An internal combustion car will be loss-making

A faster shift to electric car production would bring automotive companies increased market value and very significant additional profits. According to a report by the Brussels body Transport & Environment (T&E), due for publication on Wednesday, for the six main car manufacturers (Volkswagen, Stellantis, Volvo, Mercedes, BMW and Toyota), whose available financial data and strategic plans have been analyzed financially, their capital before 2030, the share capital would increase by an additional 800 billion euros in the event of the exit of thermal engines faster than in the current hypotheses.

Combustion engines will not be profitable

A study commissioned by T&E, carried out by the consultancy Profundo, shows that automakers are facing a drop in the profitability of combustion cars at the end of the current decade. It must be the result of the greater competitiveness of cheaper electric cars (by 2025 the prices of comparable electric and combustion models must be equal) and the tightening of emissions regulations. As a result, within three to five years, the profitability of the production of electric cars will exceed that of the internal combustion engine. – From a financial point of view, the decision to gradually abandon internal combustion engines is a suicidal step for manufacturers. Such a planned transformation reduces goodwill and even exposes companies to the risk of exiting the market – says Luca Bonaccorsi, director of sustainable finance at T&E.

In his analysis, Profundo estimates that assuming a faster shift away from petrol and diesel, Volkswagen could more than triple its market value (by 253%) by 2030, and Stellantis almost quintuple (388%). The market for premium brands would have even more opportunities: Mercedes and BMW could increase their value by 471 and 472% respectively. – A faster transition to electric vehicles is not only in the interest of the climate and consumers, but is also essential for the financial profitability of European car manufacturers – underlines Rafał Bajczuk, senior policy analyst at the Foundation for promotion of electric vehicles.

Not all automakers are ready to transition to purely zero-emission vehicles in the same way. According to T&E, Volvo and Volkswagen are in the best position. Volvo Cars aims to go fully electric by 2030. – Manufacturers are working hard to increase battery performance and bring down the price. Volvo Cars has invested in StoreDot, which is developing a battery based largely on cheap and readily available silicon, which can be quickly charged – says Emil Dembiński, President of Volvo Car Poland.

Next week, the European Parliament will vote on the date for the final withdrawal of new thermal cars from the market, which would take place in 2035. In the meantime, manufacturers would be obliged to reduce the emissions of passenger cars sold by 20%. in 2025 (compared to 2021) and 55%. in 2030

A reader is a risk

Meanwhile, the prospect of killing internal combustion engines is highly controversial not only in the automotive industry, but also in the fuel sector. Yesterday, 103 entities representing manufacturers of fuels, biofuels and car parts called on European authorities to remain technologically neutral, i.e. to refrain from unconditionally banning the sale of cars with internal combustion engines in Europe. They indicate the risks linked, among other things, with the need to accelerate the development of electricity networks, the dependence on rare earth metals necessary for the production of batteries (for example, lilt, cobalt or manganese) or the increase in the cost of cars due to the arbitrary choice of propulsion technology with a limited supply of raw materials.

– Electric cars are one of the important tools to decarbonise road transport in Europe, but we will achieve optimal results using a whole range of solutions – says Bartosz Kwiatkowski, director of the Polish Liquefied Gas Organization. Stresses that the current version of the regulation excludes all technologies from the European car market, except for electric cars – including those powered by hydrogen fuel cells.

Electricity, the crisis does not tick


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The crisis in the automotive industry due to the shortage of chips and the breakdown of supply chains has not slowed down the growth of the electric car market. While registrations of petrol and diesel cars are falling at a double-digit rate, sales of electric cars are rising sharply. According to the European automobile manufacturers’ association, ACEA, 224,100 vehicles were sold in the EU in the first quarter of 2022. purely electric (battery-powered) cars, more than half more than in the same period l last year. At the same time, the share of this type of engine in total sales of new passenger cars has increased to one tenth, or double. This high pace of market development, however, may be hampered by the slower development of charging infrastructure. ∑

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