Kwan Wei Kevin Tan
Updated Wed, October 16, 2024
BMW CEO Oliver Zipse says a 2035 gasoline ban will hit the European auto industry.
Easing the ban, he said, would help reduce the EU's reliance on China for batteries.
Zipse's warnings come amid fears in the auto industry of a Darwinistic price war with China.
The European Union needs to move away from its planned ban on gasoline vehicles if it wants to reduce reliance on China for batteries, BMW CEO Oliver Zipse said on Tuesday.
Zipse was addressing attendees at the Paris Automotive Summit when he criticized the EU's requirement for all new cars and vans to have zero emissions from 2035.
The law, which was approved by EU countries in March 2023, is part of the region's efforts to achieve climate neutrality by 2050.
"For the automotive industry, geopolitical resilience and access to markets and raw materials remains critical to success and future viability, while also reducing dependencies on China through openness to technologies," Zipse said on Tuesday.
A "correction" of the planned 2035 gasoline vehicle ban, Zipse said, would help reduce European OEMs' reliance on China for batteries.
Earlier in his speech, Zipse said the EU's ban could "threaten the European automotive industry in its heart" and "lead to a massive shrinking of the industry as a whole."
BMW's decarbonization efforts, Zipse told summit attendees, weren't just focused on the vehicles they produced, but also on their supply chains.
"To maintain the successful course, a strictly technology-agnostic path with the policy framework is essential," Zipse said.
"The only thing that counts in the end is the tonne of CO2 that is not emitted and the earlier the better, and not the technological way how this reduction is achieved," he added.
Representatives for Zipse at BMW didn't immediately respond to a request for comment from Business Insider sent outside regular business hours.
Several Western auto chiefs have commented on the challenges and difficulties that could arise from transitioning their industry to electric vehicles.
Stellantis CEO Carlos Tavares, who helms an automaker that owns brands like Chrysler, Fiat, Jeep, Maserati, and Peugeot, is advocating for a short transition from combustion engine vehicles to electric ones.
On Monday, Tavares said in an interview with the Financial Times that automakers will fall into a "big trap" if the EV transition slows.
Tavares said this is because automakers will have to continue investing in both electric and gasoline vehicles, thus incurring higher costs.
"When you make a longer transition, in fact, you don't replace the old world by the new one. You add up the new world to the old," he said.
EV sales have been declining in Europe in recent months. In August, EV registrations fell by nearly 44% compared to the same month a year ago, per the European Automobile Manufacturers' Association.
That's on top of the steep competition Western automakers are facing from Chinese counterparts like BYD.
Mercedes-Benz CEO Ola Källenius told attendees at the Berlin Global Dialogue conference on October 2 that the Western auto industry is fighting a price war with its Chinese rivals.
"It's a Darwinistic-like price war, market purification. And many of those players that are around now. Many of those are not going to be around five years from now," Källenius said.
"You must control your nerves, keep on investing, keep on innovating and make sure that at the end of that Darwinian battle, that you are one of the combatants that are left and that's what we are focusing on," he added.
Business Insider
Crackdown on petrol cars will trigger ‘massive shrinking of industry’, warns BMW chief
Matt Oliver
Tue, October 15, 2024 at 1:02 PM MDT·3 min read
Mr Zipse believes EU regulations on combustion engine vehicles are ‘no longer realistic’
- Michel Euler/AP
A European crackdown on petrol cars will trigger a “massive shrinking” of the Continent’s vast automotive industry, the boss of BMW has claimed.
Speaking at the Paris Automotive Show, Oliver Zipse warned that new rules leading to a ban on combustion engine vehicles by 2035 would put Europe’s carmakers at a disadvantage compared to their Chinese rivals.
His warning came as France revealed it was pushing for “flexibility” on European Union regulations ahead of their introduction next year.
In 2023, EU leaders approved laws that effectively banned the sale of petrol and diesel cars by the end of 2035.
It means the average amount of carbon dioxide emitted by new cars must fall by 15pc in 2025, 55pc in 2030, and 100pc in 2035.
But on Tuesday, Mr Zipse claimed the regulations were “no longer realistic” as demand for electric vehicles (EV) in Europe stalls and domestic carmakers lag behind their Chinese peers on cost and battery technology.
He warned the rules “could threaten the European automotive industry in its heart”, adding that “with today’s assumptions, [it will] lead to a massive shrinking of the industry as a whole”.
Mr Zipse also claimed that the rules – which he said should be relaxed – could end up benefiting Chinese manufacturers.
“A correction of the 100pc EV target for 2035 … would also afford European [manufacturers] less reliance on China for batteries,” he said.
The comments reflect the huge unease among traditional European car manufacturers that have been slow to develop electric car ranges and now face a slowdown in demand for EVs in major markets such as Germany and France.
On the other hand, carmakers also face tough competition from the arrival of ultra low-cost Chinese alternatives.
In China, where manufacturers have benefitted from state support and are engaged in brutal price wars, the cost of EVs has come down dramatically with the most popular models now selling for less than £8,000 each.
That has helped EVs take more than half of China’s new car market in recent months.
But it has also driven Chinese manufacturers to seek out more profitable sales abroad in markets like Europe.
The EU has slapped steep trade tariffs on major companies including MG owner SAIC, Geely parent Polestar and BYD in an attempt to compensate for what Brussels has described as “unfair” state subsidies they received.
However, many experts now simply expect Chinese brands to set up factories in Europe to avoid the extra taxes.
Against this backdrop, French economy minister Antoine Armand said France was sounding out fellow EU countries to see what could be done on the EU’s 2025 carbon emissions standards.
Carmakers who breach the rules could be hit with multimillion-euro fines.
“You can’t have sanctions without taking into account the economic context and the development of our industry in France and in Europe,” Mr Armand said.
“We’re exploring what flexibility there can be in cooperation with our European partners who are the most engaged on this question.”
Is the 2035 ICE Sale Ban Target in Europe Still Realistic?
A European crackdown on petrol cars will trigger a “massive shrinking” of the Continent’s vast automotive industry, the boss of BMW has claimed.
Speaking at the Paris Automotive Show, Oliver Zipse warned that new rules leading to a ban on combustion engine vehicles by 2035 would put Europe’s carmakers at a disadvantage compared to their Chinese rivals.
His warning came as France revealed it was pushing for “flexibility” on European Union regulations ahead of their introduction next year.
In 2023, EU leaders approved laws that effectively banned the sale of petrol and diesel cars by the end of 2035.
It means the average amount of carbon dioxide emitted by new cars must fall by 15pc in 2025, 55pc in 2030, and 100pc in 2035.
But on Tuesday, Mr Zipse claimed the regulations were “no longer realistic” as demand for electric vehicles (EV) in Europe stalls and domestic carmakers lag behind their Chinese peers on cost and battery technology.
He warned the rules “could threaten the European automotive industry in its heart”, adding that “with today’s assumptions, [it will] lead to a massive shrinking of the industry as a whole”.
Mr Zipse also claimed that the rules – which he said should be relaxed – could end up benefiting Chinese manufacturers.
“A correction of the 100pc EV target for 2035 … would also afford European [manufacturers] less reliance on China for batteries,” he said.
The comments reflect the huge unease among traditional European car manufacturers that have been slow to develop electric car ranges and now face a slowdown in demand for EVs in major markets such as Germany and France.
On the other hand, carmakers also face tough competition from the arrival of ultra low-cost Chinese alternatives.
In China, where manufacturers have benefitted from state support and are engaged in brutal price wars, the cost of EVs has come down dramatically with the most popular models now selling for less than £8,000 each.
That has helped EVs take more than half of China’s new car market in recent months.
But it has also driven Chinese manufacturers to seek out more profitable sales abroad in markets like Europe.
The EU has slapped steep trade tariffs on major companies including MG owner SAIC, Geely parent Polestar and BYD in an attempt to compensate for what Brussels has described as “unfair” state subsidies they received.
However, many experts now simply expect Chinese brands to set up factories in Europe to avoid the extra taxes.
Against this backdrop, French economy minister Antoine Armand said France was sounding out fellow EU countries to see what could be done on the EU’s 2025 carbon emissions standards.
Carmakers who breach the rules could be hit with multimillion-euro fines.
“You can’t have sanctions without taking into account the economic context and the development of our industry in France and in Europe,” Mr Armand said.
“We’re exploring what flexibility there can be in cooperation with our European partners who are the most engaged on this question.”
Is the 2035 ICE Sale Ban Target in Europe Still Realistic?
Jay Ramey
Thu, October 17, 2024
Is the 2035 ICE Sale Ban Target Still Realistic?Sean Gallup - Getty Images
Industry groups resist calls from within the European Union to weaken or postpone the 2035 target date adopted by the EU in March 2023 to phase-out sales of new gas and diesel cars and light trucks.
A number of political forces within the EU seek to postpone the target date, amid calls from some automakers seeing slow EV sales gains over the past two years.
Automakers that have invested the most in a quick turn to EV tech now face a different sales environment after a couple years of gains early in the pandemic.
The European Union's plans to phase out the sale of internal-combustion cars and trucks are drawing renewed skepticism from some industry groups and automakers, just as other automakers are urging the bloc to keep the planned target date.
The timeline itself was adopted by members of the European Parliament in March 2023 and envisions a gradual phase-out of new gas and diesel cars and light trucks. By fall of the same year the planned phase-out had already seen pushback, with the recent slowdown in EV demand feeding more skepticism from political factions and automakers alike.
Back in 2020 a number of automakers raced to adopt ambitious EV-only sales targets, in what was viewed as an inevitable and quickly approaching EV future.
Now, in 2024, that EV future looks a little less certain to arrive as promised, and industry groups formed by companies that have spent considerable sums on EV tech over the past few years are battling calls from within the EU to weaken or push back the 2035 target.
As the rate of EV sales in the first half of 2024 reached merely 12.5% in Europe, their anxiety is certainly easy to understand.
"Many of us have invested massively to make this imperative climate commitment a reality," said a group of 50 companies allied under the name Industry for 2035, which includes Volvo, Rivian, Maesrk, Uber, and others.
"The EU CO2 emission standards for cars and vans provides a clear direction that allows us businesses to focus on delivering the transformation required."
Volvo, as part of the group, notably backed away from its own 100% EV sales target by 2030 just last month, acknowledging actual industry trends.
Complicating these plans is the fact that the largest bloc in the European Parliament, the European People's Party (EPP), has been trying to weaken the ban for some time.
The UK is no longer part of the EU, but the country had a similar timeline in place for 2030, one that was subsequently moved back to 2035 by then-Prime Minister Rishi Sunak.
But even the 2035 timeline is now drawing skepticism from UK drivers.
A recent study by alternative fuel group Sustain that surveyed 2000 Britons revealed that 52% believe the 2035 target will not be met. A further 59% of those surveyed said they plan to keep their own gas or diesel vehicle on the road as long as possible; 50% said the environmental impact of scrapping a working car would be too great.
"Whether we meet the deadline on new cars and van sales or not, one thing is certain: We're going to have ICE vehicles on our roads for years to come," said David Richardson from Sustain, the company behind the study. "What we need is a strategy that addresses this. It's important to stress that ICEs are not the issue here—it's the fossil fuel we put in them."
The planned 2035 target has drawn renewed skepticism over the past year in the face of slowing demand for EVs. BMW CEO Oliver Zipse recently told Reuters that canceling the 2035 target would reduce automakers' reliance on EV batteries from China—a topic which has become more prominent as Chinese EV brands have made inroads in Europe.
The issue of Chinese EV brands themselves, never seen as a threat to European brands' market share just a few short years ago in Europe, has become politically charged as hefty tariffs now loom.
Even a decade ago some European automaker executives predicted in frank conversations—sometimes in quite pessimistic terms—that the EV adoption rate could effectively reach a certain plateau, attaining perhaps 20% or 30% market share, and simply stall there for years without moving.
They also predicted vastly different EV adoption rates in some countries of the EU as compared to others, which is certainly happening today in neighboring countries like Norway and Poland, or a number of other Eastern Europe/Western Europe sales comparisons.
As 2025 rapidly approaches, it remains to be seen whether the EV adoption rate in the EU and elsewhere can make up ground over the next five years, perhaps reaching a point where nearly 50% of consumer vehicle sales could indeed be electric or hydrogen by the end of the decade.
If that were to actually happen (representing a dramatic gain that is admittedly difficult to imagine), perhaps the 2035 target for 100% ZEV sales would look more achievable than it does today.
If the past five years have shown anything, it's that the EV adoption rate might progress in fits and starts rather than demonstrating steady growth.
Is 2035 still a realistic target date for the phase-out of new gas and diesel vehicle sales in Europe, or does the current rate of growth suggest otherwise? Let us know in the comments below.
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