DAVID FURLONGER: Hold your horses, Europe!

Could European fears of social disorder and unemployment offer South African motor companies some unexpected breathing space in their bid to meet European zero-emission regulations by building electric vehicles (EVs)?

The EU is finalising climate proposals, including a ban on the sale of new fossil fuel vehicles from 2035. The UK is among countries following a similar timetable.

However, European carmakers, despite supporting the EV revolution and spending billions of euros to pursue it, say lawmakers need to slow down. At the Paris Motor Show this week, Stellantis CEO Carlos Tavares spoke for many companies when he called for hybrid electric vehicles to be given a greater role in the transition to EV mobility.

Hybrid vehicles are powered by two motors — one electric, the other an internal combustion engine (ICE) using petrol or diesel. They reduce fuel consumption and are considered a stepping stone towards full electric mobility.

On some hybrids, the electric motor is continuously recharged as the vehicle moves, while others must be plugged in to electric power sources. Though they currently count as low-emission vehicles, that status will fall away in 2035 because they use fossil fuels.

Reuters reports that Tavares, whose company’s brands include Peugeot, Citroën, Opel, Fiat, Alfa Romeo, Chrysler, Lancia and Jeep, argued that, having spent heavily on hybrids, particularly plug-ins, as a “bridge technology” towards EU climate goals, companies should be allowed to sell them for longer.

“What we have to offer our European leaders is a transitional solution,” he said.

There were also social issues to be considered. Full EVs remained too expensive for the average consumer. “If you deny the middle classes access to freedom of movement, you are going to have serious social problems,” he said. “The dogmatic decision that was taken to ban the sale of thermal vehicles in 2035 has social consequences that are not manageable.”

Those consequences include potential job losses. A report by the European Association of Automotive Suppliers estimates that the EU transition from ICE to EV technology could cost up to 500,000 jobs at ICE components suppliers by 2040. This would be partly offset by the creation of 226,000 jobs at new EV suppliers but would still result in a net loss of 274,000 jobs.

A separate study by the Boston Consulting Group forecasts combined job losses of 630,000 at vehicle manufacturers and components suppliers. In return, new components technologies, battery demand and the building of charging infrastructure may create 580,000 — an overall loss of 50,000 jobs. In the US, one analysis calculates potential job losses at 75,000.

If carmakers can persuade the EU to relax its zero-emissions timetable, it will take some pressure off South African motor companies. The local motor industry exports nearly two-thirds of its production, most of it to Europe. The UK is the biggest single destination.   

To avoid losing these markets after 2035, local motor companies must go electric — and soon. As things stand, Mercedes-Benz South Africa is the only local company to export EVs, and those are plug-in hybrids. Everyone else ships ICE cars and bakkies to foreign customers. Toyota South Africa builds nonplug-in hybrids but they are exclusively for South African customers.

A year after it was promised, the local industry is still waiting for the government to announce an EV strategy, in the shape of manufacturing and purchasing incentives. In nearly every market where sales have flourished, they have been encouraged by cash incentives for buyers, to offset their greater purchase price. Most multinational motor companies want to see solid domestic demand in countries where vehicles are built, before investing in their manufacture.

The latest EV survey by online retailer AutoTrader shows a greater willingness by South African consumers to consider buying an EV — though purchase price and the lack of national charging infrastructure remain big deterrents.

Motor companies need that willingness to turn into positive action. The manufacturing life cycle for car models is usually about seven years and for bakkies, up to 12. With Europe’s 2035 deadline just over 12 years away, decisions must be made very soon. Any European postponement would be gratefully accepted.​