Automotive: Demand for 100% electric in 2035 worries manufacturers

Posted November 10, 2022, 7:35 am

Heat engines, stop or even? Ten days ago, the transition to 100% electric for new cars in 2035 seemed a stone’s throw away. Emmanuel Macron said on the eve of the car exhibition: “We are pursuing this goal.” On October 28, representatives of the European Commission, the European Parliament and the Council of Europe approved this term after a year of preparatory discussions.

However, it did not take more than a week for two first-rate officials to implicitly question the decision, which had until then been presented as irreversible. On November 3, the European commissioner for the internal market, Thierry Breton, declared that he insisted on including a “control clause” in the text.

“Without Taboo”

“The questions are numerous and we may have to adapt measures in 2026 or before 2026 to support the trajectory towards 2035,” he told “Les Echos”, before adding that this meeting should be approached “without taboos”. Three days later, the transport minister, Clément Beaune, supported this position, “to see if there are other technologies that can accompany electrics”, but also “not to kill our European industry”.

The European agreement includes a review clause for 2026. But this only applies to CO-neutral synthetic fuels.2to see if the technological progress made by then would allow them to allow it in 2035. Thierry Breton and Clément Beaune read it wider to adapt the road to 100% electric according to the challenge.

“They’re waking up now”

For Alexander Marian of AlixPartners, the approach is relevant. “The goal of decarbonization is legitimate, but if implemented too quickly, it could cause strong upheavals in the industry,” the consultant notes. Car prices should also remain affordable for the middle class. It makes sense to make it a point to progress rather than rushing at all costs. »

So this concern for pragmatism should work for companies. Above all, it has caused angry reactions to this day. “We haven’t heard from them for a year and now they are waking up! the manager yells at the equipment supplier.

The Automotive Platform, which brings together the sector’s manufacturers, spent a year campaigning for the ban on combustion engines to take place in 2040, not 2035. He did not win and some members feel that the government did not protect him. This solution is in Brussels.

French companies that do well against failure have therefore been preparing to go 100% electric for months. Renault and Stellantis have even announced that they will do so for most of their brands from 2030, as have most of their competitors. For manufacturers, it was about reducing the amount of time the two types of engines coexisted in factories, which added costs, but also about the absence of trailer Tesla and its stratospheric stock price.

Profit calculations are broken

In the automotive industry, industrial cycles are very difficult: it takes 5-7 years between the launch of a model and its release on the market, recalls José Bagdad, PwC’s partner in charge of the Automotive sector. Therefore, manufacturers have already invested heavily to convert factories or join the construction of gigafactories of batteries. To consider a trajectory correction in 2026 would be to upset all profitability calculations made so far.

Procrastination is no longer appropriate for Luca de Meo: “You have to make a decision at some point, the head of Renault reacted on BFMTV on Thursday. The train left. […] Be careful with stop and go […] It is dangerous not to believe them after making a decision.”

The Prophecy of Carlos Tavares

Carlos Tavares, his alter ego at Stellantis, said nothing else in “Le Parisien” in early October. “Our fear is that we pull the handle like crazy – what we are doing now – and they tell us: ‘Finally, no…'” the Portuguese leader finally moved forward with a prophetic statement.

The head of the sector confirms: “Changing the schedule means running two generations of platforms in parallel, and we cannot do this without incurring huge additional costs. Which will be reflected in the price paid by the customer.

According to Jose Bagdad, manufacturers will still find solutions. “They are more and more accustomed to managing uncertainties,” the consultant emphasizes. They would like to avoid it because they have been warned of difficulties. But they will adapt because they have no choice. »

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