Europe’s effort to throttle the internal combustion engine in just over a dozen years has just passed a key milestone.
MPs on Wednesday voted in favor of requiring carmakers to eliminate emissions from the cars they sell from 2035. They rejected an attempt by some right-wing lawmakers to release even a little industry, voting against an amendment that would have set an average fleet-wide CO2 reduction of 90%.
The 19th century invention by men named Maybach and Daimler is not yet dead. Parliament only voted on its position for negotiations with national governments. And member states have yet to decide whether or not they will back the 2035 date, but they will by the end of the month.
After that, the time will come for negotiations between the representatives of the Parliament and the Council of the European Union, which will begin around September or October at the earliest. It will take several months.
While the 2035 plan has been well telegraphed (the EU unveiled it 11 months ago) and the decision has yet to be finalized, European consumer organization BEUC is not exaggerating when it calls this vote a history and claims that this would have been unthinkable years ago.
“We have set a clear direction for the industry,” said Pascal Canfin, chairman of the European Parliament’s environment committee, after the vote. A faster exit from combustion engines, as some political groups including the Greens have proposed, would make it “impossible to manage the social and industrial consequences linked to the transition of Europe’s leading industry in terms of employment”.
What does this mean for automakers and their suppliers?
Several industry lobby groups remain wary. The Association of European Automobile Manufacturers wants a revision of the post-2030 objectives. The German VDA also claims that it is too early to set a zero emissions target. France’s PFA director warns Europe is taking a drastic decision and not properly protecting its industry.
On the other hand, manufacturers such as Volkswagen, Stellantis and Mercedes-Benz have already spent the last few years accelerating their transition to battery electric vehicles and increasing their investments by tens of billions of euros. Even Toyota, which remains wary of how quickly consumers will be ready to make the switch, has said it will be ready to sell only zero-emission cars by 2035.
Where it will get more complicated will be less affluent automakers like Renault and suppliers whose fortunes remain too closely tied to combustion. The French manufacturer, reeling from having to cancel operations in Russia, its second largest market, is considering drastic measures, including a partial sale of its stake in Nissan and the carve-out of its electric vehicle and combustion engine activities. A wave of consolidation is underway among parts manufacturers, with more to come.
Other companies for which Wednesday’s vote was a big setback are high-end manufacturers such as Ferrari and Aston Martin. A measure due to come into effect from 2030 would end emissions target exemptions for automakers that produce fewer than 10,000 vehicles a year.
Italy wasted no time after the EU formalized its 2035 proposal last year to signal it wanted ways for Lamborghini to circumvent the restrictions.
Ferrari investors are keen to hear about the electrification plan that chief executive Benedetto Vigna has been drawing up since he took office in September. The 1,000 horsepower supercar maker is hosting a much-anticipated Investor Day next week and faces the daunting task of catching up. Ferrari’s first all-electric vehicle isn’t expected to arrive until 2025.
“We would expect OEMs that have taken a more cautious stance on EV adoption to revise their plans and consider accelerating their electrification strategies,” the Bernstein analyst wrote Thursday, Daniel Roeska, in a note.