Luca de Meo, CEO of Renault, has taken the reins of ACEA, the European Association of Automobile Manufacturers, taking over from Olivier Zipse, CEO of BMW. And, in his first speech, he has already laid the foundations for what we will find in the future: much more expensive cars.
1.000 euros. And twice as much for consumers. This is what it will cost, according to Luca de Meo, Euro 7 to manufacturers. An increase of 1,000 euros on average, according to “the consulted engineers”, for each vehicle manufactured. An increase in costs that consumers will also pay. Double, specifically.
The problem, according to the new president of ACEA, is that the purchase of vehicles will be reduced between seven and ten percent, buyers choosing to keep their vehicles for a longer period of time and for second-hand vehicles. “The markets are getting old everywhere”, he has emphasized de Meo in his speech.
Euro 7 as guilty. De Meo has pointed to the future Euro 7 regulations as the main culprit for these increases. Euro 7 has to enter into force within three years, but (although nothing has been approved) the expected limits on pollution will force companies to make great efforts to electrify their fleets.
Euro 7 is expected to be a first step for manufacturers to jump into the highly electrified car. In fact, before it is definitive in 2035, European cars will have to consume ridiculous amounts of fuelwhich only leaves room for plug-in hybrids (and all thanks to the quirks of the WLTP cycle).
The same history. Listening to the words of Luca de Meo, we have the feeling of witnessing the same story of recent years. The polluting regulations partly explain the increase in the cost of cars in the last seven or eight years.
For this reason, the new president of ACEA is committed to another strategy: to focus the resources for the adaptation of Euro 7 on developing electrical systems for less polluting vehicles and fuels. The problem is that some firms have already announced that with Euro 7 they would stop investing in combustion engines.
no affordable cars. The lack of electric and affordable vehicles is something that de Meo himself had already warned about as president of Renault. The company has had to break up to individually face the challenges of the new mobility in five ways. Then it was already warned that a small and affordable electric technology car was not expected in the short term.
The Volkswagen Group had previously expressed itself along the same lines, whose electric car for 20,000 euros is already beginning to be a utopia. In addition, the paths of the manufacturers lead directly to a polarization of the market, with a lower offer but at a much higher price. Focusing on vehicles with the highest profit margin has been a priority since the arrival of the coronavirus.
we are not ready. According to de Meo and, therefore, according to ACEA, in Europe we are not prepared to jump to electric cars with the speed that manufacturers are required to do. In addition to Euro 7, the plans include reducing the volume of polluting emissions by 55% in 2030, before making the final leap to ban the sale of combustion engine vehicles in 2035.
But, according to manufacturers, only 5% of the materials used in the manufacture of batteries are obtained on the continent. It is not the first time that this has been discussed. The European Battery Alliance (EBA) proposes an investment of 100,000 million euros to cover a deficit that stands at 66 GWh but will increase to 270 GWh, according to Benchmark Mineral Intelligence.
A pliers. De Meo has also highlighted a problem that manufacturers have been talking about for a long time. China’s commitment to the electric car has been total in recent years and they have taken positions that allow them to have the right of veto when it comes to accessing key minerals and rare earths for the production of batteries.
Executives, such as Carlos Tavares, have also been in favor of imposing new tariffs on Chinese vehicles, because according to the CEO of Stellantis they do not receive the same treatment as European manufacturers in the Asian country.
To this we must take the course that the US government has taken with its Inflation Reduction Act. Joe Biden’s Executive has opted to offer juicy economic incentives to manufacturers who produce, recycle and develop their vehicles and batteries there.
