Electrification advanced by politicians, not industry

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Although Stellantis officially announced that it would invest 30 billion euros (34 billion USD) in its new electrification strategy, CEO Carlos Tavares gave the impression that the automaker’s plan was drawn up under duress. He told European media that the widespread adoption of electric vehicles is mainly driven by politicians who ignore environmental risks and logistical gaps.

“What is clear is that electrification is a technology chosen by politicians, not industry,” he told reporters this week.

He also pointed out that the proposed bans on internal combustion engine vehicles fundamentally transform the industry’s existing facilities and supply chains. Europe has suggested banning the sale of new internal combustion vehicles by 2035. Canada has a similar strategy, creating a “mandatory target” that would require all new light-duty vehicles sold in the country to be zero-emissions. by 2035.

As the policy is often fluid, the above is not really a guarantee. But the organized push to mandate emission-free driving (at least in terms of what comes out of the vehicle itself) is undoubtedly growing, and automakers are complying with it ahead of time. Tavares said Les Echos, Handelsblatt, Corriere della Sera, and El Mundo this was exacerbating supply chain issues by creating an industry-wide upheaval. In the longer term, he feared it would lead to the sudden collapse of auto jobs and product lines that don’t match consumer needs or market realities.

Then there is the question of how green the green movement really is. We’ve already talked about the negatives of battery production – everything from child labor issues to the fight over raw materials and the risks associated with volatile waste disposal. But it’s quite rare to hear it from an automotive executive who has just promised to spend several billion dollars to develop electric vehicles.

“Given the current European energy mix, an electric car needs to travel 70,000 kilometers (43,496 miles) to offset the carbon footprint of battery manufacturing alone and start catching up to a mild hybrid vehicle, which costs half as much. than a VE.” Tavares told reporters.

Automotive News Tavares also reported as pointing out the finances of the situation. If electric vehicles remain well above their internal combustion counterparts, they will never achieve mass appeal. He also noted that it is the same situation for manufacturers investing heavily in electrification and competing for natural resources, linking this to earlier promises he made not to close factories located in Europe. Although the money problem is not entirely related to electric vehicles, the region has some of the highest labor costs.

From A:

“I usually keep the promises I make, but we also have to stay competitive,” he said, citing in particular production costs in Italy which were “significantly higher, sometimes double those of factories in other European countries”, mainly. due to “exorbitant” energy prices.

Pointing to Rome, where the government is working to bring down industrial costs, he said: “It takes some time for the measures to be implemented. We will talk about it again at the end of 2022.”

While I’m inclined to agree with Tavares that EVs are being piled down our collective throats faster than it seems prudent, there are a lot of elements at play here. When the PSA Group partnered with Fiat Chrysler Automobiles (FCA) to form Stellantis, the latter company really hadn’t shown much interest in electrification. Handelsblatt also noted (in German) that FCA was only able to comply with European CO2 emission requirements because it had purchased carbon credits from Tesla for several billion euros. These are due to expire this year, forcing the company to comply with the region’s strict regulations or pay the hefty EU fines.

Tesla also exists as a partial exception to Tavares’ assertion that the industry is being forced into electrification. While government incentives and regulatory fines absolutely benefit the brand, it emerged organically to see if all-electric vehicles could be sold in the United States. But even Tesla CEO Elon Musk has begun to worry that continued government involvement risks fostering patronage and stifling innovation. He believes the technology is mature enough to let the existing US tax credit system (which his company can no longer take advantage of) continue to play out and opposes the Biden administration’s pre-proposal to expand them into the framework of the now blocked Build Back Better Act.

There are also concerns about the leverage that swapping to electric vehicles would give China. The nation is currently the undisputed world king in producing the components needed for lithium-ion batteries. In 2019, China was responsible for more than 60% of the world’s cathode materials going into electric cars, 83% of anodes, and had a 73% market share of all cell manufacturing. Considering how localized semiconductor chip production in Asia has worked poorly for Western automakers, it’s not unthinkable that a similar situation could occur with batteries.

However, none of this precludes electrification. The above issues are less about the fact that EVs are bad than about the clumsy nature to which they are advanced. Tavares is largely correct that government involvement fundamentally changes the industry with little regard for what could go wrong. But it also seems that part of his gripes are based on the fact that Stellantis is not as well positioned as some of its rivals.

That said, Tavares was the man responsible for the careful introduction of the Nissan Leaf to the Americas – before the segment had much competition.

“We are ready to make a profitable business once it reaches a certain level,” he said in 2009. “We don’t expect to start making profits immediately, but we certainly see analysis of profitability. We are abandoning internal combustion completely and we cannot expect electric vehicles to have the same profitability as petrol cars after 100 years of development.

Considering it took Tesla (the most successful electric vehicle maker in history) until 2021 to get its finances in the black without relying on its sale of emissions credits to other automakers automobiles, the guy might be onto something.

[Image: Frederic Legrand COMEO/Shutterstock]

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