However,  banning them or taxing them heavily is yet another nonsense and a blatant piece of political demagogy.

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Hyundai-Kia decided to reduce its hydrogen business: high development costs, poor sales- linked to the lack of production and recharging infrastructures saw to that. Both companies hope better battery range should make electric cars more credible. Therefore, the Korean giant decided to refocus its activities. Waiting for better days, perhaps ?

The thorny issue of energy production…

Electricity supply remains a major problem: in Europe, it is still largely based on fossil fuels. Wind and photovoltaics are not reliable and predictable sources, unlike coal, gas and nuclear power. Ensuring sufficient production to ensure the transition to fully electric mobility would require massive investments and… time! If Belgium’s cars were to be electrified by tomorrow, no less than 4 to 5 additional nuclear power stations would be needed to supply them safely with sustainable power. Needless to say, this is simply unthinkable and the political dithering on nuclear power only adds confusion and vagueness to the problem. In Germany, coal-fired power stations still account for about a quarter of energy production. A little further afield, in Poland, they account for almost 90% of the country’s electricity. Producing one kWh in Poland represents 1kg of CO2, whereas in France, where the majority of electricity is produced by nuclear power, the same kWh is responsible for just 7 grams of CO2! Banning nuclear power plants for dogmatic reasons is one thing, ensuring a country’s energy supply and affordable prices is obviously another… And we won’t even discuss the fact that covering a whole country with enough charging stations will cost a fortune or talk about the difficulties of installing them in cities, in flat buildings or even… the recent ban on electric vehicles in some car parks because of the  fire hazards. In conclusion, at all levels, the « all-electric » strategy is a cause for concern and needs to be reviewed to become viable in the long term, beyond mere political dogmatism.

Mercedes-Benz VISION EQXX

Mercedes-Benz VISION EQXX

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