August 20, 2025 • 36 mins
The discussion presented in this episode of Black Beauty Jag revolves around the ever-changing landscape of electric vehicles (EVs) in Europe, particularly in light of the region's ambitious climate objectives. The hosts, Chloe and Caesar, delve into the implications of the European Union's 2035 deadline for banning new gasoline and diesel car sales, a policy framed as a generational task aimed at positioning Europe as a leader in the electric car revolution. This episode is part two of a three-part series on the topic.
"The EU proposed that the 2035 ban on new gas and diesel car sales, not just an environmental thing, they framed it as a generational task." -Chloe [02:35]
They explore the current challenges faced by the automotive industry, including economic struggles exacerbated by competition from Chinese manufacturers, which has resulted in job cuts and a significant drop in the market value of Europe's largest carmakers. The conversation highlights the dissonance between the EU's climate ambitions and the reality of the automotive sector's capacity to adapt swiftly to these changes, emphasizing the need for a more pragmatic approach that balances environmental goals with economic viability.
- The European Union's ambitious goal for 2035 to transition to electric vehicles reflects a generational task, yet current adoption rates are significantly lagging behind projections.
- Jaguar Land Rover is navigating a tumultuous transition towards electric vehicles while facing economic pressures and competition from Chinese manufacturers.
- The complex dynamics of the automobile industry in Europe highlight the tension between ambitious climate goals and the economic realities faced by legacy automakers.
The episode addresses many things, including quotes from high-ranking officials, as well as the contentious debate surrounding plug-in hybrid vehicles (PHEVs) as a potential compromise in the transition to fully electric vehicles. Chloe and Caesar weigh the merits and drawbacks of allowing PHEVs to remain on the market post-2035, questioning whether this strategy serves as a necessary bridge for consumer acceptance of electric driving or merely prolongs reliance on fossil fuels. This dialogue encapsulates the critical crossroads at which Europe finds itself, grappling with both the urgency of climate action and the complexities of ensuring a robust automotive industry that can thrive in a rapidly changing global landscape.
Chapters
- 01:39 Discussion on EVs and Environmental Issues
- 07:44 The Hybrid Debate: Necessary Bridge or a Dangerous Compromise?
- 13:50 The Shift Towards Electric Vehicles: Challenges and Opportunities
- 20:42 The Rise of Chinese EV Manufacturers and Its Impact on Europe
- 28:28 The Rise of European Battery Manufacturing
- 30:49 The Challenges of Scaling Battery Production in Europe
Episode Resources
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(01:32):
Welcome back everyone toanother episode of Black Beauty Jag.
Glad to be here with you, Chloe.
Oh, I am too, Caesar. I'mready to dive into the next segment
in our discussion about whatis going on in the EU. With all the
buzz about EVs and fires, likeeven the Los Angeles fires this past
year and all of the issuesthat have been discussed and what
(01:53):
that has changed, if anything.
Oh, there is definitely a lotthat is going on, Chloe, but I'm
not sure how much of it haschanged, truly. But that is why we
are trying break down theheadlines and the facts to see where
the real deal is and how thataffects us as Jaguar owners and Jaguar
F-Type lovers. With Jaguar'sintent on going ev.
Alright then, let's hop to it,shall we, Caesar?
(02:15):
Let's look at the biggerstrategic picture. How do these safety
realities, the data, thepublic perception, how does it all
tie into Europe's huge climateambitions and the future of its massive
auto industry? Just four yearsago, Europe was really planting its
flag, wasn't it? Positioningitself as the global climate leader,
betting big on this electriccar car revolution.
(02:36):
The EU proposed that the 2035ban on new gas and diesel car sales,
not just an environmentalthing, they framed it as a generational
task. Remember, save theplanet and put Europe's famous car
industry at the forefront of innovation.
As we discussed here on BlackBeauty Jag, Jaguar Land Rover was
(02:56):
looking at pausing sales toprepare for EV sales and their focus
on EV only automobiles,especially in Europe, looked like
everyone was pulling in thesame direction. The feeling was,
we can do this, we'll lead theplanet. But fast forward to today
and the reality on the groundfeels a lot more, well, chaotic than
that. Is it what they hoped?
(03:17):
Yeah, bumpy road.
The continent's auto industryis facing serious economic struggles.
We're seeing companies cuttingjobs and struggling to compete with
China again. In our podcastepisode about the CEO change at Jaguar
Land Rover, we heard about thechanges going on there with the reduction
in force.
But even with all of the cuts,it is a challenge. China's cost advantage
(03:38):
is huge.
So true, Chloe. It is themature supply chain, lower labor
costs, state subsidies, andlook at the market value. Europe's
five biggest carmakerscombined dropped from $364 billion
to $197 billion since mid-2021.
Ouch. That's a massive hit.
(04:00):
Tells you something about thefinancial pressure cooker they're
in. That dream of leading theEV revolution is hitting some very
harsh economic walls. And thiseconomic pain is absolutely fueling
political pushback. A realrethink of that 2035 deadline seems
to be underway.
You're seeing it across the board.
Right leaning politicians andcar industry lobbyists are increasingly
(04:21):
training their ire on the EU'sregulation. They're saying it's too
fast, too rigid, it'sthreatening a vital European industry.
Protecting jobs becomes the priority.
Exactly. Jens Giesecker, aGerman member of the European Parliament
with the European People'sParty, said, we need flexibility
on the 2035 target. We don'twant to kill off the industry. And
(04:41):
Italy's Prime Minister,Giorgio Meloni, took it further and
called the target ideologicalmadness, vowing to correct it. This
reflects a growing mood,doesn't it, that maybe climate ambition
needs a stronger dose ofeconomic pragmatism.
Those are some seriousstatements from some heavy hitters.
It is more than just a simplerecalibration, though. It is that
too philosophically true.
(05:02):
It's not just a minorsquabble. It feels like a broader
shift across Europe. Thattriumphalist wave of ambitious pledges
we saw a few years ago hasturned into a much more fractious
debate about how far and howfast climate action can realistically
go without causing majoreconomic or social disruption. So
that 2035 target is now underparticular scrutiny, especially because
(05:23):
there's an upcoming EU reviewperiod that could open the.
Door for changes opportunityfor lobbyists. And for those of you
who may have missed lastweek's episode of Black beauty, Jag,
the EU goal for 2035 is whatthey call the generational task,
and it is the goal to be EVonly by the year 2035. This is basically
(05:45):
what we are discussing inthese three podcast episodes last
week, today and next week.
Thank you, Chloe. And as youwere saying, yes, this is making
the situation a reallyprecarious moment for Europe's climate
goals. Julia Poliskanovo, asenior director from the Brussels
based Transport andEnvironment Group, seems a bit concerned.
They strongly advocate fordecarbonization and she warned that
(06:07):
there's a big risk it will bewatered down and that that could,
quote, essentially extend thegasoline age in Europe, end quote.
This would be a major blow tothe EU's climate leadership image.
With all of this going on, thewhole mood has shifted from confident
ambition to, well, cautious reassessment.
Indeed. And what's interestingis that initial enthusiasm for 2035,
(06:27):
while maybe genuine in someplaces, is now meeting this dose
of hard reality that evenindustry leaders are openly acknowledging.
They see the writing on thewall. Sigrid De Vries, who heads
the European AutomobileManufacturers association, nailed
the shift in thinking. Shesaid, and I quote, the idea that
if you simply prescribe rules,it will all happen. It's just too.
(06:48):
Simply put, that realizationis starting to sink in. End of quote.
More complex than just settinga date?
Much more complex. It's notjust about the economic headwinds,
you know, it's the sheerdifficulty of transforming an entire
industrial ecosystem, one thatsupports millions of jobs, generations
of expertise.
Yeah, the whole supply chain, exactly.
(07:11):
Maybe that initial policy wasbased on a perhaps overly simple
view of how quickly you couldachieve such a profound industrial
change without huge friction,massive investment, or unintended
consequences across a wholecontinent. It's a recognition, maybe,
that grand visions needpractical, flexible roadmaps to actually
work.
That idea of a more flexibleapproach brings us right to a potential
(07:34):
compromise that's being talkedabout a lot. Allowing plug in hybrids
with the acronym PHEV or PHEVsfor plural to be sold beyond 2035.
Yes, the hybrid question.
Critics argue that this wouldessentially extend the gasoline age
in Europe. Others see it asmaybe a necessary bridge to get more
people comfortable withelectric driving.
(07:55):
The hybrid debate is reallycontentious, and it gets to the heart
of a crucial question Europeis wrestling with right now. That
crucial question is whether ornot embracing hybrids may be, as
a stopgap, a necessary bit ofpragmatism, you know, to protect
the industry, protect jobs,avoid social upheaval, maybe even
help consumers adoptelectrification gradually. Or is
it a dangerous compromise?Does it risk prolonging fossil fuel
(08:17):
reliance, slowing down thebuild out of proper EV charging infrastructure,
and ultimately jeopardizingthose crucial Net zero goals by just
kicking the can down the road.Which is it?
A real dilemma? I mean,getting down to the nuts and bolts
of it, it is.
You've got legacy automakerslike Ford and Toyota who are doubling
down on the idea thatconsumers need and want more hybrids.
(08:38):
They frame it as a practicalbridge for people not quite ready
for a full ev.
The auto manufacturing giantsclaim they are meeting consumers
right where they are, which,marketing wise, would be considered
admirable and great advice,but what is the basis for it and
what is the goal?
Some would argue that's theargument. But then you have critics,
environmental groups, some EVstartups, who say this is just spinning
(09:02):
this argument for their ownbenefit and justification for not
investing in electrificationbigger and sooner. And then it gets
confusing. Basically, thecritics accused them of putting forth
a stalling tactic to delay thefull transition, whether that was
the intention or not.
Let's not forget our very ownJLR. Jaguar Land Rover also produces
PHEVs. I'm not sure if theirintentions have come into question
(09:26):
and certainly we are notquestioning them. They have already
been attacked enough for thatad campaign in 2024.
I think that is one reasonthey do not come under attack as
much as far as whether or notthey are using stall tactics or whether
or not they are fullycommitted to an EV future.
What, because they werealready attacked in public postings
by President Donald Trump andpeople like billionaire Elon Musk?
(09:49):
No, because they have made itclear, like stalling sales, etc.
And all that we chatted aboutduring the CEO episode that they
were purposefully stallingsales to focus on EV and ramping
up for EV sales in 2026. Ithink they are so publicly committed
to that and have really putthemselves out there that people
realize they are not playinggames. Their intentions are clearly
stated. We've mentioned theJaguar F. Pace and Jaguar E Pace.
(10:11):
Coming back to the critics fora moment, another concern for some
people is the actualeffectiveness of PHEVs and that it
may be cutting into real worldemissions that's also under intense
scrutiny.
How so? Oh, and thanks forreminding me of Jaguar's PHEVs too,
Chloe. Now back to yourcomment about emissions. How so?
Well, studies commissioned bythe European Commission itself have
(10:33):
found a pretty concerningtrend. European owners of plug in
hybrids run more on theinternal combustion engine, sometimes
referred to as ice, thanpreviously estimated.
So they're not plugging themin as.
Much as hoped Often, no. Aclassic example is company car drivers.
They might get tax breaks anda fuel card for the phev, but maybe
(10:56):
not an electricity card orhome charging support.
Ha. So no incentive to charge.That makes sense. They are probably
not trying to be, quoteunquote bad or disrespectful. You
get working and the tax breakhelps and you intend to plug in the
company car. But your firstelectric bill is very disconcerting
and so you decide not to plugin the PHEV the next day and the
(11:18):
next day and well, you sort ofnever get around to it after that.
I get that.
Exactly. So they just don'tbother plugging in. They end up relying
mostly on the petrol engine,which kind of defeats the purpose.
Right. The car operates morelike a traditional hybrid or sometimes
just a heavier gasoline car,largely negating the environmental
benefit. From the perspectiveof strong EV advocates In green groups,
(11:42):
PHEVs face some pretty serious criticisms.
So true. They're often accusedof hogging up chargers at public
stations, taking up space thatfully electric vehicles actually
need because that's their onlyfuel source.
Right? Charger etiquette.
Then there are concerns aboutrapid battery degradation due to
their small capacity. The ideais these smaller batteries might
(12:02):
get cycled more heavily,potentially shortening their lifespan
compared to larger BEV batteries.
Hadn't considered that. Oh,and let's define bev in case our
audience has not heard thatacronym, BEV stands for battery Electric
vehicle, as opposed to phev,which is plug in Hybrid Electric
Vehicle. So, in the comparisonof vehicle types, there's the fundamental
(12:26):
criticism about the abilityfor a PHEV to run on fossil fuels
without any limits. Even if ithas some electric range, there's
nothing forcing the driver to use.
It depends entirely on driver behavior.
Precisely. So some CPVs,mainly as a way for manufacturers
to greenwash their fleetwithout truly changing behavior of
(12:48):
themselves or the customer,gives the appearance of progress,
maybe without the fullenvironmental impact. Now, on the
flip side, proponents arguethat some PHEV models can have enough
electric range to meet typicaldaily driving needs for most people.
You know, a short commutecould be entirely electric if the
(13:08):
driver chooses, if they chargeit. And they argue that even if people
only charge intermittently,PHEVs could still make a huge dent
in gas consumption fortransportation, still contributing
significantly to emissionscuts, even if it's not as much as
a full ev.
So a stepping stone versus a detour.
That's the core of the debate.Are they a genuinely necessary step
(13:31):
for a big chunk of thepopulation not ready for full EVs,
or are they just a delaytactic, a compromise that undermines
the urgency of the climatetransition and might prove to be
a costly detour in the longrun. Europe's grappling with that
right now.
Okay, beyond the policy fightsand the whole hybrid cushion, what
are consumers actually doing?At the end of the day, any transition,
(13:52):
especially this big, needs buyin from the people actually purchasing
the cars, right?
Absolutely. Market acceptanceis key.
The best policies mean nothingif the market isn't there. So, looking
at sales figures for 2024, thenumbers show a pretty big G between
that 2035ambition, thegenerational task, and today's reality.
Yeah, the uptick isn'tmatching the target pace.
(14:15):
Just 13.6% of new cars sold inthe EU are fully electric now. That's
up from 9% back in 2021 whenthe target was proposed. So there's
growth. Sure, progress isbeing made, but it's far below the
uptake needed to meet the 2035target of a full ban. The Adoption
rate just isn't acceleratingfast enough to hit that deadline
suggests a real disconnect.The main obstacle everyone points
(14:37):
to seems pretty simple.
Cost still too expensive for many.
(16:07):
Exactly. The average EuropeanEV sells for €42,000, which is about
$52,000 for a lot of peopleacross Europe. That's just not affordable.
It's still largely a premiumproduct trying to penetrate a mass
market. That is a fundamentalhurdle. And Europe's own legacy automakers,
even though they initiallybacked the 2035 ban, have been finding
(16:28):
it incredibly difficult tochurn out more affordable EVs at
the scale needed.
It's a massive SH shift for them.
Huge companies that startedplanning years ago have hit these
massive, unprecedentedroadblocks. Reconfiguring factories
built for combustion engines,retraining workers with decades of
different skills, losingdecades of optimization in their
(16:49):
old manufacturing methods.
I hadn't thought of that.Decades, maybe even centuries of
fine tuning systems andstrategies and putting money into
those efficiency practices,training, everything, only to basically
scrap it and start over with amore expensive production. It seems
it's a massive undoing ofgenerations of process.
(17:10):
So true. And oftentimes itinvolves buying super expensive batteries
from elsewhere because theyhadn't built up their own production
fast enough, not including theexpensive equipment and sometimes
the staff needed too.
All of that adds hugely to the cost.
Totally. So facing thesechallenges and the huge investment
costs for new platforms, newsoftware, Europe's carmakers often
(17:31):
tried to pad their profits bysticking with gas models, which have
higher margins. Their hopeseems to be to be able to pay for
the production of thosepremium model EVs that they are highlighting
in their marketing.
Protect the bottom line in theshort term.
Makes sense from theirperspective. But it left them vulnerable
in that growing affordable EVsegment, didn't it? Which is exactly
where Chinese manufacturersare now making serious inroads. Look
(17:54):
at Volkswagen, Europe'sbiggest carmaker. Their journey is
a really compelling, maybecautionary, tale of this transition.
They went all in initially,didn't they?
They did, especially after thediesel gate scandal around 2015.
They needed an image change,launched this ambitious electric
offensive under their formerCEO Herbert Deiss, who was a real
EV believer. But thefalsification was not the right approach
(18:16):
and it did not end well. Forthose who were found guilty of fraud,
the path was anything butsmooth. The software for their new
EVs proved clunky, delayingmodel launches. They got lots of
complaints from early buyers.It really hurt adoption.
Software issues plagued them,and fraud is not a good way to mix
it up. Is it big time?
(18:37):
Ambitious plans to make theirown batteries in Europe got downscaled
as the investment reality andcomplexity hit home. Dice, the CEO
pushing EVs was replaced in 2022.
That signaled a shift instrategy out of necessity. Between
the problems, the scandal,everything going on at the time seemed
like it.
And then last year, Volkswagenannounced plans to cut 35,000 jobs
(18:59):
by 2030. Highlight the immenserestructuring, the cost cutting pressure
this transition brings.Volkswagen still says the future
of mobility is electric. Andthey recently talked up plans for
a new entry level EV, maybearound €20,000 for 2027. They clearly
see the need for affordability.
Trying to compete at the lower end.
(19:19):
Exactly. But their currentCEO, Oliver Bloom, has been very
clear in calling forpolitically hyphen, flexible transition
periods. He's emphasizing thatpolicies need to reflect the realities
of how quickly e mobility isspread and not just stick to rigid
deadlines. It's a much morecautious tone. And this overall uncertainty
is a big problem in itself,isn't it? It creates ripples everywhere.
(19:43):
Yeah, clarity is needed for investment.
A Green Party mep, someoneyou'd expect to champion faster EV
adoption, even noted thatEuropean carmakers are not as clear
on their strategy as they werethree years ago.
Mixed signals from the industry.
Exactly. And that muddledapproach, combined with what he called
a cultural war againstelectric cars being fanned by some
(20:04):
polit in media outlets, justcreates wider uncertainty for everyone.
Consumers might hesitate tobuy an EV with all these mixed messages.
And investors with theircapital is crucial for building out
Europe's EV supply chain. Butuncertainty makes them nervous. It's
this complex brew of policy,economics, consumer feelings and
global pressure that's goingto decide how fast Europe's EV transition
(20:24):
actually happens and whetherthat 2035 deadline ultimately holds.
Yeah, that uncertainty reallyhangs over everything right now.
So while Europe's dealing withall these internal things like the
safety worries, the economicpain, the policy debates, the consumer
adoption hurdles, they have toworry about the competitor on the
EV scene. A new playercompared to other automakers, but
(20:45):
one they have seen coming, andthat we have already mentioned it,
is China. And China should notbe ignored. Especially since they're
rapidly dominating the globalEV scene.
Yeah, the elephant in the room.
It really feels like we'rewatching a new automotive superpower
rise almost in real time, andit's putting immense pressure on
Europe.
That's absolutely right. Ifyou zoom out to the global industrial
(21:09):
chess board, China's rise is astrategic game changer. Not just
for Europe, for the wholeglobal automobile industry.
What's their edge?
Well, decades of strategicplanning, first off, plus battery
expertise, state subsidies anda hammerlock on crucial minerals.
It's this integrated approachfrom mine to final product.
(21:33):
It allows them to producecheaper EVs, significantly cheaper.
Often, their carmakers haveessentially taken over the Chinese
domestic market, a marketwhere Volkswagen used to be king.
Almost untouchable.
Losing ground in China hurtsEuropean profits immensely.
So true. And it gives Chinesemanufacturers this huge scale and
(21:54):
cost advantage as they nowlook to expand globally, including
into Europe. It's not justcost. Chinese companies like Catl
has the coveted position ofbeing the world's largest battery
maker now. And BYD recentlysurpassed Tesla as the top global
EV seller. They are alsoinnovating and doing so incredibly
(22:15):
fast.
Technologically advanced too.
They've introduced things likenew battery charging technology that
would make recharging an EVnearly as fast as filling a gas car.
That's incredible. Thattackles a major consumer pain point
directly.
Definitely. Range anxiety,charging time. They're hitting those
head on. So that tech leapcombined with their cost efficiency
(22:37):
puts European manufacturers ata serious disadvantage. Not just
in China anymore, butincreasingly right here on their
home turf. For example, inEurope. It's a really formidable
mix of factors challengingEurope's traditional auto strength.
And the impact in Europe, it'sprofound. It's immediate. Chinese
brands aren't just exportingcars anymore. They're making serious
(22:58):
inroads, bringing the competition.
Right to their doorstep.
Exactly. Intensifyingcompetition in what used to be a
fairly protected market. TheEU's response? They've immediately
slapped them with tariffs onimported Chinese EVs. A clear defensive
move.
Are they trying to level theplaying field or protect incumbents?
(23:19):
A bit of both, probably. Butwhat's really striking are these
reports. There werediscussions and I think comments
on articles that apparentlyEuropean companies tried to import
cars made by European brandsbut built for the Chinese market.
These were cars that are oftencheaper and more advanced technologically.
And these cars were allegedlyimpounded and destroyed to protect
(23:40):
the high prices they demand inEurope. Now, this is what was posted
on the Internet, and I do notknow if this happened or someone
wanted attention and wrote iton a posting, but that is the information
that was available.
Publicly destroyed. Seriously.
That's the report. If true, itshows the extreme, almost desperate
measures being taken to shieldthe European market and legacy automakers
from this intense newcompetition. It's not a friendly
(24:03):
game. It's an aggressive,dynamic competitive landscape where
Europe suddenly finds itselfplaying catch up in a race it thought
it was leading just a Fewyears ago we did do some research
and did not find these reportsfor ourselves. So we cannot say that
this is really happening. Itis only an Internet report, but it
is concerning that it isreported and that people think that
way even in a fictional state.But when we checked around, there
seemed to be some validity.You choose for yourself.
(24:25):
Faced with that kind ofchallenge from China, Europe's clearly
not just sitting back anddoing nothing. They seem to recognize
the strategic threat andthey're hitting back with this ambitious
industrial policy, trying toforge their own self sufficient battery
ecosystem. Feels like a realmoment of strategic reawakening for
the continent.
Exactly. This is where thatword sovereignty comes roaring back
into the conversation withreal urgency. French Finance Minister
(24:48):
Bruno Le Maire put it starkly.He says, we have been able in less
than one year to build a newindustry in Europe. The example of
batteries shows that when wehave strong direction, determination
and a public privatepartnership, we can do it. He sees
E mobility, especially EVproduction and their key components,
as fundamentally a matter ofsovereignty. His argument is simple.
If Europe just keeps importingbatteries, which make up maybe 40%
(25:10):
of the cost of an electricvehicle, then Europe risk losing
the value added part of theproduction chain and the technology.
Not just profits, but control.Ah, okay.
Control over a critical futureindustry, ensuring strategic autonomy,
preventing dependence on otherglobal powers for the very engine
of future transport. It'sabout not making the same mistakes
(25:31):
they made in other sectors.And that realization, after seeing
China dominate solar panelmanufacturing, where Europe did loads
of R and D but lost the massproduction name, that directly spurred
the creation of the Europeanbattery alliance, the EBA, back in
2017, which is an EU backedinitiative specifically designed
to create an innovative andcompetitive ecosystem for batteries
(25:52):
in Europe.
A whole ecosystem approach.
Yep. The EBA pulls togethergovernments, universities, EU bodies
and tons of businesses,including the big carmakers. It's
genuinely a bold attempt toput Europe's economic interests first.
Comprehensive scope, miningand refining the raw materials such
as lithium to manufacturingbatteries, all within Europe. Ideally,
(26:13):
it is a full spectrumindustrial strategy and the scale
of an investment. The ambitionunder the EBA is enormous. The alliance
has helped channel somethinglike 100 billion euros of announced
public and private investmentjust into battery cell manufacturing.
(27:46):
100 billion. That's serious money.
It is. And the goal is trulyambitious. Establish up to 25 gigafactories
in the EU.
Gigafactories? What kind ofscale is that?
Well, a single gigafactory canproduce enough battery cells for
hundreds of thousands of EVsper year. So 25 of them. That would
(28:06):
genuinely transform Europeinto a battery production powerhouse.
Projections suggested Europeanbattery cell manufacturing could
grow and surpass US capacityif it has not done so already. It
shows a clear strategiccommitment to building that domestic
integrated battery supplychain, breaking free from dependency,
(28:27):
especially on China.
Okay, so with this massivepush, all this investment, who are
the key players actuallyleading this charge in Europe? Who
are the champions emergingfrom big industrial policy push?
Well, one of the most visiblepioneers in this European battery
effort had at one time, nottoo long ago, definitely been Northvolt.
(28:48):
Right, The Swedish company.
Yeah. Founded by PeterCarlsson, who used to be a manager
at Tesla. His vision wasexplicitly to create a European rival
focusing on sustainable,locally sourced batteries.
Ambitious goal. Very. Maybe itwas too ambitious. They were working
on completing what was calledtheir dress rehearsal for other plants
(29:11):
in Vastora, Sweden. ButNorthvolt filed chapter 11. And even
this week there was a pressrelease noting that Northvolt had
been acquired by Leighton outof San Jose, California.
In talking about whatNorthvolt accomplished, especially
in those early years, it showshow specialized this knowledge is
and then how quickly thingscan change. In talking about the
(29:33):
acquisition, it is like a pingpong game involving different companies
and even world leaders.
Exactly. Highlights the globalnature of it. The need to learn from
established leaders even asyou try to build your own capability.
Northvolt certainly got strongbacking though. Secured 1 billion
of funding from Volkswagen,Goldman Sachs and IKEA. Big names,
serious investors. That onewas expected to have up to 40 gigawatt
(29:55):
hours of capacity by 2024.Enough juice for maybe 500,000, 600,000
electric vehicles a year. Thatwas a key advantage for Northvolt
up there in Sweden, theirenergy costs were projected to be
about a quarter to 1/3 ofChina's because of the cheap, abundant
supply of hydropower.
That's a significantcompetitive edge in energy hungry
battery production. It soundedlike a good plan.
(30:17):
Absolutely. And word wasNorthvolt had even bigger plans.
A joint venture withVolkswagen for another factory in
Salzgitter, Germany. Maybe 24kilowatt hours. Their ultimate ambition.
150 gigawatts of capacity by2030. Just colossal scale, really.
Aiming high.
Yeah. Now, while Northvoltinitially got strong backing from
(30:39):
partners like Scania AB Vestasand got cheap loans from the European
Investment bank, the path toactually scaling up production is
clearly tough, as is clearwith the bankruptcy and acquisition.
That is sad that they are nomore, but demonstrates the challenges
of the industry. It shows thateven with excellent planning and
presumably well thought outFinancial planning, it does not always
(31:01):
work out in the way it wasprojected originally.
So true. Now other Europeanefforts, like acc, that's the joint
venture between Stellantis andMercedes Benz, are ramping up production
at their first gigafactory inFrance. So there's progress elsewhere.
Okay, so it's a mixed picture, definitely.
ACC has apparently pausedplans for other factories in Italy
(31:22):
and Germany, citing economicpressures and slower than expected.
Ev it really underscores thatwhile the ambition is sky high, the
actual environment for scalingup domestic battery production in
Europe is dynamic,challenging, and definitely not immune
to setbacks and adjustmentsbased on market realities.
This whole approach, this EBinitiative, the push for gigafactories,
(31:43):
all of it really represents asignificant shift in European policy
thinking, doesn't it? It is acase of moving away from a purely
hands a free market approach.More interventionist now seems that
way. Historically, the EUreally emphasized open market, strict
controls on State A. Butfacing this intense competition from
the US and China, both of whomhave very active industrial policies,
(32:03):
there's been this profoundrethinking and embrace of a new more
hands on industrial policy.And the strategic importance of this
shift.
You can't really overstate it.Even the EU Competition Commissioner,
Margaret Vestager, whonormally champions free markets,
has stated that industrialstrategy should now explicitly support
the development of key valuechains and technologies that are
(32:24):
of strategic importance forEurope. Direct support for key sectors?
Yes, directly linked toachieving technological sovereignty.
Making sure Europe isn'ttotally reliant on external powers
for critical stuff likebatteries. It's about controlling
their own destiny in thesefuture industries. A big recalibration.
But there's a major challengebaked in raw materials.
(32:48):
Ah, the upstream pot.
Exactly. Brussels identifiedmining projects across 10 EU countries
that could potentially supplymaybe 30% of lithium production by
2030. That would be a big steptowards reducing import reliance.
Okay, 30% of something. It is.
But here's the catch. Europecurrently has basically no lithium
(33:11):
refining capacity.
So they can dig it up but notprocess it.
Largely, yes. Raw lithiumneeds complex processing to become
battery grade material. Thatrefining step is a huge bottleneck
in achieving true circularityand sovereignty. It's a glaring gap
in the value chain that Europestill needs to plug if it wants full
independence. The EU is alsocleverly using regulation as a tool
(33:34):
not just for domestic control,but to project its standards globally.
How does that work?
They were aiming for a majoroverhaul of regulation for batteries
by 2023. Not sure where we arewith the progress on that. It includes
setting new environmentalstandards for Mineral extraction
and cell production, maybeeven software standards like enabling
(33:55):
vehicle to grid capabilitieswhere cars feed power back to the
grid. And critically strongrecycling mandates for old batteries.
Setting the bar high.
Exactly. And that would giveEurope a chance to shape the global
market according to its ownnorms, potentially forcing even Chinese
manufacturers to meet thesetougher environmental standards if
(34:16):
they want to sell theirbatteries or cars in the huge European
market. It's using marketpower to enforce values. But not
everyone is thrilled with thisshift towards interventionism. The
critics, well, yeah, someargue that trying to reshore all
stages of production in Europeis a kind of a feature that is like
(34:38):
being a protectionist. Theyworry it could ultimately increase
inefficiency and harmcompetitiveness by creating sheltered
industries that aren'tglobally competitive.
Risk of complacency.
That's the fear. There's aconcern the whole process could become
the proverbial camel. That isa horse designed by a committee,
meaning a messy compromisetrying to please everyone, resulting
(35:00):
in something inefficient,bloated and slow because of too many
competing interests andpolitical meddling. It really highlights
that fundamental tensionEurope is navigating with strategic
autonomy versus free marketefficiency. A balancing act they're
actively, sometimes painfully,figuring out as they try to secure
their industrial future inthis rapidly changing world.
(35:20):
Okay, so we've talked cars,fires, policy, economics, batteries,
China. But beyond the carsthemselves, beyond the factories
making them and theirbatteries, there's this other massive,
often invisible, butabsolutely fundamental challenge
Europe's facing.
Ah, the grid. Well, we'vecovered so much today, we do have
to leave something for ourfinal episode on this topic of the
(35:42):
EU and the generational task,don't we?
We sure do, Chloe. And thankyou everyone for tuning in today
in our three part series onthe EU and the future of ev. We look
forward to finishing this upnext week with you here on Black
Beauty Jag. Catch you then.
Welcome back everyone toanother episode of Black Beauty Jag.
Glad to be here with you, Chloe.
Oh, I am too, Caesar. I'mready to dive into the next segment
in our discussion about whatis going on in the EU. With all the
buzz about EVs and fires, likeeven the Los Angeles fires this past
year and all of the issuesthat have been discussed and what
(01:53):
that has changed, if anything.
Oh, there is definitely a lotthat is going on, Chloe, but I'm
not sure how much of it haschanged, truly. But that is why we
are trying break down theheadlines and the facts to see where
the real deal is and how thataffects us as Jaguar owners and Jaguar
F-Type lovers. With Jaguar'sintent on going ev.
Alright then, let's hop to it,shall we, Caesar?
(02:15):
Let's look at the biggerstrategic picture. How do these safety
realities, the data, thepublic perception, how does it all
tie into Europe's huge climateambitions and the future of its massive
auto industry? Just four yearsago, Europe was really planting its
flag, wasn't it? Positioningitself as the global climate leader,
betting big on this electriccar car revolution.
(02:36):
The EU proposed that the 2035ban on new gas and diesel car sales,
not just an environmentalthing, they framed it as a generational
task. Remember, save theplanet and put Europe's famous car
industry at the forefront of innovation.
As we discussed here on BlackBeauty Jag, Jaguar Land Rover was
(02:56):
looking at pausing sales toprepare for EV sales and their focus
on EV only automobiles,especially in Europe, looked like
everyone was pulling in thesame direction. The feeling was,
we can do this, we'll lead theplanet. But fast forward to today
and the reality on the groundfeels a lot more, well, chaotic than
that. Is it what they hoped?
(03:17):
Yeah, bumpy road.
The continent's auto industryis facing serious economic struggles.
We're seeing companies cuttingjobs and struggling to compete with
China again. In our podcastepisode about the CEO change at Jaguar
Land Rover, we heard about thechanges going on there with the reduction
in force.
But even with all of the cuts,it is a challenge. China's cost advantage
(03:38):
is huge.
So true, Chloe. It is themature supply chain, lower labor
costs, state subsidies, andlook at the market value. Europe's
five biggest carmakerscombined dropped from $364 billion
to $197 billion since mid-2021.
Ouch. That's a massive hit.
(04:00):
Tells you something about thefinancial pressure cooker they're
in. That dream of leading theEV revolution is hitting some very
harsh economic walls. And thiseconomic pain is absolutely fueling
political pushback. A realrethink of that 2035 deadline seems
to be underway.
You're seeing it across the board.
Right leaning politicians andcar industry lobbyists are increasingly
(04:21):
training their ire on the EU'sregulation. They're saying it's too
fast, too rigid, it'sthreatening a vital European industry.
Protecting jobs becomes the priority.
Exactly. Jens Giesecker, aGerman member of the European Parliament
with the European People'sParty, said, we need flexibility
on the 2035 target. We don'twant to kill off the industry. And
(04:41):
Italy's Prime Minister,Giorgio Meloni, took it further and
called the target ideologicalmadness, vowing to correct it. This
reflects a growing mood,doesn't it, that maybe climate ambition
needs a stronger dose ofeconomic pragmatism.
Those are some seriousstatements from some heavy hitters.
It is more than just a simplerecalibration, though. It is that
too philosophically true.
(05:02):
It's not just a minorsquabble. It feels like a broader
shift across Europe. Thattriumphalist wave of ambitious pledges
we saw a few years ago hasturned into a much more fractious
debate about how far and howfast climate action can realistically
go without causing majoreconomic or social disruption. So
that 2035 target is now underparticular scrutiny, especially because
(05:23):
there's an upcoming EU reviewperiod that could open the.
Door for changes opportunityfor lobbyists. And for those of you
who may have missed lastweek's episode of Black beauty, Jag,
the EU goal for 2035 is whatthey call the generational task,
and it is the goal to be EVonly by the year 2035. This is basically
(05:45):
what we are discussing inthese three podcast episodes last
week, today and next week.
Thank you, Chloe. And as youwere saying, yes, this is making
the situation a reallyprecarious moment for Europe's climate
goals. Julia Poliskanovo, asenior director from the Brussels
based Transport andEnvironment Group, seems a bit concerned.
They strongly advocate fordecarbonization and she warned that
(06:07):
there's a big risk it will bewatered down and that that could,
quote, essentially extend thegasoline age in Europe, end quote.
This would be a major blow tothe EU's climate leadership image.
With all of this going on, thewhole mood has shifted from confident
ambition to, well, cautious reassessment.
Indeed. And what's interestingis that initial enthusiasm for 2035,
(06:27):
while maybe genuine in someplaces, is now meeting this dose
of hard reality that evenindustry leaders are openly acknowledging.
They see the writing on thewall. Sigrid De Vries, who heads
the European AutomobileManufacturers association, nailed
the shift in thinking. Shesaid, and I quote, the idea that
if you simply prescribe rules,it will all happen. It's just too.
(06:48):
Simply put, that realizationis starting to sink in. End of quote.
More complex than just settinga date?
Much more complex. It's notjust about the economic headwinds,
you know, it's the sheerdifficulty of transforming an entire
industrial ecosystem, one thatsupports millions of jobs, generations
of expertise.
Yeah, the whole supply chain, exactly.
(07:11):
Maybe that initial policy wasbased on a perhaps overly simple
view of how quickly you couldachieve such a profound industrial
change without huge friction,massive investment, or unintended
consequences across a wholecontinent. It's a recognition, maybe,
that grand visions needpractical, flexible roadmaps to actually
work.
That idea of a more flexibleapproach brings us right to a potential
(07:34):
compromise that's being talkedabout a lot. Allowing plug in hybrids
with the acronym PHEV or PHEVsfor plural to be sold beyond 2035.
Yes, the hybrid question.
Critics argue that this wouldessentially extend the gasoline age
in Europe. Others see it asmaybe a necessary bridge to get more
people comfortable withelectric driving.
(07:55):
The hybrid debate is reallycontentious, and it gets to the heart
of a crucial question Europeis wrestling with right now. That
crucial question is whether ornot embracing hybrids may be, as
a stopgap, a necessary bit ofpragmatism, you know, to protect
the industry, protect jobs,avoid social upheaval, maybe even
help consumers adoptelectrification gradually. Or is
it a dangerous compromise?Does it risk prolonging fossil fuel
(08:17):
reliance, slowing down thebuild out of proper EV charging infrastructure,
and ultimately jeopardizingthose crucial Net zero goals by just
kicking the can down the road.Which is it?
A real dilemma? I mean,getting down to the nuts and bolts
of it, it is.
You've got legacy automakerslike Ford and Toyota who are doubling
down on the idea thatconsumers need and want more hybrids.
(08:38):
They frame it as a practicalbridge for people not quite ready
for a full ev.
The auto manufacturing giantsclaim they are meeting consumers
right where they are, which,marketing wise, would be considered
admirable and great advice,but what is the basis for it and
what is the goal?
Some would argue that's theargument. But then you have critics,
environmental groups, some EVstartups, who say this is just spinning
(09:02):
this argument for their ownbenefit and justification for not
investing in electrificationbigger and sooner. And then it gets
confusing. Basically, thecritics accused them of putting forth
a stalling tactic to delay thefull transition, whether that was
the intention or not.
Let's not forget our very ownJLR. Jaguar Land Rover also produces
PHEVs. I'm not sure if theirintentions have come into question
(09:26):
and certainly we are notquestioning them. They have already
been attacked enough for thatad campaign in 2024.
I think that is one reasonthey do not come under attack as
much as far as whether or notthey are using stall tactics or whether
or not they are fullycommitted to an EV future.
What, because they werealready attacked in public postings
by President Donald Trump andpeople like billionaire Elon Musk?
(09:49):
No, because they have made itclear, like stalling sales, etc.
And all that we chatted aboutduring the CEO episode that they
were purposefully stallingsales to focus on EV and ramping
up for EV sales in 2026. Ithink they are so publicly committed
to that and have really putthemselves out there that people
realize they are not playinggames. Their intentions are clearly
stated. We've mentioned theJaguar F. Pace and Jaguar E Pace.
(10:11):
Coming back to the critics fora moment, another concern for some
people is the actualeffectiveness of PHEVs and that it
may be cutting into real worldemissions that's also under intense
scrutiny.
How so? Oh, and thanks forreminding me of Jaguar's PHEVs too,
Chloe. Now back to yourcomment about emissions. How so?
Well, studies commissioned bythe European Commission itself have
(10:33):
found a pretty concerningtrend. European owners of plug in
hybrids run more on theinternal combustion engine, sometimes
referred to as ice, thanpreviously estimated.
So they're not plugging themin as.
Much as hoped Often, no. Aclassic example is company car drivers.
They might get tax breaks anda fuel card for the phev, but maybe
(10:56):
not an electricity card orhome charging support.
Ha. So no incentive to charge.That makes sense. They are probably
not trying to be, quoteunquote bad or disrespectful. You
get working and the tax breakhelps and you intend to plug in the
company car. But your firstelectric bill is very disconcerting
and so you decide not to plugin the PHEV the next day and the
(11:18):
next day and well, you sort ofnever get around to it after that.
I get that.
Exactly. So they just don'tbother plugging in. They end up relying
mostly on the petrol engine,which kind of defeats the purpose.
Right. The car operates morelike a traditional hybrid or sometimes
just a heavier gasoline car,largely negating the environmental
benefit. From the perspectiveof strong EV advocates In green groups,
(11:42):
PHEVs face some pretty serious criticisms.
So true. They're often accusedof hogging up chargers at public
stations, taking up space thatfully electric vehicles actually
need because that's their onlyfuel source.
Right? Charger etiquette.
Then there are concerns aboutrapid battery degradation due to
their small capacity. The ideais these smaller batteries might
(12:02):
get cycled more heavily,potentially shortening their lifespan
compared to larger BEV batteries.
Hadn't considered that. Oh,and let's define bev in case our
audience has not heard thatacronym, BEV stands for battery Electric
vehicle, as opposed to phev,which is plug in Hybrid Electric
Vehicle. So, in the comparisonof vehicle types, there's the fundamental
(12:26):
criticism about the abilityfor a PHEV to run on fossil fuels
without any limits. Even if ithas some electric range, there's
nothing forcing the driver to use.
It depends entirely on driver behavior.
Precisely. So some CPVs,mainly as a way for manufacturers
to greenwash their fleetwithout truly changing behavior of
(12:48):
themselves or the customer,gives the appearance of progress,
maybe without the fullenvironmental impact. Now, on the
flip side, proponents arguethat some PHEV models can have enough
electric range to meet typicaldaily driving needs for most people.
You know, a short commutecould be entirely electric if the
(13:08):
driver chooses, if they chargeit. And they argue that even if people
only charge intermittently,PHEVs could still make a huge dent
in gas consumption fortransportation, still contributing
significantly to emissionscuts, even if it's not as much as
a full ev.
So a stepping stone versus a detour.
That's the core of the debate.Are they a genuinely necessary step
(13:31):
for a big chunk of thepopulation not ready for full EVs,
or are they just a delaytactic, a compromise that undermines
the urgency of the climatetransition and might prove to be
a costly detour in the longrun. Europe's grappling with that
right now.
Okay, beyond the policy fightsand the whole hybrid cushion, what
are consumers actually doing?At the end of the day, any transition,
(13:52):
especially this big, needs buyin from the people actually purchasing
the cars, right?
Absolutely. Market acceptanceis key.
The best policies mean nothingif the market isn't there. So, looking
at sales figures for 2024, thenumbers show a pretty big G between
that 2035ambition, thegenerational task, and today's reality.
Yeah, the uptick isn'tmatching the target pace.
(14:15):
Just 13.6% of new cars sold inthe EU are fully electric now. That's
up from 9% back in 2021 whenthe target was proposed. So there's
growth. Sure, progress isbeing made, but it's far below the
uptake needed to meet the 2035target of a full ban. The Adoption
rate just isn't acceleratingfast enough to hit that deadline
suggests a real disconnect.The main obstacle everyone points
(14:37):
to seems pretty simple.
Cost still too expensive for many.
(16:07):
Exactly. The average EuropeanEV sells for €42,000, which is about
$52,000 for a lot of peopleacross Europe. That's just not affordable.
It's still largely a premiumproduct trying to penetrate a mass
market. That is a fundamentalhurdle. And Europe's own legacy automakers,
even though they initiallybacked the 2035 ban, have been finding
(16:28):
it incredibly difficult tochurn out more affordable EVs at
the scale needed.
It's a massive SH shift for them.
Huge companies that startedplanning years ago have hit these
massive, unprecedentedroadblocks. Reconfiguring factories
built for combustion engines,retraining workers with decades of
different skills, losingdecades of optimization in their
(16:49):
old manufacturing methods.
I hadn't thought of that.Decades, maybe even centuries of
fine tuning systems andstrategies and putting money into
those efficiency practices,training, everything, only to basically
scrap it and start over with amore expensive production. It seems
it's a massive undoing ofgenerations of process.
(17:10):
So true. And oftentimes itinvolves buying super expensive batteries
from elsewhere because theyhadn't built up their own production
fast enough, not including theexpensive equipment and sometimes
the staff needed too.
All of that adds hugely to the cost.
Totally. So facing thesechallenges and the huge investment
costs for new platforms, newsoftware, Europe's carmakers often
(17:31):
tried to pad their profits bysticking with gas models, which have
higher margins. Their hopeseems to be to be able to pay for
the production of thosepremium model EVs that they are highlighting
in their marketing.
Protect the bottom line in theshort term.
Makes sense from theirperspective. But it left them vulnerable
in that growing affordable EVsegment, didn't it? Which is exactly
where Chinese manufacturersare now making serious inroads. Look
(17:54):
at Volkswagen, Europe'sbiggest carmaker. Their journey is
a really compelling, maybecautionary, tale of this transition.
They went all in initially,didn't they?
They did, especially after thediesel gate scandal around 2015.
They needed an image change,launched this ambitious electric
offensive under their formerCEO Herbert Deiss, who was a real
EV believer. But thefalsification was not the right approach
(18:16):
and it did not end well. Forthose who were found guilty of fraud,
the path was anything butsmooth. The software for their new
EVs proved clunky, delayingmodel launches. They got lots of
complaints from early buyers.It really hurt adoption.
Software issues plagued them,and fraud is not a good way to mix
it up. Is it big time?
(18:37):
Ambitious plans to make theirown batteries in Europe got downscaled
as the investment reality andcomplexity hit home. Dice, the CEO
pushing EVs was replaced in 2022.
That signaled a shift instrategy out of necessity. Between
the problems, the scandal,everything going on at the time seemed
like it.
And then last year, Volkswagenannounced plans to cut 35,000 jobs
(18:59):
by 2030. Highlight the immenserestructuring, the cost cutting pressure
this transition brings.Volkswagen still says the future
of mobility is electric. Andthey recently talked up plans for
a new entry level EV, maybearound €20,000 for 2027. They clearly
see the need for affordability.
Trying to compete at the lower end.
(19:19):
Exactly. But their currentCEO, Oliver Bloom, has been very
clear in calling forpolitically hyphen, flexible transition
periods. He's emphasizing thatpolicies need to reflect the realities
of how quickly e mobility isspread and not just stick to rigid
deadlines. It's a much morecautious tone. And this overall uncertainty
is a big problem in itself,isn't it? It creates ripples everywhere.
(19:43):
Yeah, clarity is needed for investment.
A Green Party mep, someoneyou'd expect to champion faster EV
adoption, even noted thatEuropean carmakers are not as clear
on their strategy as they werethree years ago.
Mixed signals from the industry.
Exactly. And that muddledapproach, combined with what he called
a cultural war againstelectric cars being fanned by some
(20:04):
polit in media outlets, justcreates wider uncertainty for everyone.
Consumers might hesitate tobuy an EV with all these mixed messages.
And investors with theircapital is crucial for building out
Europe's EV supply chain. Butuncertainty makes them nervous. It's
this complex brew of policy,economics, consumer feelings and
global pressure that's goingto decide how fast Europe's EV transition
(20:24):
actually happens and whetherthat 2035 deadline ultimately holds.
Yeah, that uncertainty reallyhangs over everything right now.
So while Europe's dealing withall these internal things like the
safety worries, the economicpain, the policy debates, the consumer
adoption hurdles, they have toworry about the competitor on the
EV scene. A new playercompared to other automakers, but
(20:45):
one they have seen coming, andthat we have already mentioned it,
is China. And China should notbe ignored. Especially since they're
rapidly dominating the globalEV scene.
Yeah, the elephant in the room.
It really feels like we'rewatching a new automotive superpower
rise almost in real time, andit's putting immense pressure on
Europe.
That's absolutely right. Ifyou zoom out to the global industrial
(21:09):
chess board, China's rise is astrategic game changer. Not just
for Europe, for the wholeglobal automobile industry.
What's their edge?
Well, decades of strategicplanning, first off, plus battery
expertise, state subsidies anda hammerlock on crucial minerals.
It's this integrated approachfrom mine to final product.
(21:33):
It allows them to producecheaper EVs, significantly cheaper.
Often, their carmakers haveessentially taken over the Chinese
domestic market, a marketwhere Volkswagen used to be king.
Almost untouchable.
Losing ground in China hurtsEuropean profits immensely.
So true. And it gives Chinesemanufacturers this huge scale and
(21:54):
cost advantage as they nowlook to expand globally, including
into Europe. It's not justcost. Chinese companies like Catl
has the coveted position ofbeing the world's largest battery
maker now. And BYD recentlysurpassed Tesla as the top global
EV seller. They are alsoinnovating and doing so incredibly
(22:15):
fast.
Technologically advanced too.
They've introduced things likenew battery charging technology that
would make recharging an EVnearly as fast as filling a gas car.
That's incredible. Thattackles a major consumer pain point
directly.
Definitely. Range anxiety,charging time. They're hitting those
head on. So that tech leapcombined with their cost efficiency
(22:37):
puts European manufacturers ata serious disadvantage. Not just
in China anymore, butincreasingly right here on their
home turf. For example, inEurope. It's a really formidable
mix of factors challengingEurope's traditional auto strength.
And the impact in Europe, it'sprofound. It's immediate. Chinese
brands aren't just exportingcars anymore. They're making serious
(22:58):
inroads, bringing the competition.
Right to their doorstep.
Exactly. Intensifyingcompetition in what used to be a
fairly protected market. TheEU's response? They've immediately
slapped them with tariffs onimported Chinese EVs. A clear defensive
move.
Are they trying to level theplaying field or protect incumbents?
(23:19):
A bit of both, probably. Butwhat's really striking are these
reports. There werediscussions and I think comments
on articles that apparentlyEuropean companies tried to import
cars made by European brandsbut built for the Chinese market.
These were cars that are oftencheaper and more advanced technologically.
And these cars were allegedlyimpounded and destroyed to protect
(23:40):
the high prices they demand inEurope. Now, this is what was posted
on the Internet, and I do notknow if this happened or someone
wanted attention and wrote iton a posting, but that is the information
that was available.
Publicly destroyed. Seriously.
That's the report. If true, itshows the extreme, almost desperate
measures being taken to shieldthe European market and legacy automakers
from this intense newcompetition. It's not a friendly
(24:03):
game. It's an aggressive,dynamic competitive landscape where
Europe suddenly finds itselfplaying catch up in a race it thought
it was leading just a Fewyears ago we did do some research
and did not find these reportsfor ourselves. So we cannot say that
this is really happening. Itis only an Internet report, but it
is concerning that it isreported and that people think that
way even in a fictional state.But when we checked around, there
seemed to be some validity.You choose for yourself.
(24:25):
Faced with that kind ofchallenge from China, Europe's clearly
not just sitting back anddoing nothing. They seem to recognize
the strategic threat andthey're hitting back with this ambitious
industrial policy, trying toforge their own self sufficient battery
ecosystem. Feels like a realmoment of strategic reawakening for
the continent.
Exactly. This is where thatword sovereignty comes roaring back
into the conversation withreal urgency. French Finance Minister
(24:48):
Bruno Le Maire put it starkly.He says, we have been able in less
than one year to build a newindustry in Europe. The example of
batteries shows that when wehave strong direction, determination
and a public privatepartnership, we can do it. He sees
E mobility, especially EVproduction and their key components,
as fundamentally a matter ofsovereignty. His argument is simple.
If Europe just keeps importingbatteries, which make up maybe 40%
(25:10):
of the cost of an electricvehicle, then Europe risk losing
the value added part of theproduction chain and the technology.
Not just profits, but control.Ah, okay.
Control over a critical futureindustry, ensuring strategic autonomy,
preventing dependence on otherglobal powers for the very engine
of future transport. It'sabout not making the same mistakes
(25:31):
they made in other sectors.And that realization, after seeing
China dominate solar panelmanufacturing, where Europe did loads
of R and D but lost the massproduction name, that directly spurred
the creation of the Europeanbattery alliance, the EBA, back in
2017, which is an EU backedinitiative specifically designed
to create an innovative andcompetitive ecosystem for batteries
(25:52):
in Europe.
A whole ecosystem approach.
Yep. The EBA pulls togethergovernments, universities, EU bodies
and tons of businesses,including the big carmakers. It's
genuinely a bold attempt toput Europe's economic interests first.
Comprehensive scope, miningand refining the raw materials such
as lithium to manufacturingbatteries, all within Europe. Ideally,
(26:13):
it is a full spectrumindustrial strategy and the scale
of an investment. The ambitionunder the EBA is enormous. The alliance
has helped channel somethinglike 100 billion euros of announced
public and private investmentjust into battery cell manufacturing.
(27:46):
100 billion. That's serious money.
It is. And the goal is trulyambitious. Establish up to 25 gigafactories
in the EU.
Gigafactories? What kind ofscale is that?
Well, a single gigafactory canproduce enough battery cells for
hundreds of thousands of EVsper year. So 25 of them. That would
(28:06):
genuinely transform Europeinto a battery production powerhouse.
Projections suggested Europeanbattery cell manufacturing could
grow and surpass US capacityif it has not done so already. It
shows a clear strategiccommitment to building that domestic
integrated battery supplychain, breaking free from dependency,
(28:27):
especially on China.
Okay, so with this massivepush, all this investment, who are
the key players actuallyleading this charge in Europe? Who
are the champions emergingfrom big industrial policy push?
Well, one of the most visiblepioneers in this European battery
effort had at one time, nottoo long ago, definitely been Northvolt.
(28:48):
Right, The Swedish company.
Yeah. Founded by PeterCarlsson, who used to be a manager
at Tesla. His vision wasexplicitly to create a European rival
focusing on sustainable,locally sourced batteries.
Ambitious goal. Very. Maybe itwas too ambitious. They were working
on completing what was calledtheir dress rehearsal for other plants
(29:11):
in Vastora, Sweden. ButNorthvolt filed chapter 11. And even
this week there was a pressrelease noting that Northvolt had
been acquired by Leighton outof San Jose, California.
In talking about whatNorthvolt accomplished, especially
in those early years, it showshow specialized this knowledge is
and then how quickly thingscan change. In talking about the
(29:33):
acquisition, it is like a pingpong game involving different companies
and even world leaders.
Exactly. Highlights the globalnature of it. The need to learn from
established leaders even asyou try to build your own capability.
Northvolt certainly got strongbacking though. Secured 1 billion
of funding from Volkswagen,Goldman Sachs and IKEA. Big names,
serious investors. That onewas expected to have up to 40 gigawatt
(29:55):
hours of capacity by 2024.Enough juice for maybe 500,000, 600,000
electric vehicles a year. Thatwas a key advantage for Northvolt
up there in Sweden, theirenergy costs were projected to be
about a quarter to 1/3 ofChina's because of the cheap, abundant
supply of hydropower.
That's a significantcompetitive edge in energy hungry
battery production. It soundedlike a good plan.
(30:17):
Absolutely. And word wasNorthvolt had even bigger plans.
A joint venture withVolkswagen for another factory in
Salzgitter, Germany. Maybe 24kilowatt hours. Their ultimate ambition.
150 gigawatts of capacity by2030. Just colossal scale, really.
Aiming high.
Yeah. Now, while Northvoltinitially got strong backing from
(30:39):
partners like Scania AB Vestasand got cheap loans from the European
Investment bank, the path toactually scaling up production is
clearly tough, as is clearwith the bankruptcy and acquisition.
That is sad that they are nomore, but demonstrates the challenges
of the industry. It shows thateven with excellent planning and
presumably well thought outFinancial planning, it does not always
(31:01):
work out in the way it wasprojected originally.
So true. Now other Europeanefforts, like acc, that's the joint
venture between Stellantis andMercedes Benz, are ramping up production
at their first gigafactory inFrance. So there's progress elsewhere.
Okay, so it's a mixed picture, definitely.
ACC has apparently pausedplans for other factories in Italy
(31:22):
and Germany, citing economicpressures and slower than expected.
Ev it really underscores thatwhile the ambition is sky high, the
actual environment for scalingup domestic battery production in
Europe is dynamic,challenging, and definitely not immune
to setbacks and adjustmentsbased on market realities.
This whole approach, this EBinitiative, the push for gigafactories,
(31:43):
all of it really represents asignificant shift in European policy
thinking, doesn't it? It is acase of moving away from a purely
hands a free market approach.More interventionist now seems that
way. Historically, the EUreally emphasized open market, strict
controls on State A. Butfacing this intense competition from
the US and China, both of whomhave very active industrial policies,
(32:03):
there's been this profoundrethinking and embrace of a new more
hands on industrial policy.And the strategic importance of this
shift.
You can't really overstate it.Even the EU Competition Commissioner,
Margaret Vestager, whonormally champions free markets,
has stated that industrialstrategy should now explicitly support
the development of key valuechains and technologies that are
(32:24):
of strategic importance forEurope. Direct support for key sectors?
Yes, directly linked toachieving technological sovereignty.
Making sure Europe isn'ttotally reliant on external powers
for critical stuff likebatteries. It's about controlling
their own destiny in thesefuture industries. A big recalibration.
But there's a major challengebaked in raw materials.
(32:48):
Ah, the upstream pot.
Exactly. Brussels identifiedmining projects across 10 EU countries
that could potentially supplymaybe 30% of lithium production by
2030. That would be a big steptowards reducing import reliance.
Okay, 30% of something. It is.
But here's the catch. Europecurrently has basically no lithium
(33:11):
refining capacity.
So they can dig it up but notprocess it.
Largely, yes. Raw lithiumneeds complex processing to become
battery grade material. Thatrefining step is a huge bottleneck
in achieving true circularityand sovereignty. It's a glaring gap
in the value chain that Europestill needs to plug if it wants full
independence. The EU is alsocleverly using regulation as a tool
(33:34):
not just for domestic control,but to project its standards globally.
How does that work?
They were aiming for a majoroverhaul of regulation for batteries
by 2023. Not sure where we arewith the progress on that. It includes
setting new environmentalstandards for Mineral extraction
and cell production, maybeeven software standards like enabling
(33:55):
vehicle to grid capabilitieswhere cars feed power back to the
grid. And critically strongrecycling mandates for old batteries.
Setting the bar high.
Exactly. And that would giveEurope a chance to shape the global
market according to its ownnorms, potentially forcing even Chinese
manufacturers to meet thesetougher environmental standards if
(34:16):
they want to sell theirbatteries or cars in the huge European
market. It's using marketpower to enforce values. But not
everyone is thrilled with thisshift towards interventionism. The
critics, well, yeah, someargue that trying to reshore all
stages of production in Europeis a kind of a feature that is like
(34:38):
being a protectionist. Theyworry it could ultimately increase
inefficiency and harmcompetitiveness by creating sheltered
industries that aren'tglobally competitive.
Risk of complacency.
That's the fear. There's aconcern the whole process could become
the proverbial camel. That isa horse designed by a committee,
meaning a messy compromisetrying to please everyone, resulting
(35:00):
in something inefficient,bloated and slow because of too many
competing interests andpolitical meddling. It really highlights
that fundamental tensionEurope is navigating with strategic
autonomy versus free marketefficiency. A balancing act they're
actively, sometimes painfully,figuring out as they try to secure
their industrial future inthis rapidly changing world.
(35:20):
Okay, so we've talked cars,fires, policy, economics, batteries,
China. But beyond the carsthemselves, beyond the factories
making them and theirbatteries, there's this other massive,
often invisible, butabsolutely fundamental challenge
Europe's facing.
Ah, the grid. Well, we'vecovered so much today, we do have
to leave something for ourfinal episode on this topic of the
(35:42):
EU and the generational task,don't we?
We sure do, Chloe. And thankyou everyone for tuning in today
in our three part series onthe EU and the future of ev. We look
forward to finishing this upnext week with you here on Black
Beauty Jag. Catch you then.
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