Mondial de l’auto: the real beginning of the electric car

Anti-electric car, Carlos Tavares? No way. Electrification is “a political choice, we abide by the decisions”, says Stellantis’ general manager, not without cynicism. Three years ago, however, the then president of the PSA fulminated against “amateurism”

Brussels decisions that risk leading the “industry to a dead end”! Symbol of this 180 degree turn: Carlos Tavares knocked on the door of the European Manufacturers Association (ACEA) in June. After the decision taken by the 27 states of the European Union to ban the sale of new cars with gasoline and diesel engines by 2035, he felt that lobbying was no longer useful. “Whoever wants to haggle can haggle, but that doesn’t interest us”, hammers the boiling leader. The time for recriminations is over, place for unscrupulous execution. As a result, its Dare Forward 2030 plan provides for the sale of electric vehicles only in the Old Continent.

Born in 2021 from the merger of PSA and Fiat Chrysler Automobiles, Stellantis promises at the beginning of the next decade 75 so-called zero-emission models for 5 million in annual sales (136,000 in the first half of 2022). Furthermore, “from 2024, electrics will represent 50%” of the total production of engines at the Trémery (Moselle) mechanical unit, “against 15% last year”, specifies Arnaud Deboeuf, director of manufacturing at Stellantis.

Carlos Tavares’ flip-flop illustrates the switch to electric adopted by all manufacturers. Renault also plans to go 100% electric in eight years in Europe. And Luciano Biondo, director of Renault’s new ElectriCity northern industrial center, aims “by 2025 to produce 400,000 non-thermal cars” in Douai and Maubeuge. With the small R5 expected in 2024 at an alleged base price of 26,000-27,000 euros, then an R4 SUV derivative by the mid-decade. Renault is also expected to show a concept of this R4 at the Paris Motor Show, which will be held from October 17 to 23 in Paris. This will be one of the attractions. Better: the manufacturer intends to announce in November the consolidation of all its future zero-emission activities into a specific entity of 10,000 people, based in France. This should even be the subject of a “separate quotation, this is what we are studying”, underlined the director general, Luca de Meo, in the spring (see also interview on page 74). Last weekend, the Alliance even specified that Nissan could enter the future electric hub. In return, Renault would reduce its stake in the Japanese from 43% to 15%. An operation that would make it possible to finance the enormous expenses involved. In January, Renault and its allies Nissan and Mitsubishi announced a joint €23 billion investment in electrification over the next five years, following the €10 billion already disbursed by the Covenant. Stellantis expects over 30 billion (including software) between 2021 and 2025!

Batteries, tendons of war

The French Automotive Platform (PFA), which brings together leading manufacturers and equipment manufacturers, estimates the expenditure needed to support the energy transition at a total of €9 billion in France over five years, of which €6.5 billion to produce batteries. Because the sinews of war are precisely the battery factories. The new European manufacturer ACC (Automotive Cells Company), also owned by TotalEnergies, Stellantis and Mercedes, is expected to mobilize more than 7 billion in Europe (see page 81). With “just under 1.3 billion euros in public aid”, recognizes the director general, Yann Vincent. If battery manufacturers and manufacturers are fully mobilizing, so are equipment manufacturers. In a decade, Valeo claims to have invested more than 10 billion euros in technologies to reduce CO2 emissions. Consequently, “electrification will generate 15 billion euros in revenue from 2025 onwards”, estimates its managing director, Christophe Périllat. That’s almost the equivalent of your current annual turnover. It’s true that new electric car sales are taking off rapidly. They already account for more than 12% of total registrations in France (in the first eight months of 2022), up from just 1% four years ago. The strategy consultancy Bipe estimates that they could represent “up to 50% in 2030”. The demise of the thermal vehicle “will happen sooner than expected, around the 2030s,” predicts Yann Vincent. Logic: Most European manufacturers will see no more sense in spending money on diesel and gasoline engines, doomed to be banned by Brussels a few years later.

Generate 10% productivity

So does electrification represent a new chance for an auto industry whose production has fallen by two-thirds since its peak in 2004 to 1.35 million vehicles in France last year, with an industry record trade deficit of €18 billion? It is true that electrification “could potentially lead to the creation of 11,000 jobs”, predicts Alexandre Marian of the firm Alix Partners. Already, the needs are immense. Battery, electric motor, data and on-board software technicians and engineers are in high demand. But electrification also risks… “eliminating another 52,000 jobs by 2030 in France”, tempers Alexandre Marian. This represents a net drop of over 40,000 jobs. That is, “almost 15% of the workforce”, reacts Claude Cham, president (of honor) of the Federation of equipment manufacturers Fiev. The main victims will be forges, foundries and mechanical activities. Across Europe, 225,000 jobs could be created by electrification, according to PwC. But 500,000 would be destroyed! Why this erosion? Electrification “adds 50% of the costs to a conventional vehicle”, warned Carlos Tavares at the Reuters Next summit in late 2021. [ces] costs to the final consumer”, there is no other solution than to achieve “10% productivity per year in an industry used to generate 2 to 3%”, explained the general manager of Stellantis.

Who says productivity says fall in employment. However, France is likely to suffer more from future industrial arbitrations than other vehicle-manufacturing countries in Europe. Because the tricolor industry suffers from high additional production costs, “from 300 euros per car compared to Spain, 600 compared to Central European countries”, estimates Luc Chatel, president of the PFA. Another bad news for employment: almost all high-value electronic components, whose electrified models are voracious, are… imported (see page 78). However, an electric car “includes 60% more (in value) than a thermal model”, calculates Alix Partners. Finally, an electric car requires less labor than a gasoline or diesel model because it is much easier to assemble. Former Volkswagen president Herbert Diess estimated it was 25% less complexity!

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