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Yves here. It’s surprising to see BMW speaking up only now on the impact of the coming EU ban in 2035 of sales of new fossil fuel burning vehicles. I don’t know if the dynamic is the same, but recall during the Brexit negotiations how UK businesses didn’t speak up for their interests (except financial services firms and even then not very forcefully). They were oddly silent on a myriad of issues, from trucker licenses and routes, to the impossibility of preventing border frictions. And there were no demands for manuals and procedures and guidance until way way way too late in the game for the Government to come up with anything. Knowledgeable people in the UK claimed that the corporate community was afraid of retaliation if nary a bad word was said about Brexit.
With the 2035 phaseout of gas and diesel fueled vehicles, perhaps similar self-censorship or fear of reprisals. But that would also mean that the once politically very powerful Germany automakers wield far less clout than before.
But separately, this scheme does illustrate Brexit-level hopium. Yes, it probably is possible to get to 2035 and not have disruption and counter-productive behavior, like a gas car sales boom before the drop dead date and then their owners babying them so they have much longer lived in service than historical norms. But the EU appraoch seems to be just to let Mr. Market sort it out and not do much in the way of infrastructure and alternative mode of transit investment…or even trying to rethink job and societal provisioning needs so as to reduce the need for as many car trips as now.
Another issue is that just because governments mandate an activity does not mean it will happen. As we reminded readers, an early 1990s electric vehicle mandate by California and a coalition of northeast states, required that a certain percentage of cars offered for sale by the end of the 1990s be electric. That requirement was abandoned when it became clear there was virtually no demand for these cars.
And demand may again be the problem with this picture. Aside from concerns about whether it’s possible to have enough grid capacity and electric generation to support a large switch to electric cars, there’s also price and material needs. EVs are more expensive than internal combustion engine cars, and that cost disadvantage seems likely to persist. A friend who owns a niche high end car supplier (specialized tech with many of the best respected automakers as clients) says there is now a huge inventory of unsold EVs in the US that weirdly is not yet well reported.
And if some start seeing these mandates as threats to the livelihood, we could see more technotage, like the destruction of ULEZ (emission) monitors in London or the destruction of all the EV chargers at a Costco in Barstow, CA, per a sighting by a reader very much inconvenienced by that vandalism.
By Tsvetana Paraskova, a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice
The EU’s pledge to ban the sale of new gasoline and diesel cars and vans from 2035 poses an “imminent risk” to Europe’s car manufacturers, which are unlikely to win a looming EV price war with their Chinese competitors, BMW chairman Oliver Zipse has told the Financial Times.
“I want to send a message: I see that as an imminent risk,” Zipse said.
The executive, however, said BMW was in a better position to compete with the Chinese manufacturers, most of which are targeting buyers of cheaper and smaller electric vehicles.
Yet, “The base car market segment will either vanish or will not be done by European manufacturers,” Zipse told FT.
European Union member states in March approved an emissions regulation under which the bloc will end sales of new carbon dioxide-emitting cars and vans in 2035.
The new rules target 55% CO2 emission reductions for new cars and 50% for new vans from 2030 to 2034 compared to 2021 levels, as well as 100% CO2 emission reductions for both new cars and vans from 2035.
The landmark deal was made possible after Germany – the biggest economy, the biggest car market, and the biggest car manufacturer – sought and won an exemption for e-fuels. Germany wanted sales of new cars with internal combustion engines if they run on e-fuels to continue beyond 2035, and it got that exemption.
The slump in exports of Germany’s auto industry to China in the first quarter of 2023 could be the beginning of a new long-term trend of “strong disruption” in German-Chinese trade as China’s EV boom accelerates, researchers at the IW institute in Cologne said in a report in June.
“There appear to be strong disruptions playing out in the automotive sector, especially regarding China’s increasing importance as an exporter of electric cars,” the report’s authors wrote.