Europe’s automakers rush to go electric

The move to electric vehicles

Yet, the turmoil being experienced by the industry is much more about the stop-go of last year.
Rather than cause a retrenchment, the pandemic has helped accelerate the move to electrification.
The greatest spur, however, has undoubtedly been government legislation.
EU penalties on carmakers that fail to meet emission reduction targets are driving a mass migration from internal combustion engines (ICE) to hybrids and fully electric vehicles. After a slow start, European carmakers are adopting aggressive transition plans.

Volkswagen goes all in on electric vehicles

Just this past week, Volkswagen announced — to the joy of its shareholders, who piled in to push shares up 20% — that the German automaker aims to become the global leader in electric cars by 2025. The automaker is placing heavy bets on next-generation lithium-ion batteries, the Financial Times reported.
Volkswagen says it will sell 1 million electric or hybrid cars this year, a tenfold increase from 2019, with half being fully electric vehicles and the rest plug-in hybrids.

Bullishly, the company says it will make good profits on those cars, predicting 5.0%-6.5% for the year. That projection is down from 7.9% in 2019 but better than 2020’s 4.8%.
The impetus is intensifying, as Volkswagen’s delayed launch of the fully EV ID.3 car by just three months is said to have cost the firm €200 million in EU emissions penalties last year.

Competitors race to catch up

Other carmakers are not far behind.
According to ThomasNet, Swedish Volvo’s CTO Henrik Green said “there is no long-term future for cars with an internal combustion engine.” The company will even be pulling hybrid models from its lineup.
In a series of stages, Volvo will have an electric version for all its models by 2025. The automaker is expecting to be fully electric by 2030.
Ford Europe has said the same, promising to be fully electric by the end of the decade. In the US, General Motors announced recently that it is committing to an all-electric future by 2035.
Even luxury brands are following the same strategy.
Jaguar announced an ambitious near-term goal to fully ditch gasoline and diesel by 2025. The target is a massive undertaking for the firm. Jaguar’s resources for research and development are relatively limited compared to other major automakers.
Volkswagen’s competitor in Germany, BMW, is taking a slightly more cautious line. BMW said it will have half its sales from zero-emission vehicles, likely full EVs, by 2030. The rest, ICE and hybrids, will be phased out during the next decade.

Legislation versus customer demand

Legislation, rather than customer demand, is in large part driving the pace of change.
But, as a result, Europe is leading the way in this rapid transformation.
US states like California will likely be not far behind. However, it remains to be seen how ambitious the new Biden administration is in driving through change on a similar scale in the US.
Meanwhile, customer resistance is likely to be fierce in the US. Infrastructure and driving distances make fully electric vehicles more of a distant prospect outside the major urban areas.
The timescale, if achieved, will have a profound impact on metals demand. That expectation has been behind the rise in copper, lithium and cobalt prices these last few months.
Automakers, though, seem to be largely betting the farm on their plans.
For good or ill, they are going electric and hoping consumers, en masse, come along with them.
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