Adding fuel to the fire or moving towards a European automotive new deal

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While the debate in Brussels is in the process of being closed, it is tending to become hysterical in Paris. More precisely, the anti-electronic people are noisy there, while the supporters of the choices made in Brussels are as vocal across the border as they are coy on the banks of the Seine. For them to get out of this schizophrenia, they would undoubtedly have to stop considering that industrial management will follow in order to give themselves the means to propose a new European industrial electric deal for the European automobile industry.

The week before the 'feast of the dead' was the week of the final burial of the combustion engine in Europe by 2035. It began in France with the meeting on Tuesday 25 October of the first ministerial committee on the ZFE-m. It followed the week of the Paris Motor Show and Equip'Auto, which had already placed the automobile issue at the heart of the public debate, highlighting in particular the Chinese offensive and the risk of seeing electrification offer it unhoped-for chances of success.

Affected by the yellow waistcoat crisis very early on in his previous five-year term, President Macron knows that automotive issues are extremely sensitive and is trying to allow his majority to get through the rains of criticism that are being poured out by some and others on the various strands of the European policies that Paris supports for having largely contributed to setting their contours. For this reason, it is not a question, at the French level, of contesting measures such as the banning of Crit'Air 3 vehicles from the ZFE-m on 1 January 2025 - which is the French translation of the European directives on air quality - or the ban on the registration of combustion engine vehicles in 2035. It is only a question of ensuring that the consequences of these contested measures are seen as bearable for the populations of motorists and professionals concerned.

We thus find ourselves in a rather peculiar political situation where the supporters of the measures taken support them quite actively in Brussels but tend to remain silent in France, while the opponents express themselves very vehemently. Thus the government, when confronted with the mayors and populations concerned by the ZFE-m or with manufacturers and industrialists harmed by forced electrification, will get out the chequebook to cushion the impact of measures that it almost pretends to approve only halfway. Thus, as Autoactu reported on Friday, the agreement reached on Thursday was not celebrated by the members of the government or the Macronist deputies in the National Assembly.

It is welcomed by Pascal Canfin, MEP for Renew Europe, "a political group in the European Parliament formed in June 2019 and intended to extend the Alliance of Liberals and Democrats for Europe (ALDE) group to parties that do not want the mention of liberalism in their name, including La République en marche," says Wikipedia. Interviewed by Les Echos, Canfin does not have the restraint of his Parisian colleagues and hides neither his enthusiasm nor his determination to fight the arguments of the anti-electrics and, in particular, those of Carlos Tavares, who continues his double game which consists of committing his company very actively to the path of electrification while saying that it is not a good option.

The MEP's arguments deserve to be taken up again because they enable us to identify quite precisely the errors to which the hysterisation of the debate and the refusal of French politicians to assume the European choice, of which they are solidary, lead.
P. Canfin begins by saying: "Those who accuse us today of playing into China's hands are the same ones who told us five years ago that the electric car was not possible. He thus takes up the core of the argument that was once the argument of the environmental NGOs "alone against all".

This argument was already becoming much more widely accepted and, after the Volkswagen affair, it became the argument of the vast majority of political representatives in Europe. It consists in considering that manufacturers and industrialists in general cannot and should not be listened to to inform public policy choices. Indeed, they only know what exists and therefore have no trouble showing how uncompetitive, risky and ultimately unreasonable the alternative solution envisaged is. By trusting them too much, we condemn ourselves to immobility or even to being fooled, as was the case with the German industry, which had agreed on the 'clean diesel' strategy.

After all, when it comes to imposing new safety equipment such as ABS or ESP, the equipment manufacturers do not hesitate to indicate that costs will fall when the device is made compulsory and produced on a completely different scale. By doing the same with electric vehicles, without their prior consent this time, we will get the industry to make feasible a path that it has until now wanted to avoid taking seriously.

The course taken since 2016 with increasing firmness, in Europe as well as in China and then in the United States, is indeed this one and, with all due respect to Carlos Tavares, it corresponds to the political shift associated with the Volkswagen affair that could be summarised as the "Peter and the Wolf" syndrome: the manufacturers have so often sung catastrophist tunes like those he is trying to get across in total duplicity that it has become perfectly futile, despite the salvoes of applause that have been generated, to attempt this political enterprise; it is to mistake the era and think that one can behave politically in 2022 as one did ten years ago to engage in the exercise.

P. Canfin, responding to Carlos Tavares' objection concerning the loss of European sovereignty and the risk of placing oneself under the Chinese yoke, then expressed himself in these terms: 'The Chinese are present on the market́ of small electric cars, where European car manufacturers refuse to invest today. Besides, there are hardly any entry-level thermal vehicles produced in Europe today."

The first sentence is quite accurate and also repeats an argument found on the Autoactu readers' forum commenting on the article on the European agreement. It reads: "The manufacturers say they can no longer make cars for the people with what is being imposed on them. But is this being able, knowing or wanting? Is it the truth, or is it a clever excuse to justify the general slide towards the top of the range, as we are seeing at the moment? It's convenient, it's not me, it's Europe and then there are no limits! Yeah... The financiers and shareholders of the manufacturers have succeeded in getting rid of the unprofitable "A segment" and are now attacking the "B segment" (Bye Fiesta) to take everyone to Suvland at €30k and juicier margins. It's a lopsided game being played at the moment. A Spring comes out at 20k€ in the catalogue with a 6000€ bonus not deducted, so it's obviously possible. What's more, the Chinese are coming up with affordable equipment that obviously holds up and will overtake all the historical manufacturers from below if they don't react." This could not be better said, and even if it is primarily the product policies of the manufacturers that are at fault here, Brussels has largely contributed to this drift by pushing for ever greater safety associated with ever more numerous and expensive equipment.

It is indeed urgent that the emphasis be placed on small EVs: these are the ones that will be affordable and will allow the fleet to be renewed; they are also the ones that will consume the least amount of lithium, cobalt and nickel. It is up to Brussels to facilitate their development and to break the upmarket momentum.
This is where - as his second sentence indicates - P. Canfin would be well advised to take a closer look at the automotive dossier. Indeed, to say that there are "almost no more entry-level thermal vehicles produced in Europe today" is to confuse France or Germany with Europe. It is also forgetting that it was the EU that wanted to give Turkey or Morocco the status of 'associated' countries to the Union, which in fact establishes a free trade zone between them and us, allowing the manufacturer to integrate them fully into their European industrial organisation and to put them in competition with their Romanian or Slovakian sites, just as they put their French sites in competition with their Spanish and then their East European sites.

When one evolves in such apparent ignorance of European automobile issues, it is difficult to believe that one has fully integrated the industrial and social consequences of the agreements one is promoting. From this point of view, it is not enough to provide an envelope that will make it possible to offer more comfortable coffins to the deceased sites. It is also necessary to anticipate the volumes produced and the location of the volumes produced.

Today, there is a strong and justified temptation to use electrification as a tool for relocation, including B-segment vehicles. However, we will have to quickly consider the production of electrified vehicles on sites that are not pioneers in this field: if we do not want the vehicles produced to be imported from Spain, Romania, Slovenia, Turkey or Morocco, they will have to be sufficiently affordable to be bought locally and thus allow the decarbonisation of fleets other than those in Germany or Norway.

There is little concern about this, even though, since the "Peter and the Wolf syndrome" was identified, politicians have shown a voluntarism that should force them to consider that "the housekeeping will follow". Clearly, the Europe of the automobile, which is highly integrated since we have wanted it to be so for 65 years, needs a new deal and not just customs protection. If we can think that manufacturers are no more likely to spontaneously structure such a new deal than to propose clean or affordable vehicles, then the politicians who have ventured down the road of electrification at full speed no longer have a choice: they must exercise their industrial right to follow up.

In order for this reflection to emerge in Brussels, which is not accustomed to it, it must be requested and alliances must be formed between the States which have common interests in these matters. Unlike Germany, we do not have an interest in moving upmarket, which is really only suitable for them, the Swedes (Chinese) and the British. This opens up a few opportunities for European automotive diplomacy, which would eventually allow French politicians to assume in Paris the choices they defend in Brussels.

2/11/2022

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

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