Electric cars: do we need European benefits?

► Twenty-seven are unlikely to agree

Eric Hope, automotive specialist, partner at Roland Berger.

On paper, the idea of ​​using European benefits to subsidize electric vehicles is quite attractive. The United States has just adopted a similar device, and Beijing has long banned the sale of electric vehicles in its domestic market without domestically produced batteries.

In this context, it is legitimate for Europeans to try to protect their industry. Especially since all market forecasts confirm this: electric cars are on average 20% cheaper than their European counterparts, Chinese manufacturers risk capturing 15-18% of the European market by 2030.

In detail, the question is knowing whom and how we protect. The American system, which was announced this summer as part of Joe Biden’s major recovery plan, is quite interesting because it is not intended to protect national manufacturers, but to encourage manufacturers, regardless of nationality, to locate their production in the United States.-United.

To qualify for the $7,500 (€7,673) tax credit, vehicles must be sold for less than $55,000 (€56,266), the vehicle must be assembled and manufactured, and the battery must be on North American soil (United States, Canada, Mexico) but above. all material used by these batteries must also come from the North American continent.

If this last criterion is not met and 40% of the material comes from a country that has a trade agreement with the US that effectively excludes China, then the credit is available. The tax is reduced by 40%. These criteria may seem too restrictive, and they are only eligible for the bonus on certain Tesla and General Motors models. But ultimately, the idea is to move the entire production chain to the United States.

It remains to be seen whether the European Union can equip itself with such a mechanism. There may be some doubts about this. Especially because it would not necessarily be compatible with the free trade agreements of the World Trade Organization (WTO). While the United States is not very careful about these issues, the Commission is.

But above all, because twenty-sevens who do not have the same interests at work may find it difficult to come to an agreement. For example, the French and Germans will want to protect their manufacturers, but Germany is still very afraid of retaliation by its Chinese partner.

As for Eastern European countries such as Poland, Hungary or Slovakia, they have invested heavily in expensive battery plants in recent years and are not interested in buying raw materials in Europe rather than in Asia for obvious reasons of profitability. But it is obvious that France cannot act alone without the consent of Brussels.

► We should think about ecological criteria

Lucien MatthewDirector of Transport and Environment of the French NGO

Europe needs to move towards the electric car for both climate, industry and public health. For this, it is important to think about the application of environmental criteria related to the production of motor vehicles, as well as the rules related to “local content”, that is, the rules on what benefits cars produced in Europe can get.

Battery production in coal-intensive China emits an average of 6.3 tons of carbon dioxide (CO2). If we take the average emissions of the electricity mix of European countries, a battery produced in Europe can fall below 4 tons. This difference may seem small, but if we multiply it by the number of cars produced, it becomes significant.

Some of the CO2 emissions from batteries remain due to the extraction of materials and are more difficult to suppress unless more environmentally friendly production methods are adopted. If the best standards are applied, this figure of 4 tons may drop even lower. In particular, the electricity mix of the European Union should be less carbon intensive.

The interest of European production is not only based on the issue of CO2 emissions. It will also allow better control over the value chain, ensuring that electric vehicle batteries are produced under the best environmental and human rights conditions.

In the context of the protectionist policies of the US and China, you also need to be pragmatic from an industry perspective. We should not be dependent on other countries for the implementation of our transition period.

The policies that states can apply also allow to direct the offers of producers in Europe. proposal for the system “social leasing” €100 per month (lease) for entry-level models by the French government is a very good signal to encourage the production of smaller vehicles – therefore less polluting during construction – and towards a high-end move for affordable cars in a context where manufacturers are more used move on

European dominance can take many forms. In particular, discussions are being finalized for the implementation of new European regulations on batteries. These will make recycling mandatory, impose a duty of vigilance on the value chain and also enable the calculation of the carbon content of batteries. This is an additional step to opting for the most environmentally friendly battery cars.

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