“Electric car, mirror with larks and hen with golden eggs”

For those who stick to a superficial reading of economic news, one would think that car manufacturers are on the brink of collapse: lack of components limiting production and supplies, taxes and regulations of all kinds, costly transition to electricity, deliveries at their lowest … In fact, it is quite the opposite! The car manufacturers’ profitability goes from record to record. This is a telling indicator of who benefits from this transition.

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The numbers are pretty incredible. In 2021, Stellantis thus managed to increase its revenue by 14% despite a 20% drop in sales. And the group has almost tripled its profit to 13.4 billion euros, which for the first time has a net operating margin of over 10%. In the first quarter, Stellantis’ revenue increased a further 12% with a decrease of 12%. Across the Rhine, the Volkswagen Group broke all profitability records with an operating profit of 73% in the first quarter despite stable revenue. It is clear that the increase in the average price of vehicles sold exceeded and more than compensated for the loss in volume. The ecological transition, far from weighing on producers’ profitability, is a huge blessing, especially as the constraints on components make it possible to play on supply for better direct demand.

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In particular, the various rules implemented by the EU have allowed for an increase in the average price of cars. Many manufacturers end up stopping their smaller models: finished Peugeot 108, Citroën C1, Renault Twingo in the long run, as the imposed rules make them more expensive and make them less interesting to consumers. It is the paradox of EU rules to push for an increase in vehicle weight, as energy conversion specialist Nicolas Meilhan has noted for years. Berlin has defended the interests of its manufacturers of large sedans and large SUVs well by giving a kind of bonus to the sellers of the heaviest cars … But the increase in the weight of the vehicle outweighs a large part of the overall reduction in emissions per. vehicle, as a vehicle of 1,500 kg necessarily requires more energy to get ahead than a vehicle of 1,200 kg.

False good idea

What’s worse, the transition to electricity also has the effect of excluding an increasing number of consumers from the new market who do not have the means to buy a new electric city car for over 20,000 euros or a new compact over 35,000 euros. Lower volumes slow down the transition. And this transition is causing Europe problems. The value chain for electric vehicles is actually very different from the value chain of thermal vehicles, and it is highly dependent on resources (metals) or know-how (batteries), where Europe is quite poorly placed. This transition is also an opportunity for Chinese producers to challenge Western dominance. Suffice it to say that by deciding to go faster than anyone else, the EU risks once again sacrificing its economic interests in the first industrial sector, making ecology a criminal offense for our economies.

Even worse, there is debate about the ecological relevance of this transition. We can first point to the even less ecological nature of the production of an electric car, which would require twice as much CO2 as thermobiles, by initially making an expensive investment. In addition, we want to make sure that all the negative environmental externalities are taken into account in the production of its components, right down to the metals, many of which are produced under less than glamorous conditions. And because some of the components come from the central kingdom, this means that the electrical energy used to produce them often comes from coal … To the top there is the question of the origin of the electrical energy used to drive these vehicles: in Germany a good deal comes from coal, again an environmentally friendly smoke veil.

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In short, the accelerated transition to the electric car could very well be a false good idea from managers who arbitrarily focus the greatest decarbonization effort on the individual car. Above all, industrialists see it as an opportunity to increase their profits without worrying about the not so glorious environmental results, as well as the great risks that this transition poses to our economies and the dependence that this risks establishing with a less naive China. …

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