EU committee electric vehicle targets unrealistic, a seismic shift for auto makers – ACEA

LONDON (ICIS)–Europe’s key automotive trade group attacked on Tuesday emissions-reductions targets voted on by the Environment Committee of the European Parliament (EP) as “totally unrealistic”, despite analyst projections of more affordable electric vehicles in coming years.

– EU  Committee backed proposals for much stricter EV targets

– Timeline is too stringent for the European auto sector, says ACEA

– Costs drops could put EVs at parity with regular autos by 2025, says UBS

The committee voted this week in favour of a proposal that would require auto makers in the EU to derive 20% of sales from electric vehicles or hybrids by 2025, rising to 40% by 2030.

The draft proposal – which has not been formally adopted by the EU’s executive body, the European Commission – is intended to galvanise growth of the electric vehicle market, which has so far posted sluggish growth.

One car per 60 cars sold in the EU during the second quarter of 2018 was electrically chargeable, according to ACEA data.

The level of carbon dioxide (CO2) emissions from new cars should be cut by 45% by 2030, the EP’s committee added.

The measures would increase pressure on governments as well as original equipment manufacturers (OEMs) to prioritise the development of the electric vehicle sector through the rollout of infrastructure as well as vehicles, according to the Environment Committee’s rapporteur Miriam Dalli.

“Since charging infrastructure is a pre-condition for the successful deployment of ZLEVs [zero- and low- emission vehicles], and investment needs to be increased from today’s low levels, different support instruments at both Union and Member State level need to effectively work together, mobilising and incentivising significant public and private investment,” she said.

The pace of the timetable would require a “seismic” shift for the European automotive industry, and are ahead of consumer readiness to adopt electric vehicles, according to ACEA general secretary Erik Jonnaert.

“The extremely stringent reduction levels adopted are totally unrealistic, as they would require a massive and sudden shift to electromobility,” he said.

“The framework conditions for such a seismic shift are clearly not in place, and consumers are just not ready to go fully electric at this stage,” he added.

However, electric vehicle costs are likely to drop significantly in the run-up to 2025, according to analysts at Swiss investment bank UBS.

Vehicle cost at present is dominated by the expense of rechargeable batteries, but UBS projects potential for an 18% drop by 2025 compared to 2018, placing electric vehicles at sticker price parity with conventional autos for the first time.

“This is before any savings the industry can achieve by using China as the global EV assembly hub,” UBS analysts said in an investor note.

That increase in competitiveness is likely to be preceded by a margin trough for electric vehicle OEMs in the early 2020s before recovering on economies of scale, UBS added.

Despite this, the speed with which the automotive landscape would need to change, from car production to consumer habits to charging networks, is not feasible in the timeframe set out by the committee, ACEA’s Jonnaert added.

“Let me be clear: we are fully committed to moving towards zero-emissions mobility,” he said.

“But this transition must be made at a pace that is manageable. This is vital not only for our industry and its workers, but also for consumers – who are meant to actually buy these vehicles.”

The measures are expected to be debated in European Parliament next month.

Pictured: An electric vehicle charging point in central London
Source: Richard Gardner/REX/Shutterstock

Focus article by Tom Brown