DAVID FURLONGER: The cost of being clean

It’s said that “misery loves company”. If so, the South African motor industry should feel right at home with its European counterparts. They could all share the frustration they feel as they try to embrace an electric future. 

This week’s FM cover story highlights how the South African industry is struggling to migrate from the traditional internal combustion engine (ICE) and develop the capacity to manufacture and sell electric vehicles (EV). 

The EU is streets ahead. That doesn’t mean everything there is running smoothly. Far from it. But while South African vehicle and components companies blame government inactivity for many of their difficulties, the problem to the north is perceived government overactivity, bordering on interference. 

A few weeks ago, the EU performed a sudden U-turn by relaxing its post-2035 ban on ICE vehicles, to allow the development of carbon-neutral substitutes — known as e-fuels — for petrol and diesel. 

The decision was in response to pressure from motor companies, mainly German, who argue that many of the EU’s EV-transition target dates are too rigid and take no account of industry developments. 

Now the industry is ganging up on EU bureaucrats again. The European Automobile Manufacturers’ Association says that imminent rules to reduce poisonous emissions from petrol and diesel engines further will not only cost up to 10 times as much as EU estimates but will also set back EV development. 

A study commissioned by the association estimates that the direct cost per vehicle of complying with Euro 7 exhaust-emission regulations would be €1,862 (R38,649) for a car and €11,707 (R242,954) for a truck or bus. EU estimates were €184 (R3,818) and €2,765 (R57,444) respectively. 

Volvo Group CEO Martin Lundstedt says: “Euro 7 sets major roadblocks for manufacturers and our partners in the supply chain to continue with their rapid shift to zero emissions. To comply with the proposal, truck-makers would be forced to move substantial engineering and financial resources from battery- and fuel-cell electric vehicles back to the internal combustion engine. It would not only put the brakes on our rapidly advancing electromobility roadmap but potentially set it into reverse gear. It is not good for the industry, not good for the climate, and certainly not good for people’s health and wellbeing.” 

Euro 7, as its name implies, is the seventh generation of European clean-air legislation governing vehicle emissions. It is due to take effect for cars in mid-2025 and for trucks and buses in 2027. 

Rather than the Euro 6 update that was expected, the manufacturers’ association says Euro 7, which also seeks to control the emission of microscopic particulates from tyres and brakes, is more stringent for cars and vans and “a complete overhaul for trucks and buses”, requiring billions of euros of investment. 

It is “a complicated and costly reform”, it says. “It will lead to higher prices for consumers and operators, who risk holding on to their older, more polluting vehicles for longer. This would be detrimental to the environment and disruptive for vehicle manufacturers.” 

Automakers want to know what the point of the new rules is, when the motor industry is already racing helter-skelter to create an emissions-free EV environment. They say that the costs involved in Euro 7 will take away money from EV research and development, and threaten thousands of industry jobs.  

The industry has powerful allies. Eight European governments, including France and Italy but excluding Germany, have said they oppose the new rules. Talks are continuing but, in principle, there are enough dissenting EU members to block the legislation, which they say is unrealistic. They want it scrapped altogether. 

The US publication Automotive News says the spat underlines the view that “EU countries have reached regulatory saturation on environmental rules”. 

Renault Group CEO Luca de Meo observed recently: “There is a temptation to develop more and more regulation. Piling up regulation doesn’t mean we have a strategy. What we need is an industrial policy and strategy.”