Home & Leisure

The big miss on electric cars is remaking Europe's auto industry

Albertina Torsoli, Stefan Nicola, Monica Raymunt, Bloomberg News on

Published in Automotive News

“We have spent billions as an industry to make electric mobility possible,” said Holger Klein, the CEO of ZF Friedrichshafen AG, a German parts maker that employs around 165,000 people worldwide. “Now the question is: Do we have the right parameters?”

Renault SA CEO Luca de Meo has been advocating an alliance akin to the tie-up that created a European planemaker to vie with Boeing Co. by pooling assets in Germany, France, Spain and the UK. The executive has argued that an “Airbus of autos” would help share the massive cost of building cheap EVs, while allowing them to benefit from greater scale.

Interest in broader cost sharing rose late last year, when Renault presented a concept for an electric city car that would cost less than €20,000 — half the price of VW’s ID.3. De Meo’s initiative is inspired by Japan’s kei cars. The popular mini vehicles are built by several manufacturers and get preferential treatment from regulators.

Different approaches are emerging. Stellantis’s Tavares has openly discussed an interest in mergers and acquisitions, whereas others are more focused on less-thorny collaborations.

Renault’s de Meo downplayed speculation on a major combination last week, telling Bloomberg Television that agility is more important than size. He confirmed that talks on a joint EV platform are taking place “left and right.”

“We’re very open to share that kind of investment because it’s very difficult to make money with small cars,” said de Meo, who has previously worked for Volkswagen as well as Fiat. “We’re trying to find a way.”


A shakeup in Europe could spill over to the U.S., where General Motors Co. and Ford Motor Co. also are paring back EV investment and have indicated they’re open to partnerships with peers. President Joe Biden’s administration is considering giving manufacturers more time for the shift to electric cars, the New York Times reported over the weekend.

As they’ve dialed back investment plans, traditional carmakers have returned more money to shareholders, indicating a lack of resources isn’t the issue. GM, Ford and Stellantis spent a combined $22.7 billion buying back shares and paying dividends last year, while Renault last week proposed its biggest shareholder payout in five years.

It wasn’t supposed to work out this way when the EU approved plans last year to effectively halt the sale of new combustion-engine cars from 2035. There are a number of reasons for souring EV sentiment. Consumers got glitchy software and unexpectedly high operating expenses. Because of maintenance complexities, insuring an EV costs more than a conventional vehicle — twice as much in the UK, for example. But affordability might be the biggest hurdle for mainstream buyers.

The slump is only expected to be temporary as battery technology and charging infrastructure improve, according to Colin McKerracher, an analyst at BNEF.


swipe to next page

©2024 Bloomberg L.P. Visit Distributed by Tribune Content Agency, LLC.


blog comments powered by Disqus