End of combustion engines in the EU by 2035?
In mid-July, the European Commission decided that it wanted to the end the sale of motor vehicles with internal combustion engines by 2035 to be replaced by electric vehicles. This step comes at a time when a significant number of car manufacturers have announced the end of internal combustion engines in horizon of the next 15 years. What does this mean for dealers?
The EU intends to increase emission standards
The European Union is failing to meet its original targets for reducing CO2 emissions not only from car transport. With weather fluctuations in July causing large-scale floods in Belgium, Germany, and the Netherlands, a tornado in the Czech Republic, or an unexpected heat wave in Spain, the climate change debate is intensifying. According to commissioner Adina Valean, transport is responsible for 29% of all EU greenhouse gas emissions (cars are responsible for 12%). By 2050, the commission wants to reduce these emissions by 90%. Banning internal combustion engines in cars and vans could be a way to reach that goal.
Some manufacturers are in turmoil
At present, it is still only a proposal that is opposed not only by some representatives of the car industry, but also by politicians. For example, the German MEP Peter Liese said that the end of internal combustion engines by 2035 could be a major problem for manufacturers of components of these engines. At the same time, he is not the only one in the European Parliament who has reservations about the current proposal. So, what will happen next?
Every two years, a report on the direction of the market is drawn up, and a complete revision of the regulation is due in 2028. At present, cars in the EU can produce 95 g of CO2/km, while in 2030 it should be 55% of that figure and from 2035 net zero. For delivery vans, it is now 147 g of CO2/km, which will fall to half by 2030 and by 2035 should also be zero. Until 2030, only small manufacturers with an annual production of 1000 – 10,000 cars or 22,000 vans can apply for an exemption. The European Commission has already announced that it will prepare proposals for the sale of electric cars, which will come into effect by 2030 latest. Similar programs already exist in key markets such as France or Germany, contributing to a massive increase in electric car sales.
Electric cars lack infrastructure
The key problem, which has been highlighted by manufacturers, is the lack of charging infrastructure. Some car manufacturers have strongly criticized the European Commission for this, suggesting that if the EU does not invest in charging infrastructure, it is unrealistic to achieve the newly set goal. The European Commision responded by proposing mandatory construction of public charging stations (paid for with public money) on all major roads with a maximum distance of 60 km between them by 2025. By 2030, there will be total of 3.5 million public charging stations in the EU, and 16.3 million by 2050. However, the charging stations are being built in parallel by the manufacturers themselves, whether it is Tesla or the Ionity consortium backed by BMW, Ford, Hyundai, Mercedes-Benz, Volkswagen, Audi, and Porsche.
Dealers and service stations are not ready for electric cars
The electric vehicle problem will soon affect dealers as well. Although they are ready to sell electric cars, their infrastructure is absolutely not adapted for them. In short, dealerships are not ready to recharge 15 demonstration vehicles at the same time with fast charging, not to mention recharging vehicles in service. Building a charging infrastructure consumes money and time. In addition, many dealers will struggle with the insufficient capacity of the electrical transmission grid, as even 10 fast charging stations with an output of 150 kW will require an electrical connection of a respectable 1.8 MW, which is equivalent to the electrical consumption of a medium-sized factory. The European Union will fact the same problem. To be able to transition to electric cars, it will be necessary to significantly strengthen the transmission grid and electricity generation capacity.
Another problem will be with service. New tools will be needed for the repair and maintenance of electric cars as well as different facilities. This will apply in particular to the handling of batteries that are highly flammable, explosive, susceptible to physical damage, and most importantly, high weight. While portable systems for removing an internal combustion engine have been part of the standard equipment of a car service for decades, most services do not have the equipment or the necessary space for handling batteries.
Prepare for the revolution in time
The necessary preparations for dealerships and service centers could thus be divided into three categories. The first is the charging infrastructure, not to mention that some discounted charging point for customers could be an interesting marketing tool. The second category is service and facilities. Both will require massive investments and major renovations with long-term returns. The third category is sales. This will change significantly, because customers will suddenly become interested in a completely different range of parameters than before – range, charging speed, availability of charging stations in their place of residence, speed of single-phase charging (from 230V home chargers), etc. A tool that can deal with these changes is the specialized Automotive CRM from Konica Minolta, for example. It enables a comprehensive 360 ° customer view, from their interactions with car dealers and service centers, thanks to which you will more easily identify a suitable electric car for them. Furthermore, you can combine your offer with targeted subsidy incentives that the EU is now preparing with member states. As always, the player that wins is the one that is able to adapt the fastest to market changes.
Sources
https://fortune.com/2021/07/14/automakers-europe-ban-of-new-combustion-engine-cars-by-2035/
