A European perspective on the accelerated electrification of the automotive industry

Notes:

Tommaso Pardi (Gerpisa, CNRS-IDHES)

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Tommaso Pardi's presentation is based on his report for the ETUI. There is a proliferation of reports on electrification, but few talk about the cause of electrification. There is global warming, of course, but European regulation has played a central role in this electrification process.

Emissions from the transport sector are on the rise, while the EU has set itself the target of a significant reduction in emissions. The Green Deal, which puts an end to the internal combustion engine, aims to bring the automotive sector back on the 'right track' in terms of emissions. This means that the automotive sector must make twice the effort.

There is a 32% increase of the fleet between 2000 and 2019. The fleet is ageing, and in addition there are new cars, which are much less green than we think. As soon as the regulations became restrictive, the automotive manufacturers resorted to legal and illegal (dieselgate) optimisations of the emissions during homologation tests. It is this discrepancy between emissions and regulations that helps to understand the current situation of forced electrification of the automotive industry.

The main technology used by the automotive industry to meet its emissions targets was diesel. But sales of diesel vehicles have been falling since 2017. This is why the automotive industry has chosen to massively produce electric vehicles. So, in 2021, the electric vehicle has reached 19% of the market share, there is a sevenfold increase in market share in two years for the electric vehicle. This is very fast. In addition, any form of extraordinary carbon taxation contributes to the acceleration of electrification.

Everything makes electrification indispensable and unavoidable. In 10 years, the industry must drastically reduce its emissions. By 2030, the thermal vehicle must disappear, to be completely eliminated by 2035.

But why hasn't the automotive industry complied with European standards and exposed itself to the risk of dieselgate? The short answer is the upmarket nature of the European car. The mass of the vehicle, the power of the engine, etc., means that vehicle prices are increasing. Vehicles have become bigger, heavier, more efficient.
This increase is equivalent to a 32% increase in emissions. But at the same time, vehicles had to reduce their emissions by 33%. The automotive industry has made some efforts, but not enough to compensate for the increase in vehicle size.

Why did the automotive industry go in the opposite direction to what it should have done? It should have reduced the mass and power of vehicles. The long answer is different. For this, we can mobilise the concept of 'design of control' (Fligstein, 2001). Markets are political constructions that rely on key institutions, such as property rights, or rules of exchange (when and how a product can be produced and sold). These rules are determined by the dominant actors, as the aim is to reproduce the position of the dominant actors. But competing conceptions of control may come from new or foreign actors.

We need to go back to the history of regulation in different countries.
USA: vehicles are very polluting and the problem of smog arose very early on. As early as the 1960s, there were regulations, such as the Clean Air Act, with the aim of reducing emissions. Unleaded petrol became compulsory in 1969.
The oil crisis shifted the demand for automobiles towards more compact and more fuel-efficient vehicles because oil consumption had to be reduced. Japanese vehicles that consumed less petrol were the winners. So there is a challenge to the dominant control design. This creates a crisis in the American automotive industry, which also shows that the consumer does not necessarily go for a heavier, more efficient vehicle. In the 1980s, a protected market was developed in certain areas. This is the restoration of the status quo. There was also a freezing of the Japanese market share.

This explains why today the most popular vehicles sold in the USA are very heavy (Ford F-150, Toyota Tacoma, two tonnes, very polluting).

In Europe, the trajectory is very different: in the 1980s there are two competing conceptions of control, because within the common market there are competing strategies: premium (Germany, Sweden) vs. generalist (France and Italy). There is therefore a struggle to define the control concepts of the common market. In the 1990s, there was a German victory over the control concept, which favoured a model that produced premium vehicles.
The single market becomes an instrument to open up export markets, especially for Germany, instead of an instrument of protection, as the French and Italians wanted. Technical standards were then standardised on the basis of higher criteria, specific to German vehicles.

A struggle between the French and Italians, on the one hand, and the Germans, on the other, began within the European Commission over the regulations. Germany lobbied the Brussels parliament intensively. However, weighted CO2 targets are a bad thing for the environment. This is a way of playing with the binding targets of the European regulation. This downscaling is therefore the direct result of a struggle between two business models and the ensuing regulation. However, a move downmarket is what would have made it possible to reduce emissions.

In Germany, there is no challenge to the control design, which would imply a denunciation of the weight targets. There is only a challenge to the combustion engine: the status quo remains unchanged. Electrification is only a replacement for diesel, it is a mere substitute for diesel. Added to this is the fact that electrification is a move upmarket. The EV, when it was launched, was small and affordable, whereas the EV today is particularly expensive.
Electrification was initially thought to be a technology suitable for light vehicles, because the battery is expensive and there are range problems. This is a technological nonsense. Heavy vehicles for everyday use, low speeds and short distances makes no sense. Nor does it make sense for the electric vehicle.

What are the social and political consequences of these transformations? The countries of Central and Eastern Europe are increasingly equipping themselves with second-hand thermal vehicles. They are moving away from emission reduction targets.
Moreover, the structuring of a control concept around the premium is at the origin of the forced march towards electrification. In the same way, electrification does not change the product architecture or the economic model of the manufacturers. We are entitled to ask the question of the economic and social sustainability of the ecological transition.

What can be done? Electric vehicles must be made affordable. This means producing small electric vehicles in France. The weight-based targets must be abolished and other criteria must be introduced, such as energy efficiency. The move downmarket can be achieved by introducing technical regulations tailored to small electric cars.