Is the EU *Sabotaging* It’s Own EV Policy? 2035 ICE Ban
Two things have happened in the EV industry. The first is the pressure on the EU to roll back their deadline of full EV cars sales. The second was the imposition of tariffs on cheap EV cars from China. What do these two things tell us about the priorities of the EU when it comes to making all cars electric?
Looking at the first.
The pressure on the EU to push back it’s date for all new cars to be EVs. What will they do?
The pressure on the EU is coming from one main direction.
Car manufacturers in general. Sales of new cars are not growing and the average age of the vehicle fleet is increasing. Both things are bad news for car manufacturers. There are a number of reasons for falling sales but I think the main two, are the price of new cars and the second is new cars being less appealing than they have been in the past, they have features that people actually want to avoid.
The increasing price of new cars is due to many things. The increasing tech that is demanded on new cars is increasing their price, things like lane assist, brake assist, pedestrian safety devices and so on. Another cause is some manufacturers gearing up for lower sales volumes by increasing prices to maintain their revenue. And yet another reason that may not be relevant now but will be as 2035 approaches, is the penalties the EU will inflict on car companies that sell more than their quota of petrol powered cars, these penalties on companies are paid for by consumers in the form of higher pricing.
There are a number of knock on effects caused by increasing new car prices and new cars being potentially less desirable than cars already in existence.
Ultimately, both things will lead to the price of used cars rising, or at least not falling as fast as before. And as I’ve covered in this article, when you make used cars more valuable, the longer they will be kept on the road.
In short, the more the EU squeezes internal combustion engine cars the harder the market will push back. And in this situation, no one is a winner. Car manufacturers are their employees are losers, the environment is a loser because the car fleet is getting older than it would have been without any intervention and people are a loser because they are using older cars.
The Outliers
There are car manufacturers and other companies who are pushing against the trend. This article highlights Volvo, Uber and Ayvens as companies who are against the deadline moving back. Volvo is heavily into electric vehicles, plus they are part of a larger auto group, they can afford to have this position, even if it’s just a hedge for the parent company. Uber obviously gains by cars being more expensive as it might mean less car ownership which is more business for them. And Ayvens is a car leasing company, the benefits to them of a massive demand for cars to be changed to EVs is obvious. In short, the three highlighted companies who are pushing for the date not be moved are doing so not for the environment, but for business reasons that will give them an edge.
In Short
There are millions of manufacturing jobs at risk in Europe if new car sales drop. And increasing the value of the internal combustion engine (ICE) vehicle fleet will mean people driving older cars for longer. Both things make meeting CO2 emission targets harder. More unemployment means lower wages which means people less able to afford new (EV) cars and older more valuable cars have a longer, economical service life.
Unless there are some massive improvements in the cost of EVs and in their range and/or if the EU cares about EU jobs, I see only one way this is going, a pushing out of the date.
The Second Point
The EU placing tariffs on EV import from China. There is only one conclusion we can draw from this and that is the European car manufacturing industry is more important than people adopting EVs. A country willingly flooding another country with cheap cars that they are funding sounds like a great deal for the country (economic area) receiving the discounted vehicles. But apparently not. The EU is against Europeans having access to discounted EVs. Ergo, the tariffs, ergo European car manufacturing is more important than EV targets.
The logic of the tariffs, I presume, is to stop Chinese companies getting a foothold in Europe, putting European car makers out of business and then jacking up their prices in the future. It’s a tried and tested strategy used by Japan in the 60s and 70s and the Koreans in the 80s and 90s.
Whatever the logic, car manufacturing (jobs) comes first. It must.
Answering the Question
Answering the question in the title of this article, does the EU care about CO2 emissions and EVs? Yes, as long as it does not damage car manufacturing in the EU (jobs).
Can They Accelerate Uptake In The Long Term?
I think yes, but the setting of deadlines, which aim to force people into cars they don’t want, will backfire. It will make the process take longer, or perhaps even reverse the rate of transition.
People will only transition to EVs if they are better than their current vehicle ie more comfortable, similar range, cost less to run. Logically, technology will take us there naturally.
Investment in research is what will get us to the tech we need to move to EVs. We need to create stability and confidence for companies to invest the most money possible. Government deadlines undermine stability and confidence, which lessens investment which slows technological progress.
Stability is the key and stability means confidence in the free market to give people the cheapest (least amount of resources to build) and most efficient forms of transport (lowest emission possible), the current tech will allow. Uncertainty will only slow this natural process.
