Will Electric Cars Crash the German Government?

By Andrew Stuttaford

Wednesday, June 22, 2022

 

Well . . .

 

The Financial Times:

 

Germany’s finance minister has rejected EU plans for a de facto ban on the sale of new combustion engines cars by 2035, raising the prospect that a pillar of the bloc’s green agenda will be watered down.

 

Christian Lindner told a conference in Berlin on Tuesday that completely phasing out the combustion engine in Europe was “the wrong decision” as manufacturers elsewhere in the world would fill the gap. Lindner, who also heads the business-friendly Free Democratic party, said: “Germany is not going to agree to a ban on combustion engines.”

 

Brussels wants the region’s automakers to cut carbon emissions from cars by 100 per cent from their 2021 levels, a mandate that would make it impossible to sell new petrol or diesel vehicles from 2035. The move would force the German car industry to accelerate its electrification plans, and lobbyists have warned it could lead to the loss of hundreds of thousands of jobs in the sector.

 

Hundreds of thousands of jobs?

 

I reckon that that will have weighed with Mr. Lindner, who may, I suspect, not be entirely convinced by stories of all those new jobs that are supposedly going to be created in the green economy.

 

I wrote about what the switch away from internal-combustion engines could mean for carmakers here. Looking on the bright side, it will be a good news for the Chinese auto sector, which will be able to take advantage of the position that it has built up in the battery sector, and the fact that electric vehicles are relatively simple to make. Chinese exports of EVs are already doing well in Europe. Rejoice!

 

The FT:

 

A vote by MEPs [members of the European Parliament] two weeks ago to adopt the revised CO₂ standards met with a strong backlash from Germany’s automotive lobby, the VDA. The VDA claimed the decision was “taken against citizens, against the market, against innovation and against modern technologies” . . .

 

Perhaps the VDA is wrong about that, or perhaps it is right, but it seems that the EU’s central planners do not want to put its claims to the test.

 

The FDP is only one of three parties within Germany’s governing coalition. The second of those parties, the Greens, does not agree with the position Lindner has taken. Meanwhile, the FT reports no one could be reached for comment from the SDP, the third (and leading) party in the coalition, and one that enjoys significant blue-collar support.

 

The conversation across the coalition table will be interesting.

 

Back to the FT:

 

The division between Germany’s coalition partners echoes the ructions within the European auto lobby in Brussels, known as ACEA. Stellantis, one of the organisation’s largest members, left to start its own campaigning organisation just days after the parliamentary vote. Stellantis boss Carlos Tavares has been critical of the speed at which regulators are forcing carmakers to electrify their models.

 

Stellantis was formed by the merger of Fiat Chrysler and Peugeot, and is the fifth-largest auto manufacturer in the world,

 

On the other hand, other automakers disagree.

 

The FT:

 

The boss of Volkswagen’s passenger cars brand, Ralf Brandstätter, said: “The current vote, but above all the choice of customers in Europe, shows that the shift to electromobility is irreversible.”

 

Best guess is that after the dieselgate scandal, VW won’t want to risk alienating any governments. Nevertheless, an obvious question remains. If consumers are so keen on EVs, why the need for compulsion?

 

Something similar might be said of Mercedes, another carmaker with a diesel scandal to live down, which has also backed the European vote.

 

The skilled engineers over at (checks notes) the German Federation for the Environment and Nature Conservation, meanwhile, declared that “the internal combustion engine is a discontinued model,” language with more than a touch of the commissar about it.