European car manufacturers have warned of missed decarbonization targets and job losses unless the sector gets more support from policymakers.
Carmakers Ask Europe to Introduce Mandatory EV Charging Infrastructure Targets
Manufacturers warn of job losses and missed decarbonization targets without help to reach the EU’s Green Deal goals.
The European Automobile Manufacturers’ Association (ACEA), whose members include Volkswagen, Ford, Honda and Toyota, issued a 10-point plan to help the industry align with Europe’s Green Deal.
The Green Deal sets the course for Europe to achieve carbon-neutrality by 2050. A roadmap published by the European Commission includes a goal for 90 percent decarbonization of the transport sector.
But while the EC's roadmap acknowledges that a ramp-up in charging infrastructure is required, it states that the EU will only intervene to fill gaps on the network such as in areas of low population.
Car manufacturers don't think that’s enough and want the commission to use a planned review of the alternative fuels infrastructure policy to introduce mandatory EV charging infrastructure targets for member states and ensure tech-neutrality.
With the sector in a state of mild decline, the industry wants a guiding hand to help manufacturers navigate the changes.
“At the very time when our industry is massively stepping up investments in zero-emission vehicles, the market is set to contract — not only in the EU but also globally — so the transition to carbon-neutrality needs to be very well managed by policymakers,” said Michael Manley, CEO of Fiat Chrysler Automobiles and the current ACEA president.
In a press conference, Manley said the challenging circumstance could see jobs shift from Europe to markets with a lower cost base. The ACEA claims 2.6 million people are employed in the EU automotive manufacturing sector.
Sales of passenger cars are forecast to drop 2 percent, according to ACEA. At the same time, the appetite for electric and hybrid vehicles is forcing some manufacturers to revise their footprint. Last November Audi announced it would cut 9,500 jobs over the course of five years. The goal is to free up €6 billion by 2029 to reinvest in the shift to EV manufacturing.
The European Commission chose not to comment on ACEA’s plans when approached by GTM but did stress that there is a new sustainable and smart mobility strategy due out later this year.
ACEA is clear that what it wants from policymakers is stability.
“Mandatory targets are always easier to plan around than goals or forecasts,” Wood Mackenzie analyst Ben Kellison told GTM. “They provide the market with a clear understanding on what the landscape is transitioning toward."
However, with the EV rollout still very much in a nascent stage, pitfalls can result from poorly designed or inflexible goals.
“With EV charging, we do not know how charging behavior and customer demands will change over time with new vehicles, patterns of movement, and preferences,” said Kellison. “This creates a significant concern about the potential for the investment to be a stranded asset at some point during its 20-year lifespan. In a policy environment that accelerates EV charging adoption, there is greater risk of this occurring.”
“The EU’s current position brings with it lower risk than the ACEA’s goals, as the EU only explicitly mentions intercity charging and rural area development to reduce range anxiety while allowing for more organic growth elsewhere,” added Kellison.
In terms of incentives for EVs themselves, Kellison notes that total cost of ownership is the key metric for fleet managers, so any incentive that can tip the balance will help drive growth.
The U.K.’s next budget, slated for March 11, is widely expected to include a tax break on all zero-emission company cars. Cash subsidies in the U.K. were eliminated for plug-in hybrids last year, and the electric vehicle grant, for new cars only, was cut from £4,500 to £3,500 ($5,888 to $4,580).