Zapping Autonews Green Car concepts of the year 2022 in video
Bruno Camus is a Doctor of Management, Professor of Marketing at Kedge Business School. Author of several books published by Editions d’Organisation and academic articles, his research work is very focused on the automotive sector, with which he also works as a consultant.
For Autonews, he analyzes and decodes manufacturers’ strategies and sheds light on the complexity of their market and their environment.
The end of the debates?
At the end of this vote, electricity has therefore won the match with fossil fuels, at least in the European Community. This is not a surprise given the evolution of sales of electric vehicles, whose market share has increased from 1 to almost 10% in France in less than ten years (and the hybrid is at 25% – Source Observatoire Cetelem). The phenomenon is the same in Germany, but still a symbol of internal combustion engines with high displacement. The incentives to change cars to become electric are not weakened, the French government has just extended the benefit of the ecological bonus until the end of the year.
In fact, the gradual decline in CO2 emission tolerance thresholds imposed by the EU since the turn of the century has led manufacturers to focus their investments on sustainable solutions, even though some, such as Stellantis, have let us go back. The industrial shift is therefore initiated and seems irreversible due to the amounts invested and the advanced process of changing the production tool; and political pressure. The rise in fuel prices after the Ukrainian conflict only highlights the paradigm shift. Therefore, manufacturers like Volkswagen or Renault even announce that they will be ready in 2030, five years before the deadline. The electric, however, suffers from disadvantages: a selling price twice as high as a comparable thermal model (28,000 euros on average against 14,000 – Cetelem Op.cit), autonomy limited to urban use, all the more so as the network of charging stations is very inadequate, for not to mention the charging time that is considered to be too long. It will take 1 million terminals in France to be ready by 2035; there are currently only 60,000 (source PFA). There is also the issue of battery recycling. The challenge is therefore gigantic.
However, research and development continue with other energy options.
Thus, the hydrogen engine equipped with a fuel cell is not abandoned. There is an offer on the market and the (high) investments are currently being maintained at Toyota, Honda, Mercedes, BMW, Peugeot…, even though Hyundai has just announced the delay of its Nexo model. On the other hand, Ford is seriously considering this solution to replace the V.8.
Synthetic and organic fuels also remain on the agenda. They are potentially carbon neutral and still affordable, especially Bio-Ethanol, of which Ford is the champion. Manufacturers have not given up their development, especially in motorsport. However, their manufacturing process remains costly and faces criticism from environmentalists who fear risks to the environment and competition with the needs of the food industry.
Gas appears to be doomed because of its fossil origins and its technology that requires clutch with a gasoline engine.
Finally, petrol and diesel will continue because the ban on the sale of thermal vehicles will only apply to passenger cars and small utilities. Trucks, buses and used vehicles are exempt from the restriction. Like the manufacturers of new cars whose production will be less than 1000 units per year; those who make between 1,000 and 10,000 get an extra year of grace. A so-called “Ferrari” amendment was tabled in this regard by Italian MEPs eager to protect their luxury brands (Ferrari, Maserati, Lamborghini, etc.).
Ultimately, it is estimated that 50% of the car fleet will still run on fossil fuels by 2035.
The European Union is not the world
In the wake of COP26, held in Glasgow (Scotland) in 2021, around 30 countries had endorsed the principle of carbon neutrality by 2040, in particular through the restriction of the sale of thermal vehicles. Within the framework of its “climate package”, the European Union gave concrete form to this commitment by setting a deadline of 2050 with the famous 2035 communication. But with the exception of India, neither the United States nor China, nor Russia nor Brazil, for only to name the major countries, made no formal commitments at COP26. US President Joe Biden has certainly said he wants to reduce carbon emissions by 50% by 2030; and Chinese President Xi Jinping has implemented a policy of restricting registrations and circulation of vehicles in China, but it seems unrealistic to imagine these two huge countries radically converting to electricity.
The car remains a lever for the development of national economies, with developing countries striving to acquire an affordable and usable vehicle. This is what has happened in China in the last twenty years. From this point of view, the infrastructure dedicated to the electric motor, which is already poor in developed countries, is zero elsewhere. However, there are 1.5 billion vehicles in circulation in the world, compared to 300 million in Europe (including the UK) and 40 million in France (Source SP Global). In Africa or South America, rolling stock consists mainly of old, technically obsolete and polluting vehicles. No European directive can force them to change; and yet they cannot afford it. Therefore, both Western and Asian manufacturers producing and selling cars in these countries will continue with the heat engine. Even the Chinese, despite their dominant position in battery manufacturing, do not envision the end of thermal energy. On the contrary, their car industry, which is still limited to exports, could benefit from European producers reducing their supply. Fear expressed by Luc Chatel (BFM TV 09/06/22), President of the Automotive Platform, on which the CEOs of the two French car groups and equipment companies (Valéo, Michelin, etc.) sit.
In addition to the economic reservations expressed by the actors in the sector, there are the social insecurities associated with employment. The automotive industry (manufacturers and equipment manufacturers) weighs heavily in relation to the number of employees (10% of assets) to which distributors and repairers must be added. There are concerns about the social consequences of the transformation of industrial processes and about the ability of sales and maintenance networks and small workshops to adapt to such changes. Luc Chatel (op.cit) does not hesitate to talk about “industrial scuttling”. In Germany, as in Italy, the reactions are similar. Europe alone cannot change the rules of an industry that is more than a century old and so globalized. The car’s flagship country, the United States, are they ready for such a decision, at a time when American society is about to break down? What will be the future of Russia at the end of the Ukrainian conflict? What development for Africa? And what is the attitude of the Chinese? So many questions that are hard to answer today. One can also wonder whether the ecological impact will be relevant.
2035-2040: both very near and very far
There are therefore many uncertainties, while 2035 on an industrial scale is tomorrow!
Consensus on global warming is fairly broadly divided, but the proposed solutions are being discussed because they involve radical changes in lifestyle. It is not certain that the population is ready for it despite their sensitivity to ecological problems. Even sustainability experts do not all agree with each other; one can therefore not demand the unanimous and unconditional consent of public opinion. Mobility, especially outside urbanized areas, remains a major problem for most citizens. It embodies freedom and, in many countries, a factor in social progress.
Other issues remain unresolved beyond the relative impact of a decision that concerns only the European Union. Electrical energy requires rare resources, such as lithium, cobalt or nickel, whose extraction and transformation address fundamental issues such as national energy dependence, operating costs and the impact on the planet. . Even the price of electricity, provided it is always available, can rise due to world market prices and local tax decisions. In France, we remember the incentives to run on diesel from the 1960s. This fuel, which for a long time was taxed less than petrol, still dominated the French car fleet ten years ago. Since then, it has been reviled for its polluting effects and more expensive than gasoline … How can the population have confidence in the future?
The world is fragile, not just organic. The Covid pandemic has revealed the limits of globalization and is now calling on states, including France, to reconstruct a national industry. The Ukrainian crisis has highlighted the dependence of European countries on Russian oil and gas, to the point where a coal-fired power plant in France (St Avold) is reopening. Neither of these two major and brutal crises was predictable. They force political leaders to react and question certain principles and strategic orientations. It can still happen in 2035, and decision makers can change, not only men and women, but also the sociopolitical vision.
It is then not forbidden to think that the item for the heat engine is not closed.
On 8 June, the European Parliament voted to ban the sale of new thermal vehicles in 2035. This resolution appears to confirm the victory of the electric motor over all other alternatives. Are the games finished?