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AB 2000 studies

Alain Boublil Blog

 

The electric car mirage

The announcement by China of ambitious objectives regarding electric or hybrid car sales in 2019 follows on many declarations made during Francfort Motor Show by German carmakers. They were anxious about rebuilding their good reputation after the “Dieselgate”. In Beijing, it is part of the policy in favor of the reduction of CO2 and particles emissions which, at the local level, are the cause of a major threat for health. In 2019, 10% of car sales should have an electric or hybrid engine. If they don’t, carmakers will have to pay a penalty or to buy to their competitors the emission certificates they didn’t use, like what have been instituted in France with CO2 emission quotas for industry. That 10% ratio could be increased until 12% in 2020 but the government keeps the right to spread over several years these ambitious objectives if they too much hurt local carmakers. Volvo announcements regarding the fact that, at that moment all their models will have electric engines are not surprising because the company is controlled by the Chinese group Geely. Europe has also adopted objectives for the year 2021 but following different methods: the chosen criterion is the yearly average of CO2 emissions by the models sold by the carmaker. It authorized it to make compensations between its brands. The average weight of the group models is also taken into consideration, which gives to the German industry an advantage.

But that did not impeach spectacular announcements by political leaders in France and in the United Kingdom about the banishment, on the long term, of fossil fuels motorization and the commitment to the industry to propose electric models. During the Francfort Motor Show, the models which were exposed with a lot of publicity were, in reality, for most of them, prototypes far from being able to be offered to customers. It was necessary to live down scandals. In France, after Carlos Ghosn, the Renault CEO, inflamed declarations, the new Nissan CEO, in Japan, has clearly pointed out that electric vehicles, during a long period of time, will only represent a marginal market share. Today, they hardly reach 2% of the brand sales, despite the massive subsidies they benefit in many countries.

The Chinese project is more credible because car ownership is a new phenomenon. In a few years, registrations exceeded 20 million which, by far, makes China the biggest market in the world, but penetration ratio among households, with less than 20%, is still very low. Chinese people are not using their cars for long trips, for going to holidays for instance. They take the train and the plane for those who can afford it. They use their cars on short distances, notably to go to work, which creates massive traffic jams in the big cities which are under equipped with public transportations like Beijing or Sichuan metropolis. Pollution, which is added to coal power plants emissions, makes air stifling many times each year and is becoming a major political issue. For all these reasons, different utilization practices, low ownership ratio and massive local pollutions, the electric vehicle bet can be, a least partly, won.

The situation is quite different in the United States where, if we except California and, if we set aside Tesla, which is a marginal and loss-making manufacturer, there is no aggressive policy and no displaid objectives, and in Europe where the issue became less economic than political. In several countries, including France, very ambitious objectives regarding the reduction of the fossil-fuel engines share have been announced and substantial benefits have been offered to buyers. Until now, this policy did not get any result because electric cars registrations hardly exceeded 1%. The reason is simple. These vehicles are not addressing customer expectations due to their low range (near to 400 kms for the most expensive of them) and the conditions of their batteries recharging. If the owner of an individual house can easily equip his garage with a power point to recharge his car batteries during the night, he will be able to go working everyday but he can't to go into vacation with his children. We can imagine the number of hours he will have to wait for,in a power station next to the highway during peak travel periods. To obtain a change in consumer behaviors, it is necessary that alternatives solutions meet their expectations and it can occur quickly. The shift from coal to natural gas to produce power has been spectacular in the United States and is following the same track in China because utilities get, due to the price advantage, an immediate incentive. That has significantly contributed to the reduction of greenhouse gas and particles emissions. We are far from that model with the shift in favor of electric cars which, even with subsidies couldn’t fill for technical reasons customer expectations.

The significant improvements which could be accomplished with more advanced batteries don’t constitute a good argument because it incites potential buyers to wait. Today, two bought cars out of three are second-hand vehicles. The very few owners of electric cars have the greatest difficulties to resale them. If it is confirmed that vehicles with much higher performance will appear soon on the market, nobody will take the risk, even with a high subsidy, to acquire today a vehicle which will quickly become obsolete and which will be almost impossible to resale. To that it must be added the change of car buyers taste. They are more and more attracted by SUV which will be very difficult to equip with electric engine because of their weight. It could also be easy to add to these obstacles the crisis which would hurt gasoline stations and their rarefaction with all the consequences for the huge majority of motorists who will still use their traditional vehicles during the transition period.The policy in favor of electric cars misses the right target because it exists many cases which would fit with their current and future capacities like cabs, light freight vehicles or those used by public services, the Post office for instance. Curiously, nothing is done to facilitate their use.

To restore their reputation, carmakers are multiplying announcements and are locking up heavy investments. Their priority is to absorb the industrial shock which will be provoked by the progressive and welcomed end of diesel engines. German carmakers are the most offensive on that ground both in Brussels and at home. Regarding politicians, they talk to the public to strengthen their image as environment protectors in keeping up the confusion between the detrimental consequences at the local level of the particles rejection in the atmosphere by the diesel engines and the indisputable effects on climate of greenhouse gas emissions. But in France they seem to underestimate the industrial consequences of their initiatives. In driving carmakers on a wrong way, they risk to weaken them and send them in the wrong direction as when some, in the middle of a desert, believe they see an oasis.   

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