Europe's mix of shoves and sweeteners hastens electric car shift

European countries like Germany and the UK have taken decisive steps towards doing away with petrol and diesel based vehicles.
Electric cars charge on a street in London, Britain. (REUTERS)
Electric cars charge on a street in London, Britain.

Europe has added more writing on the wall for gasoline and diesel cars, spelling out how the internal combustion engine will meet its demise.

The UK’s ban on gasoline and cars by 2030 and Germany’s four-year extension of subsidies for electric vehicles reflect governments’ carrot-and-stick approach to getting auto companies to embrace batteries. The tactics have already been working, with EVs seizing a greater share of passenger car sales in Europe than any other developed auto market in the world.

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The shift will still be no easy feat, especially against the backdrop of industry sales sliding because of the pandemic. With much fewer workers needed to manufacture battery-powered cars, the birthplace of the combustion engine faces tens of thousands of job cuts over the coming years. And while costs are coming down, EVs are still years away from reaching price parity with the gas and diesel cars consumers are used to.

(Also Read | Volkswagen welcomes German government's scheme to support low-emission cars

“In the long term, the days of the internal combustion engine in Europe are numbered," Colin McKerracher, head of advanced transport for BloombergNEF, said by phone. “While the policy is driving the supply side, there is also a real demand for these vehicles. The people who are buying EVs love them."

The political pushes and pulls driving Europe’s EV sales momentum are starting to lure battery-manufacturing investments that suppliers have for years been reluctant to make. China’s SVolt Energy Technology Co. said Tuesday it will join larger peer Contemporary Amperex Technology Ltd. in opening a factory in Germany in the coming years. Tesla Inc. cell supplier Panasonic Corp. also may start up a battery business in Norway.

While the UK is moving up its gas- and diesel-car ban by a decade, its 10-point plan to foster a “green industrial revolution" doesn’t take an entirely prohibitive approach. Prime Minister Boris Johnson announced almost 2.4 billion pounds ($3.2 billion) for charging infrastructure, subsidies and support for EV development and production.

(Also Read | UK's Green Plan bans petrol, diesel car sales by 2030

Tesla Model X electric cars recharge their batteries in Berlin, Germany, November 13, 2019. (REUTERS)
Tesla Model X electric cars recharge their batteries in Berlin, Germany, November 13, 2019. (REUTERS)

That amount of backing will only partially offset Brexit uncertainties gripping the industry and pales in comparison to Germany’s aid. Chancellor Angela Merkel’s government is offering carmakers and suppliers 5 billion euros ($5.9 billion) to help weather the coronavirus crisis and invest in electric cars.

“Germany is developing into the lead market for e-mobility!" Volkswagen AG Chief Executive Officer Herbert Diess wrote in a LinkedIn post. “The federal government’s plan to electrify private transport is working," he said, pointing to electric and plug-in cars seizing 17.5% market share.

Others in the industry are less sanguine. Electric vehicles account for only about 5% of sales in the UK, with prohibitive cost and a dearth of charging infrastructure holding back demand, said Mike Hawes, chief executive officer of the Society of Motor Manufacturers and Traders.

“All the conversations we have with customers, with drivers, all they’re concerned about is availability of charging," Hawes said in an interview with Bloomberg Television.

Jaguar Land Rover, the UK-based automaker owned by Tata Motors Ltd., has struggled to get much traction with its I-Pace electric crossover. Electric and plug-in hybrid cars were just 6% of sales last quarter.

“It’s not our job to defend the internal combustion engine," BMW AG CEO Oliver Zipse said at an event Wednesday hosted by the newspaper Sueddeutsche Zeitung. “We will make what the customer wants to buy."

First Published Date: 18 Nov 2020, 18:22 PM IST

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