Electric car turmoil will make Brexit a comparative breeze for auto makers

  • Date: 19/12/20
  • Neil Winton, Forbes

Unless the price of electric cars falls drastically, Europeans on average salaries are unlikely to be able to afford new cars.

Automakers are having hysterics about the impact on their sales and profits if the European Union (EU) and Britain fail to agree a free trade deal, but the ramifications of that look minor compared with the long-term existential threat to the automotive world from electrification and the demise of the internal combustion engine (ICE).

If Britain is forced after Brexit to switch from tariff-free auto trade with the EU to World Trade Organization (WTO) terms, that will soon sort itself out even if it leaves some competitors a bit bruised. After all, getting on for half of Britain’s auto production is already sold through WTO tariffs.

But according to Peter Wells, Professor of Business and Sustainability at Cardiff Business School, there are more massive threats looming and only the strongest will survive. The U.K industry faces Brexit upheavals, but the global industry will have to handle a decade of disruption as electric cars and maybe computer driven ones gradually replace conventional vehicles. The whole idea of individual car ownership is being questioned

“There’s a huge watershed moment building up for the global industry. The pace of change is frighteningly fast because of pressure to cut carbon (dioxide CO2) emissions and fight climate change. There will soon be a huge demand for low (CO2) emissions vehicles and those companies able to act quickly, like Volkswagen, will be in a position to benefit,” Wells said in an interview.

Volkswagen plans to spend about $86 billion developing electric cars and the latest technology over the next 5 years. VW, which sold about 11 million vehicles world-wide in 2019, has already launched its ID.3 battery electric, the first iteration of a new generation of electric vehicles. VW hopes this will allow it to overtake Tesla Inc as the world’s leading maker of electric cars and SUVs.

The coming turmoil will force companies which lag in the race to seek safety with more partnerships and mergers or they will be swallowed up by successful ones, according to Wells.

The push for electric cars is being led in Europe by politicians, and therein lies a concern because currently, the only way to sell an electric car is to either persuade waverers with big taxpayer subsidies, or by making ICE cars unattractive with onerous environmental demands like allowing electric cars access to cities and denying that right to the rest. Oil rich, socialist Norway has already shown the way.

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