Electric car: the crash after the race?

The government is firing on all cylinders to encourage the French to buy electric cars. In January 2023, some of them, subject to resource tests, will be able to obtain a zero-interest loan to purchase an electric or hybrid vehicle. Credit that will have to be repaid within a maximum period of seven years. This is an experiment planned for two years. In addition to this system, there is a tax credit for installing a charging station, ecological bonus, conversion bonus, special electric car rental project, etc.

Play no more! You have to go fast, really fast. In its new Fit for 55 climate package, the European Commission predicts the end of sales of combustion-engine cars by 2035. “Whoever wants to travel far, take care of his mount”? Too late, the horse galloped off. But if the goal of reducing CO2 emissions is clear, the path to achieving it is fraught with major pitfalls.

Public finance risk

If everyone drives an electric car, the bill will likely be hefty. Design office 6t, which specializes in mobility analysis, did the calculation. Assuming a doubling of the sentence and a halving of support for electric mobility by 2030, the deficit for the public authorities, that year, would be from 9 to 12 billion euros compared to 2021.

This amount is explained, inter alia, by a tax effect. “To understand the impact of electric mobility on tax revenue, two effects must be distinguished,” explains Hadrien Bajolle, project manager at 6t. The first is due to the lower taxation of electricity in relation to gasoline, per unit of energy. He calculated that a thermal vehicle today brings in the State from 570 euros/year (in urban areas) to 650 euros/year (in rural areas) for a gasoline model, and from 700 to 790 euros/year for a diesel, the latter The difference is linked to the fact that the latter drive more on average than petrol vehicles.

On the other hand, the tax income of an electric vehicle is between 140 and 150 euros/year. “A second effect is linked to the fact that electric vehicles consume less energy than thermal vehicles. Less energy consumed therefore automatically means less revenue for public authorities, continues Hadrien Bajolle. In other words, in the current system, we are more ecologically virtuous, as we are drying up the funding of public services. This should lead us to completely rethink taxation to make it less dependent on physical flows.” Extensive program.

social threat

It is a fact, the electric car and its simpler motorization demand less manpower than the thermal vehicle. According to a study carried out by the company AlixPartners on behalf of the Automotive Platform (PFA), the French sector would lose 15% to 30% of its workforce in the electric transition, that is, between 46,000 and 87,000 jobs. “Sectors are particularly at risk, in particular bar turning, steel casting and stamping. About 32,000 jobs are threatened between manufacturers and Tier 1 equipment manufacturers, comments Alexandre Marian, co-author of the study. The entire sector must review all its production processes”.

But this report, commissioned after proposals from the European “Fit for 55” climate package last summer, insists on another risk posed by a too-rapid transition to electricity: that of “accelerating additional resources outside France”. In other words, we run the risk of seeing further relocations to low-cost countries, in Eastern Europe or North Africa, for example. “The cost price of the components of an electric car is 60% higher than that of a thermal model. This explains more expensive cars, which threaten the volume of sales, decrypts Alexandre Marian. The faster electrification is required, the more manufacturers will seek to be price competitive in order to sell as many vehicles as possible. Hence an incentive to produce in more accessible conditions outside France”. Which would obviously be negative for employment in France.

On a European scale, half a million jobs are threatened in the production of heat engines by 2040, (poorly) compensated by new jobs – around 225,000 – in electric motorisation, which would reduce the net loss to 275,000 jobs, points out a recent document from Clepa, the association of European equipment manufacturers, and the company PwC Strategy&.

Risk of shortage of rare metals

“Either we don’t want electric vehicles, electric scooters, cell phones anymore… and we accept. But if we want to get in […] a society where we will emit less greenhouse gases, we must take the consequences. And the consequences are that we need materials like lithium,” argues Barbara Pompili, Minister for Ecological Transition, adding “that we should look for some at home.”

“The battery of an electric vehicle is 40% of its value. And a large part of its weight is metals: nickel, manganese, cobalt, lithium for the famous lithium-ion batteries”, specifies Christel Bories, CEO of the mining group Eramet. The supply problem arises in France and Europe. By 2050, the EU will need thirty-five times more lithium than today, ie 800,000 tonnes per year, and up to twenty-six times more rare earths (neodymium, dysprosium, praseodymium…).

It will also need twice as much nickel, 330% cobalt, 45% silicon, 35% copper and 10-15% additional zinc, according to the latest Eurométaux report (April 2022). We will have to secure many new sources of supply.

If we add to all these challenges the need to produce a lot of electricity to run our cars, without penalizing the rest of the economy – which is a huge challenge in itself – the program of the next Prime Minister responsible for ecological planning is like the work of Hercules. We wish you success because the clean car is essential in the race towards carbon neutrality.

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