The news broke like a bomb in early September: Major German carmakers are threatening factory “lockdowns” and mass layoffs across Europe, as they are unable to meet the gigantic costs of the transition to electrification, as well as aggressive competition from China. Now Brussels is threatening Beijing with punitive tariffs over state subsidies to the Chinese auto industry, but that is apparently not enough.

In theory, Europe’s transition to electrification should be completed within a decade, as already in March 2023 the EU energy ministers had passed a law banning the circulation of new cars with a conventional internal combustion engine from 2035. Berlin attempted to overturn the decision after the fact, but was unsuccessful. What is going to happen? The debate that took place this week in the Plenary of the European Parliament in Strasbourg was extremely enlightening.

The point of view of the German car industry is expressed by Christian Democrats (CDU) MEP Jens Giesecke. “The markets are weakening, the sales of electric vehicles are decreasing, the infrastructure is not sufficient,” the German politician stressed at the Strasbourg Plenary. “Environmental targets are difficult to meet and from 2025 we are threatened with fines. That is why we must act. First, to prevent fines. Better to invest this money in the transition to electrification and the preservation of jobs. Second, lift the ban on conventional engines from 2035. Third, more diversification is needed. The exclusive focus on electrification is leading us to a dead end.”

Is “climate neutrality” enough?

“Climate neutrality” is the slogan of those who, on the one hand, hesitate to commit to the exclusive goal of electrification, but on the other hand, do not want to withdraw the EU’s ambitious climate goals. Peter Liese, also a Christian Democrat and one of the most experienced MEPs in consumer protection issues, he believes that “we must not abandon the ecological goals, especially those concerning 2030 and 2050, which are also included in the political program of the European People’s Party (EPP)”.

However, the German MEP believes, “we must withdraw the abolition of the internal combustion engine and impose a ‘climate neutrality’ regime.” We can also operate an internal combustion engine in a ‘climate neutral’ way, for example with e-fuels. Let’s measure the CO2 emissions in the vehicle’s exhaust…”

Put simply, “climate neutrality” advocates are saying this: Why pay the huge costs of going electric if it turns out we can achieve the same reduction in emissions with other fuels, such as “green hydrogen”? The answer is not easy. However, many consider that the objections are expressed “after the holiday”. European Commission Vice-President Valdis Dombrovskis points out at the Strasbourg Plenary that “the industry had sufficient time to prepare for the transition to future needs”. Monika Schnitzer, professor of economics at the University of Munich and head of the “Council of Experts” for the German economy, tells Bavarian Radio (BR) that the car manufacturers “had been present in the negotiations to ban the internal combustion engine”. So why the late objections?

“Chinese vehicles are cheaper”

Mohamed Sahim, MEP of the Dutch Labor Party (Partij van de Arbeid) and vice-president of the European Socialists, expresses the view prevailing in political forces left of the Center: “Chinese electric vehicles are much cheaper and, to be honest, they dominate the specific technology – a technology which, however we do it, determines the future of the European car industry” says the Dutch MEP at the Strasbourg Plenary. “This is the issue we should be discussing today. And yes, we need to look at the necessary solutions to help our industry, but when the industry or some colleagues are lobbying for us to delay or even go back to the old legislation, that means they are thinking of short-term profit and not the future of workers or European consumers”.