End of heat engines in 2035: after the German veto, what consequences for the automotive industry?

Romain Rouillard 7:01 p.m., March 10, 2023, modified at 7:03 p.m., March 10, 2023

It's a grain of sand that suddenly came to stop a machine that was nevertheless running at full speed.

Validated by the EU Member States and the European Parliament on February 14, the ban on the sale of thermal cars by 2035 in the European Union only had to pass the obstacle of the Council of the EU to be definitively adopted.

But this Tuesday, an unexpected blockage suddenly slowed down the process.

For the text to enter into force as planned, it required a favorable vote from countries representing 65% of the European population.

And while only Italy, Poland and Bulgaria were initially to oppose all-electric by 2035, Germany, with its 83 million inhabitants, joined the trio,

An astonishing turnaround that caused a slight wind of uncertainty to blow when everything seemed to be tied up.

The main European manufacturers have invested heavily in electricity with this famous deadline in sight.

The Renault group, for example, plans to produce 500,000 electric vehicles by 2025, while the Italian Alfa Romeo has already announced that it will abandon the internal combustion engine within four years. 

“Winners could become losers”

"Today we postponed this ban sine die but it proved that we were able to prevent certain things from happening. So to bring our German partners into line, it is likely that concessions can be made ", says Guillaume Crunelle, automotive expert at Deloitte.

Example: developing a sector of "biofuels" or synthetic fuel, without oil - therefore less polluting - but which would still require keeping thermal engines.

A technology on which some German manufacturers, including Porsche, have worked a lot.  

>>

- Electric cars: where are the other countries?

"The winners could become the losers", resumes Guillaume Crunelle.

“Tomorrow, if there are biofuels, there will be an offer parallel to electricity. We will therefore have to be competitive in both technologies. This means investing in electricity but also investing in thermal power when we had to stop Especially since a study we conducted proved that 49% of electric vehicle buyers would be ready to change if a less polluting thermal solution were to emerge,” argues Guillaume Crunelle.

But according to Arnaud Aymé, transport specialist consultant at SIA Partners, the large-scale development of biofuels may not immediately benefit everyday vehicles.

"Synthetic fuels are very expensive to produce. And if a sector gains momentum, we can imagine that it will go primarily to the air sector, because the electric plane is not for now", underlines he.

“Brands are not going to deconstruct battery factories”

And with regard to the course to be taken now for the manufacturers, the time has not yet come to a great upheaval.

"We are following this closely but we will not change strategy. If a new regulation passes, we will adapt", soberly replied the Renault group, questioned by Europe 1. Arnaud Aymé also refuses to assimilate this German blockage to a major cataclysm for the automotive industry.

"What happened two days ago annoys manufacturers because they don't like this political instability. Now, even if the end of thermal cars were to come after 2035, for the French sector, for example, that will not change much. Brands are not going to deconstruct battery factories", he underlines. 

>>

- New black year for the French automotive market in 2022

And according to him, we must not overinterpret this German veto at the Council of the European Union.

"It has been postponed indefinitely but it is not dead either. This ban on selling thermal cars in 2035 is absolutely not abandoned".

Clearly, the chances of seeing manufacturers backpedaling in turn by reinvesting massively in combustion and hybrid are almost nil.

"Now, even the United States is going electric. So the manufacturers no longer have a choice. History is on the way and nothing will stop it", assures Arnaud Aymé.

And this despite the skepticism displayed by some bosses about this all-electric policy.

"Carlos Tavares (the boss of Stellantis

) clearly said he thought it was stupid.

That there were other solutions like the rechargeable hybrid.

And today he says 'I keep thinking that but we are a big group so we have to line up'".