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EU Has Already Effectively Banned Gas Cars, So U.K. Move Moot

EU Has Already Effectively Banned Gas Cars, So U.K. Move Moot.

“A date without a plan will merely destroy value today”

The auto industry exploded with anger when Britain announced Tuesday it would bring forward a ban on the sale of new gasoline and diesel cars and SUVs to 2035 from 2040, but the reaction was misplaced because the European Union (EU) has effectively already banned them by stealth.

The ban announced yesterday also includes plug-in hybrid electric vehicles.

Britain’s Society of Manufacturers and Traders (SMMT), which speaks for the British auto industry, was incandescent

“It’s extremely concerning that government has seemingly moved the goalposts for consumers and industry on such a critical issue. Manufacturers are fully invested in a zero emissions future, with some 60 plug-in models now on the market and 34 more coming in 2020,” SMMT CEO Mike Hawes said.

“If the U.K. is to lead the global zero emissions agenda, we need a competitive marketplace and a competitive business environment to encourage manufacturers to sell and build here. A date without a plan will merely destroy value today,” Hawes said.

But this is a surprising reaction when you consider Britain has already signed up to a tight schedule of CO2 emission cuts as a member of the European Union. The EU has mandated average fuel economy across manufacturers’ fleets the equivalent of about 57 miles per U.S. gallon in 2020/2021, up from 41.9 mpg in 2015. It rises again by 15% in 2025, and hits 92 mpg by 2030.

Experts like investment researcher Evercore ISI believe the 92 mpg figure will require almost 100% battery electric cars anyway by 2030, so perhaps the 2035 target will be makeable with ease. Evercore also said hybrids, even plug-in ones, probably won’t be fuel efficient enough to meet the 2025 standards, only electric will do.

According to a report from investment researcher Jefferies last year, the auto industry faces fines totalling the equivalent of $36 billion, twice its estimated annual profits, for breaching EU rules, and could be forced to raise prices up to 10%. PA Consulting, in a report released in January, had a slightly less disastrous prediction for fines, estimating the top 13 European manufacturers face fines of more than €14.5 billion euros ($16 billion). But PA Consulting said all manufacturers are now set to miss their 2021 targets, with Volkswagen facing the biggest fine of 4.5 billion euros ($5 billion). 

$34 billion should do it
VW has earmarked $34 billion to electrify its fleet, and says 25% of its global sales will be all-electric by 2025. Other big carmakers are planning variations on the same them.

So for the auto industry to express surprise about the 2035 date is strange, given the frantic activity already under way to electrify everything, perhaps by 2025.

The SMMT didn’t reply to a question seeking clarification.

It remains to be seen how British, and European, voters will react main when they realise they have been priced out of the market for new cars because only electric ones are available, and will be forced on to the bus. 


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