Plug-in hybrid vehicles: problematic support also from the point of view of French industrial interests

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The attacks on the plug-in hybrid vehicle by NGOs are, with fairly strong arguments, mainly for reasons of environmental policy. The issue also deserves, in France in particular, an examination in industrial and strategic terms. From this point of view, despite the success of Stellantis and its four plug-in hybrid models assembled in France, it is not appropriate to continue with a plug-in hybrid policy that mainly boosts German and Swedish sales.

In Europe, public policies to reduce emissions are mainly restrictive or incentive policies and marginally industrial or R&D policies. However, as the France Stratégie report of May 2018 on Public policies in favour of very low emission vehicles underlined, it is the countries that have real industrial and strategic projects for electric or electrified vehicles that are leading the way. 

From this point of view, the report already underlined: 
i) the opposition between China and the United States is emblematic in that it puts the nation without an industrial policy in a very defensive position compared to the one that does have one;
ii) the EU mainly emphasises the need to reduce greenhouse gas emissions and, within the EU, at the time, only the United Kingdom seemed to have an industrial project involving strengthening the supply chain and supporting R&D and training.

Three and a half years later, in Europe, things have changed because:
i) electric and electrified vehicles (BEVs and PHEVs) already represent almost as much as diesel in a country like ours (17.9% of car registrations compared to 21.1% in 2021);
ii) the prospects, which are becoming clearer year by year (or even month by month), are increasingly unfavourable to older technologies and increasingly favourable to BEVs;
iii) the fear generated by the industrial, social and strategic prospects associated with the massive electrification of catalogues and registrations has ended up legitimising industrial policies, as indicated by the rise in power of the famous PIIECs (for important projects of common European interest) which basically make it possible to bypass the 'normal' system of prohibition of state aid.

As we have clearly understood through the mythical 'battery Airbus', it has not been possible to build a common European project and, under the PIIEC regime, we have to accept that several projects are structured that are more or less national or bi-national but in no case supra-national. To put it briefly, in the same way that we tried in vain in France to get Renault-Nissan to join the Airbus that Total and Stellantis were beginning to build, called ACC (Automotive Cells Company), in Europe we toyed with the idea of a European project, only to reject it because it was obvious that no agreement would be reached: the Swedish company Northvolt joined forces with VW and BMW in a PIIEC; Daimler chose the other PIIEC battery, ACC. 
Everything indicates, therefore, that it is not only impossible to get manufacturers to agree at European level, but that even at national level, in Germany no more than in France, managing to get all the players to join forces to counter the threat of domination by Asia now appears to be a 'false good idea'.

Nevertheless, for reasons that have to do with the specificities of markets, industrial systems, tax systems, energy policies and administrative systems, national frameworks are still much more likely to allow the coherent articulation of industrial and environmental policies that the France Stratégie report identified as crucial. 
From this point of view, as Le Monde pointed out on 30 December, it is likely that we will have to arbitrate very quickly, even more firmly than we have done up to now, on the question of rechargeable hybrids. Here, from an environmental point of view, the cause seems more or less heard: the WLTP measurements of PHEV emissions correspond to mainly urban cycles carried out by some sort of environmental monks who do without the internal combustion engine whenever possible and recharge their vehicle as many times as necessary per day; the real conditions of use by senior executives who are provided with this vehicle by their employer because of the advantages it brings in terms of VAT and the traditional 'fuel card' which transfers this charge to the employer are quite far removed from the ideal world of WLTP.

The various studies carried out by ICCT, T&E and L'Automobile-Magazine (quoted by Le Monde) tell a different story and argue not only for the end of the meagre subsidies that stimulate the demand for these vehicles but also for the rapid or gradual abolition of the "TVS bonus" that currently ensures the growth of "fleet registrations", the importance of which is well known, particularly for the C segment.

This is where the industrial issue comes in. Indeed, the argument in favour of support for PHVs at this level is that French manufacturers have a convincing offer in this field and that, insofar as these vehicles are expensive vehicles in the higher segments, they are more likely to be assembled in France. 
Therefore, in 2022, supporting 'upmarket' strategies would imply doing nothing against PHEVs despite doubts about their ecological virtues. In fact, if we are to believe the Autoactu-Autoways "Hit Parade" by model of PHEVs sold in France over the first 11 months of 2021, 6 of the top 10 places are occupied by vehicles from French brands: the 4 from Stellantis (3008, C5 Aircross, DS7 and 508) are assembled in France and represented 39,000 vehicles over 11 months (42,500 annually). These six vehicles represent 40% of registrations and the share assembled in France is 30%. Given the competing imported vehicles in the top 20, 11 of which are German or Swedish brands, we can assume that the 70% of imports that we deduce from the statistics on volumes are even more important if we reason in value.

Indeed, customs statistics tell us that over the last 12 months available (Nov. 2020-Oct. 2021), the 14,828 PHVs we exported had an average unit value (AUV) of 15,000 euros while the 71,446 imported were worth an average of 34,000 euros: the deficit is 56,618 vehicles and 2 billion euros; in 2019, it was 27,677 vehicles and 0.56 billion. In the game of moving upmarket, the French are being crushed by northern European manufacturers and the PHEV does not change anything. 
Defending everything that favours the top of the range sometimes makes it possible to cultivate, on the basis of one or two successes (such as those of the 3008 or the DS7), the idea that, behind the Germans, the French sites could survive. In fact, between PHEVs assembled in France and PHEVs exported from France, about 65,000 PHEVs will have been produced in Rennes or Sochaux and this must be taken into account in the management of tax measures. 

The fact remains that, as the figures stand, it is quite clear that to support hybrids in the name of these volumes - which we would not necessarily lose - is to play into the hands of the dominant players in the high segments, who will not be the French but the Germans, the English and the Swedes. 
Our deficit on PHVs is growing and, here, the environmental and industrial diagnoses converge: there is no long-term interest in defending this route, especially as no one really believes in it any more. We remember that a little more than 10 years ago, President Sarkozy agreed to Angela Merkel's requests, who understandably demanded that the CO2 requirements applicable to the various manufacturers be modulated according to the weight of the vehicles. The French manufacturers and Fiat were demanding - for very good reasons - that all manufacturers be judged according to the same target figure. They had to accept their defeat and this had to be done.

From this point of view, electrification poses the same problems: 
- Firstly, from an industrial point of view and secondly from an environmental point of view, should we support all types of electrification through our national policies, whether or not they favour our manufacturers or our factories? 
- Should we instead ensure that the electrification that is most readily supported is that which concerns lighter and more accessible vehicles using smaller batteries manufactured near the assembly sites in Giga-Factories using low carbon energy?

03/01/2022

The weekly column by Bernard Jullien is also on www.autoactu.com.

      

 

  
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