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AB 2000 studies

Alain Boublil Blog


Electric vehicule:the major uncertainty

Considered as a priority in the fight against the greenhouse gas emissions, the promotion of the electric vehicle is encountering many obstacles in the world which could put into question the announced objectives, due to the specificity of the related industrial sectors and of the client requirements. We do not meet these difficulties in the power production or in the building isolation for instance. Technologies are available for renewables as for nuclear. Regarding the reduction of the energy consumption, it is enough to offer the appropriate financings, to turn out and to recruit the qualified manpower. The situation is quite different in the carmakers sector.

A vehicle is a good which is very complex to make. It needs numerous suppliers which must have acquired along the decades the necessary know-hows and competitiveness. The motorization mode change makes the electric car a completely different vehicle. First must be mastered the production of batteries or be found competitive suppliers both regarding price and quality. Then, the assembly of the pieces must be completely transformed with hundreds of thousand jobs concerned.

The development of the “giga-factories” in Europe must not create an illusion. It will be needed a lot of time at the Douvrin plant, in the north of France, where Stellantis and Mercedes made a joint-venture for the production scaping ratio falls under 10%. It will be also necessary that the raw materials supply as lithium or rare earths where China has a 70% market share, is secured. The reconversion of the sites will need heavy social plans. The opening of new plants will necessitate different qualifications.

Thermal engines components and parts producers will have to retrain themselves because an important share of their markets will progressively disappear. The car industry will so have to face the social costs of these transformations and the financing of the new production units. Their main competitors, the Chinese carmakers, have, them, started the electric vehicle production much before their European and American homologues, with the exception of Tesla. They have not been affected by the retraining costs. They so have at their disposable for a long time an advantage regarding competitiveness and the quality of the vehicles proposed to the public.

The product must answer to the market expectations. The adventure of Hertz, the car leasing company, is revealing. It bought tens of thousand electric vehicles. It has been obliged to resell them because its customers did not want to hire them. Several points explain car driver attitude. There is the price, largely higher than for a thermal engine car and the driving range with the uncertainties about the recharging network. Who is going to buy a car when he knows that it will not be possible to go into vacations with it? Appropriate for short distances and inside urban zones or for home owners who have a recharging equipment, the electric vehicle suffers from the constrains attached to its energy supply. These points explain the large differences existing between the three major world markets, the United States, Europe and China.

The American market is disappointing. President Biden had fixed as an objective that the electric vehicles market share would reach 50% in 2030. In 2023, it has only reached 9.5% because models do not meet enough the customers expectations: high prices and especially too short driving range. A rebound is unlikely after the instauration of high tariffs on imports of Chinese batteries and cars; car drivers are used to make long trips. Vehicles consume a lot of gasoline but its price, thanks to low taxes, are twice lower than in Europe. The electric vehicle so is few attractive all the more that we see a feeble mobilization in favor of climate in the country. All the same, the first electric vehicle producer in the world is American, Tesla which has invested to produce in China and in Europe.

In Europe, it is different. Despite a very high public commitment in favor of climate, carmakers were interested in the development of electric vehicles only recently. The Tesla success and mainly the European decision to forbid the sale from 2035 of new vehicles with thermal engines forced them to react. But the prices spreads, 20% as an average despite public subventions, the high maintenance costs and the lack of recharging points continue to have a dissuasive effect. In France, in 2023, their share has reached 16,7% of the new registrations but it has fallen since the beginning of the year with the reduction of the subventions, as in Germany where market share is now only 11%.

China with near 22 million registrations of new cars in 2023 is the first car market in the world. Consumers demand is strong and the carmakers are able to satisfy it. Electric vehicles sales have increased by 34% since the beginning of the year and the exports for the 2024 first four months by 20.8%, i.e. 421 000 units. The Chinese industry, which is also the first producer in the world, has at its disposal both, to the difference of the U.S. and of Europe, a strong internal demand and enterprises able to satisfy it and to export. It is why the European authorities, worried, have launched a procedure allowing to strongly increasing the tariffs on the electric vehicles made in China, which so concerns Tesla.

But that step comprises a major contradiction and is not going to receive unanimity from the State-members like Germany: Chinese carmakers, as Build Your Dream (BYD), through exporting to Europe, thanks to their competitive prices, are favoring electric vehicles sales and contribute to the achievement of the climate objective. The launch of heavy tariffs to protect European producers, will dissuade consumers who think prices will be too high. The electric vehicle share will remain at the current low level and that will make impossible the interdiction in 2035 of the sales of new cars with thermal engines.

That decision will necessarily generate a retort from the Chinese authorities, hurting European vehicles. Volkswagen realizes 30% of its sale in China and German car exports constitute one of the most important contributions to the country trades surplus. Everything allows to thinking that Berlin will do all it can do to avoid trade tensions with Beijing, which will leave the European market door open to the Chinese carmakers. It then will remain to the States to take the appropriate decisions in order to allow the European industry to having the resources to finance this major technical transition and to facing the Chinese competition.

We cannot want something and its opposite. It is not possible to impose to the car drivers a mobility mode which does not correspond to their expectations and it is not possible to constrain enterprises to anticipate a mutation without having the guarantee about its achievement. In the U.S., it is the freedom which prevails, even if tariffs protect the local carmakers. In China, it is not an issue. Everybody agrees and the huge Chinese market offers to carmakers a production volume which is a powerful factor of prices reduction. It remains to Europe to take the lessons, through a postponement of the date of the interdiction, in order to allow the carmakers to adapting them to their clients demand, or through deciding to put into place a substantial program of financial supports to allow them to achieving their mutation toward the electric car.