Wednesday , November 25 2020

It’s hard to believe what we see: new nails are falling into the coffin of traditional car production

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A study from Transport and the Environment (T&E) was published in early October, showing that despite the coronavirus epidemic, sales of electric cars will increase significantly this year, mainly due to stricter emissions regulations.

The market share of electric cars could reach 10 percent in 2020 and 15 percent in 2021.

It is worth recalling that, according to a regulation previously adopted by the European Commission and the Council, car manufacturers will have to reduce their CO2 emissions in the fleet to an average of 95 grams per kilometer by the end of 2020, and manufacturers who fail to do so could face significant penalties.

So it was encouraging news that T&E, based on sales data in the first half of this year, came to the conclusion that carmakers have adapted well to the challenge and will be able to meet the requirements, provided manufacturers either sell their fully electric cars at the level rolling stock.

However, the study also highlighted that there is a danger that momentum will expire after 2021 due to longer-term, more permissible regulation in the European Union for now.

This is because carmakers can achieve fleet-level targets by selling more plug-in hybrid models, so they are not forced to significantly increase sales of purely electric models.

This, in turn, could jeopardize the further spread of electromobility in Europe.

It was a rain of important announcements – We just shook our heads

However, based on the news of recent days, it seems that T&E started ringing too soon,

Europe’s largest carmakers, the UK and Germany, have also made special announcements that could accelerate the spread of electric cars.

Contrary to its previous plans, Volkswagen does not plan to spend € 60 billion (approximately HUF 21,600 billion), but EUR 73 billion (approximately HUF 26,280 billion) of its EUR 150 billion (approximately HUF 54,000 billion) budget for electricity and self-driving, and digitization over the next five years, according to a Reuters report. He justified his decision by two things: on the one hand, with their investments they want to secure their leading position in the market in the “new green era”. On the other hand, even stricter regulations in the European Union are expected to force the company to achieve 60 percent of electric car sales by 2030.

At least as important was Carlos Tavares ’participation in the Reuters Automotive Summit, where the head of the PSA group said he would no longer spend more money on developing internal combustion engines. He also spoke about his company’s ability to adhere to further tightening by the European Union, which should result in a ban on the sale of new vehicles with internal combustion engines sometime between 2030 and 2040.

BMW is also taking serious steps to accelerate the transition to electric cars in its global product network. The German premium carmaker will build a new plant at its production base in Munich as part of an investment of 400 million euros (approximately 144 billion forints). He also announced that by the end of 2022, he will be producing at least one purely electric BMW model in all its plants in Germany. It is also important that the Bavarians expel the production of internal combustion engines from Germany: it is planned that soon only petrol and diesel resources will be produced in the BMW Steyr and Hams Hall plants.

Several important announcements have also been made regarding European battery production. It turns out that SVolt Energy Technology will build its first European plant in Germany as part of a € 2 billion investment (approximately HUF 720 billion). The reason for the move is, of course, that the Chinese battery maker, like other Asian suppliers, wants to profit from the expected rapid growth of electric cars. Panasonic, Equinor and Hydro have signed a cooperation agreement to assess the needs of European manufacturers by the summer of 2021 and decide on a joint venture.

As mentioned above, it’s not just key players in the automotive industry who have come up with big announcements. Boris Johnson announced the green package of the industrial revolution at dawn on Wednesday. The British Prime Minister made ten key points, the first of which was

The UK will ban the sale of vehicles powered exclusively by internal combustion engines ten years earlier than previously planned, from 2030 onwards.

Regarding the news, it is worth recalling that the British in the Road to Zero strategy presented in 2018 still planned to expel petrol and diesel vehicles from the showroom only in 2040, while Johnson already in February this year talked about setting this target date. It will change by 2035. It was a big surprise and a significant step forward at the time, but there were those who were not even happy with it, saying it would allow producers a long transition.


Johnson also confirmed that from 2035, only fully electric new cars can be placed on the market in the UK.

Germany also entered the field of action this week. The unexpected outbreak of the coronavirus epidemic has put the country’s car industry in a terribly difficult position at a time when the transition to new technologies has already posed enormous challenges for the sector. The problems could be exacerbated by austerity measures to combat the second wave of the epidemic, although the engine of the German economy has already suffered a lot this year. To alleviate the situation, the government led by Angela Merkel has put together an incentive package of 5 billion euros to provide additional funding for the purchase of electric cars and new trucks, as well as the transition to new technologies.

In this regard, it is important to say that most car manufacturers have in the past misjudged the expected expansion of electric cars. These actors believed that the transition period would result in electric cars being slower instead of vehicles equipped with internal combustion engines on the roads.


Cover image source: Simona Granati / Corbis via Getty Images

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