The electric shock behind Europe's stuttering EV future
news.sky.com
news.sky.com
Germany does have a giant, excellent chemistry industry.
> China's interest in batteries is not a recent trend. It has been investing in their production for many, many years. It has been attempting to dominate not just the production of cells but also of the cathodes and anodes that go inside them - not to mention the chemicals used to make those electrodes. It has been firming up the entire supply chain - all the way down to the mines. And while you can find only so much lithium and cobalt in China, Chinese firms have been buying up mines in Africa and elsewhere for years.
The fun thing is that the west saw it coming and didn't try particularly hard to forestall it. Consistent, long term industrial policy is very effective.
Truth is they are years ahead of most battery manufacturers in R&D.
At least maybe we'll get to stick around as business consultants and selling mainframes to a handful of companies convinced by "nobody was ever fired for buying German".
However, germany is the most car-dependent country (because it can't go anywhere without making cars).
Companies can forget how.
Stellantis (which owns Chrysler, Jeep, Dodge, Fiat, and some other forgettable car brands) forgot how. The CEO was fired on December 1st, 2024. His strategy had been to crank prices way up, add on post-sale service charges, and get the biggest bonus in automotive executive pay history (not counting Musk's current litigated bonus.)
Sales went down. Way down. Chrysler now makes only minivans. Overpriced Jeeps are piling up in dealer lots. The "mild hybrid" power train, with 21 miles of electric mileage, is a dud. The brand image is in the tank. Nobody wears a Stellantis T-shirt.
The US has 3 million unsold cars sitting on dealer lots. Some have been there for over a year. How many will still start?
- Abarth
- Alfa Romeo
- Chrysler
- Citroën
- Dodge
- DS Automobiles
- Fiat
- Jeep
- Lancia
- Maserati
- Opel
- Peugeot
- Ram Trucks
- Vauxhall
Which worked so well for Japan that you had Nobel economic laureates promoting it. </s>
I'm being a bit sarcastic of course but MITA was seen as such the future in Japan--until it wasn't.
Anyway, it was wildly successful in Japan, Germany, and the US. Up until the time it stopped working. It has been arguably less successful in China, but still good enough to create massive change.
It's not very clear (at least to me) how and why. But it never seems to be a positive thing after some point, instead, it seems to have very negative impacts on more developed countries.
It's good at the initial stages and unproductive later on. The problem is that when you need to remove it is also when its recipients are most powerful.
Yes. This is what kills the US in rare earths, cobalt, gallium, etc. US mines shut down when the price goes down. Sometimes they restart when the price goes up. Sometimes they don't. All this churn makes the business unprofitable in the US.[1]
[1] https://mpmaterials.com/articles/mp-materials-reports-third-...
The largest non-Chinese supply chain globally is Lynas, concentrates from toxic waste free mining in W.Australia are shipped to Malaysia for processing where pools of low level radioactive waste and associated acids are created as by product.
Texas, USA, very much wants in on having "oceans of toxic sludge left after the" processing:
The United States Department of Defence will contribute $US288 million ($442m) to develop Seadrift, with a view the construction will be finished by mid-2026. Lynas bought the southern Texas site in July last year from Dow and planned to turn first sod before the end of this year.
https://lynasrareearths.com/wp-content/uploads/2023/12/Lynas...
The US expansion is funded by a US DoD initiative to secure critical resources for the US.
This of course is unsustainable, and should have been stopped earlier by either Chinese or western governments with some concern for the environment as well rewarding bad self-destructive behavior.
That being said, having driven my EV for a year or so I somewhat find ICE vehicles gross now. All that sputtering, poisons, jerkiness, continuous maintenance, loudness etc. just feels so primitive. The only place it still makes sense is for situations that require a lot of power like long distance hauling, heavy equipment etc.
To be able to compete with China the West would need to:
- Match generous subsidies to companies, not just through banks but at the government level by building entire towns just for battery production.
- Making large parts of land uninhabitable for the cost-effective extraction of rare earths.
- Suppress wages at factories and engineering bureaus to be able to cost compete in manufacturing.
- Dramatically lower cost of energy production (only doable without renewables in the short term).
I just don't see any Western government having a strong enough mandate for any of the policy changes required to compete with China. The simpler reaction is just imposing tariffs.
And China is hugely deploying renewables, which they happen to be able to produce very cheaply due to their industrial policy. The difference is that China is using their fossil fuel resources to make this investment, while the west is using its fossil fuel resources to shove crayons up its nose.
what a bunch of empty invective
This is how it always works, until it doesn't. Why is everyone so quick to forget that Japan was the exact same way in the 70s and 80s?
Overheard at a battery conference: western battery suppliers are actually copying (or in your words, stealing) the Chinese electrolyte formulas and other designs.
Great artists steal, the US and Europe play the same game.
The dependence on cars and the incompetence to get excellent on software are a huge problem here in Germany. But the educated part of the people here saw that coming.
The will to change is what is dragging us down in Germany.
- Because they can invest and still fail.
- Because a press release and actual money spent on reasearch are two very different things.
Anyway, that's all fine. Those are all huge and diverse economies, will re-group and stabilize.
Europe is stagnating due to an ever-increasing set of regulations, higher taxes (partially required to enforce those regulations and a shrinking labor force) and specially the effect that those have on the motivation of the most skilled workers: killing it.
Me and my wife have tried starting a couple of businesses, but it’s incredibly complicated to navigate and deal with German bureaucracy, and all the effort gets awarded with an incredibly high tax rate of around 50%.
So lots of smart people in my environment are actually walking the path backwards and they have either stopped side projects or simply started to reduce working hours. Either that or just moving to other countries like Switzerland, Singapur or the US.
The situation is even worse in Netherlands, France or Spain.
The taxation system in those countries creates negative incentives as it makes you feel punished if you become economically successful with a new product or idea. I really think it should be the complete opposite. And it’s not a matter of lack of budget for public services: public education, healthcare and justice are usually covered with around 30% of the public expenditure.
Anyway, I don't think that it has anything with regulations or taxes. It's the attitude of Europeans. You can see how European GDPs have fallen short after 2008 but that's not because regulations kicked in in 2008 but because, IMHO, the way they handled the economical crisis.
Also, Europeans have a different understanding of what startup is supposed to do, they appear to think that its computer based high margin small business and Americans appear to believe that its supposed to be a business that should grow extremely fast and doesn't have to have any profit until it captures the market and establishes monopoly.
The American way creates huge wealth but creates a lot of suffering and stagnation once the startup reaches the profit making phase. This is a no-go for the Europeans, its something that the public demands be tackled and its something that EU tries to do with giant tech corporations and that's what makes the American businesses hate EU.
I don't know if European public will accept having american-like wealth concentration at the top. The vibe in Europe is that we should all have a dignified life quality and un USA they are O.K. with having people in extreme poverty at the same street with 40 Billion dollar company HQ. When they are too annoyed by all that poor, their solution ideas are something like "let's move somewhere else", "let's buy a land and create a new city where we don't have these people around" or "let's kick out these people and make them someone else's problem".
Yes, the American way creates huge wealth but I'm not convinced that its an improvement over over European way. Also, don't look just for EU vs USA, take at look at China, Japan and Singapore who also managed to built great wealth or innovation without forcing part of the population in poverty.
A few weeks later I went to the local MG dealership. They told me I could have an MG4, the high-end model (heated seats, automatic AC, fast charging), with 420KM range, for ~35000€. I asked how long it would take to have the car once ordered. They told me I could have it the next day, I would just need to choose a color that's in stock.
I bought the MG.
Basically, the European manufacturers sell cars made to order. You tell them the exact model you want, the color you want, and they put it on their roster, to come out of the factory months later.
The Chinese bring over thousands of cars to Europe, and they just sell whatever is in stock. When they have too much stock, they reduce the price. They don't even really care about those pesky European import tariffs.
Those Chinese cars are better equipped, have longer range, and cost less than the European ones. Meanwhile, the Europeans are busy selling their old petrol-burning models to south America in exchange for cheap south-American meat [1]. No wonder they're losing the EV war.
[1] https://apnews.com/article/uruguay-mercosur-european-union-t...
Chevy had an EV, the Bolt, that gets pretty good reviews. They had some kinks the first few years but seem to have gotten them worked out. And with the tax EV tax incentives a Bolt was around $20k (around $28k without incentives). Range of around 250 miles (400 km).
Then they announced in early 23 that it was being discontinued to make room for their "new generation" of EVs. That newer generation was going to be bigger cars and more expensive cars with nothing comparable to the Bolt.
They did later add a next generation Bolt to the plans, with manufacturing to start in 2025 for the 2026 model year, and supposedly it is still going to be around $28k. The next generation uses their "Ultium" architecture which is probably a good thing--they are using that in all kinds of products, including military products, so it will probably have good long term support. But they are also dropping CarPlay and Android Auto, instead going with some in-house system, and those generally don't have a great track record compares to CarPlay or Android Auto.
Still, even if the 2026 Bolt turns out well they did introduce a 2 years gap where no Bolt was available. The only Chevy EV choices are the $42k Equinox, the $49k Blazer, and the $96k Silverado.
If instead of discontinuing Bolt and then scheduling a reintroduction for 2026 they had continued making the current generation and just rolled out the 2026 as the next generation (like basically every other auto maker does when they change generation) I'd seriously be looking at getting one now. I had planned on an EV sometime in the next 4 years, but with the incentives likely to go away under Trump moving that up to now could make sense. But Bolt, at $28k before incentives, was the cheapest EV on the US market.
Second cheapest is Nissan Leaf at just a little more than a Bolt, but it only has 150 miles of range and they still use an air cooled battery. After that was Mini Cooper SE Hardtop at $32k. That thing is cute, but only 114 miles of range, and I'm rather large so even if I fit in the thing it would probably feel claustrophobic.
So, in summary, Chevy had the lowest cost reasonable EV on the US market, and nobody was really even challenging them for that...and they just gave that up.
The LT trim of the 2025 Equinox EV is under $35,000 MSRP. Which puts it at under $27,500 with the $7,500 Federal Tax Credit.
If you look at that graph showing thee difference in price for various components, the difference in "distribution" and "body and chassis" (in absolute dollars) is greater than the battery.
Add to this China's ability to sell a car for $20K Australian, shows that it's not just the battery. And as noted in other comments, the US and Europe both also make a lot of batteries.
The biggest problem is that incumbent equity holders just want to keep making more money, while making the same product. The rest (including the tariffs) is just apologism, and a distraction from the core facts.
Of course everyone wants a car that's at least $80K! If GM shareholders aren't going to increase their returns, why would anyone even drive a car at all?!
VW is slowly vanishing from US markets (EV or ICE) and tried to enter the Chinese market only to get the crap kicked out of it
I'd mention Stellantis which is also mostly an EU company now, but they are so screwed at this point it isn't even sporting
That's a massive rewriting of history.
VW was one of the earliest foreign automotive manufacturers to enter the Chinese market.
In the 1990s and 2000s, the Volkswagen Jetta was China's Model T. And until 2023, VW was the top selling car brand in China.
And that was the crux of the issue - VW grew complacent by leveraging "Made in Germany" branding to sell in China, while not investing in innovation.
This meant that when Chinese challenger brands like BYD could outcompete VW in China, VW as a whole suffered.
Already VW has lost significant market share in the US after the emissions scandal and is functionally non-existent in Japan, Korea, Brazil, and India.
China was their last growth market within which they held dominance, and they lost it.
This is a common story for "Made in Germany" - German manufacturers strategically chose China in the 2000s for greenfield FDI, and unlike most other European countries, Germany's economy is extremely coupled with China (France and the UK were more diversified with France leveraging LatAm and India and the UK leveraging NA and India).
The persona that purchased VW cars in America was also the same persona that tended to care about the environment.
[0] - https://money.cnn.com/galleries/2010/autos/1001/gallery.gree...
[1] - https://www.greencarreports.com/news/1037084_driven-2010-vol...
Designed in Germany, almost all VWs sold in China (including black Audis government officials loved) were made in China under three 49/51 JVs (with VW as the minority owner). The majority owners in tern graduated with VW technology/know-how and combined with EV tech to sell under their own brands, although not as successful as BYD. Even BYD had its own 49/51 JV with Mercedes for a decade.
The only foreign auto manufacturer allowed to operate in China outside of a minority JV is Tesla.
That's a very important point I forgot to add! Thanks for bringing that up!