Automotive sector: forced electrification

31st August 2021
-IAM, News

Hugues Chevalier, Economist

The European Commission is expected to announce on July 14 that it will ban thermal engines from 2035 in the European Union. The new regulations would not ban heat engines per se, but the authorised levels of CO2 emissions would be so low that only electric vehicles could be permitted. The level of CO2 has not yet been decided and this point is crucial for the thermal engine industry. Indeed, at 30 g / km, only fully electric engines would be allowed, while at 50 g / km, hybrid motorisation would also be possible. The thermal engine industry still has tens of thousands of employees in Europe and car manufacturers are asking for more time to adapt. If automotive manufacturers are currently lobbying very actively to obtain at least a level of 50 g / km, they have already started to adapt and to invest at a forced pace (with the help of public subsidies), as it is the case currently in Germany and France. After the VW group, BMW and Daimler, it is the turn of other French manufacturers to announce massive investments toward engine electrification. Thus, Stellantis, the Franco-Italian-American manufacturer, resulting from the merger PSA – Fiat Chrysler, presented last week a plan of 30 billion investments over the next five years. The vehicles of the 14 brands will be manufactured on four platforms and will share three types of engines. In addition, Stellantis is expected to create five battery building units to achieve a capacity of 260 gigawatt hours (GWh). In less than 10 years, no less than 700 GWh of capacity should be installed in Europe, of which a third by the Volkswagen group. In total, over the last twelve months, 330 billion euros of investments have been announced, up 41% compared to 2019-2020.