Fairytales Stellantis CEO Carlos Tavares Tells the World

This is a reaction to an interview with four influential European journals as previously reported on by Steve Hanley. Originally, the title of this article was “The Lies Stellantis CEO Carlos Tavares Told The Press,” but I changed it to “Fairytales Stellantis CEO Carlos Tavares Tells The World.” The change was because lies are deliberate and perhaps Carlos Tavares believes what he told the press to be true. I also don’t think this is a case of not being able to understand because your salary depends on not understanding. I think he just can’t imagine a world where his preconceptions are not true. Nevertheless, his comments are as true as the fairytales written by Hans Christian Andersen, or the folktales told by the Grimm Brothers.

Fairytale #1:

There are other technologies that would lower emissions faster. Full battery electric vehicles need 70,000 km to compensate for the CO2 emissions created during production.

This is wrong on so many levels. It is hard to decide where to start. That number of 70,000 km is perhaps true for the Stellantis products. If that is the case, Stellantis has a very dirty and inefficient production process. It is not representative for the industry. The recent academic studies measure between about zero kilometers for the cleanest production to 30,000 km for average production in Europe. It is also the wrong measure.

Well-to-wheel and cradle-to-grave comparisons are the most valuable in the context of the climate crises. For cities that have a problem with clean air, like Los Angeles, Paris, and Beijing, the CO2 and NOx production while the car is driving is the most important measure.

Well-to-wheel is the easier measure. It is about the amount of greenhouse gases while in operation. It is dependent on the location where the car is used and the origin of the energy used. A fossil fuel vehicle (FFV) getting its fuel from the Canadian tar sands is about the dirtiest you can get. A battery electric vehicle (BEV) driving on the solar collected with the panels on the driver’s home is approximately the cleanest possible. Even a BEV driving on the electricity from lignite burning power plants is way cleaner than a FFV driving on LNG. There is a huge chasm between the two technologies where pollution is concerned. Replacing the fleet of fossil fuel burning vehicles with zero-emission vehicles is the top priority in getting the air not just cleaner, but really clean.

Cradle-to-grave includes the measure Tavares was concerned about. It is the total contribution of greenhouse gases over the lifetime of the vehicle. It depends on the raw materials used, their processing, the fabrication processes used in making the vehicle, and different energy sources used while in operation. The final matter is the way the vehicle is disposed of. For BEVs, this is harder to calculate than for FFVs. Current production is already hard to measure and the young technologies used are developing fast. The energy source will change drastically over time from thermal power plants to mainly  wind, water, and solar (WWS). About the end-of-life processing in 20 or 30 years, we have no idea.

The technologies that would lower emissions faster, that Tavares is referencing, are probably hybrid technologies and cleaner burning or tailpipe filtering technologies — old technologies legacy auto did not care to implement. These hybrid vehicles still have tailpipes (filtered tailpipes) and emit fumes you want to keep your children far from, and these can reside for centuries in the greenhouse layer of the atmosphere. To keep global warming below 1.5°C as is the goal of the Paris agreement, the emissions from road traffic must go to zero as fast as possible. With the current policies, which Carlos Tavares thinks too strict and ambitious, European road transport will burn the total EU carbon budget allowed to keep us below 1.5°C before we are halfway to net zero.

With an average useful life of 20–30 years for FFVs, we need to stop making and selling them 20–30 years before 2050.

Fairytale #2:

Electrification was chosen by politicians, not by the industry.

Electrification is chosen by the public. The industry and politicians chose to slow-walk the transition to a hydrogen-based transport system with minimal impact on the industry and society.

Politicians gave the industry the task of making the cars more efficient and lowering CO2 output. The industry made them more efficient, but by making them bigger and heavier, CO2 went up instead of down.

The auto industry thought it had another option to lower CO2. That option was clean diesel. It did not become a success. Still, politicians kept protecting the industry — most diesel cheaters were never prosecuted.

Profits and employment in the car industry needed to be protected. When Nissan and Renault started selling battery electric vehicles and were building charging infrastructure for them, Frau Merkel personally intervened and made the non-existent CCS the European standard — a standard nobody was making BEVs for. That gave the other carmakers a few more years to do nothing. It was only unsustainable for the planet.

The public chose the battery electric option, though, made possible by hated entrepreneurs like Elon Musk and Carlos Ghosn. Some compliance cars made as a token of their greenwashing efforts became huge successes to the astonishment of their makers. Some killed their compliance cars, others started to follow the market.

After years of lobbying to delay it, the European Union’s (EU) Corporate Average Fuel Economy (CAFE) regulation came into effect. Clean diesel and other schemes to lower emissions from combustion engines had all failed. The only way left to get the average CO2 low enough was by making a lot of plug-in hybrids (PHEV) and some smaller BEVs.

And still the politicians did not mandate battery electric vehicles or zero emission vehicles. They kept protecting the industry by giving PHEVs unrealistically low CO2 numbers. The CAFE requirements increase slowly, based on the expectation of more than a decade ago that developing new cleaner generations of internal combustion engines (ICE) would take time.

Industry and politics did not expect that simply switching to battery electric vehicles would bring a new model to zero emissions at once. BEVs make a faster transition to zero emissions possible in a single generation.

The public, through its opinion leaders and NGOs, is now trying to get politicians to make the CAFE requirements more realistic and push the industry to at least keep the pace of the market. The resistance of politicians trying to protect the legacy carmakers is hard to overcome. They aim for 2035 to reach zero CAFE emissions, while the market is looking at 2025.

Fairytale#3:

The European Commission’s intention to ban internal combustion car sales in 2035 is too early. The industry is being forced to transition to fully electric car production faster than planned.

The industry planned to keep producing FFVs for as long as possible, keeping the transition below the horizon. When the transition becomes unavoidable, they wanted it to be a slow transition to hydrogen fuel cell (HFC) vehicles that were in development for three decades, perhaps ready for mass introduction to the market in the middle of next decade. There was no plan to transition to fully electric cars.

What the EU is proposing in 2035 is a shocker for the industry. It is totally unprepared. It never realized in those decades of discussions with the EU that it could become reality. What the market is asking for is even worse. There is no way the industry is willing to switch to mass production of fully electric cars in the middle of this decade.

Company cars are the bread and butter of the European car industry, with up to 70% of sales in some countries. Belgium will have a company car ICE ban in 2026, making laggard Belgium go to over 70% BEV share in 5 years. And Belgium will likely still be a laggard.

Other countries have comparable plans, with countries like Sweden, Germany, and Netherlands transitioning even faster. European sales will be over 90% fully electric before 2030. As far as the market is concerned, the deadline for FFVs is 2030. If anything, the EU is saving the industry’s ass. The European automotive industry must speed up or be wiped out by Asian and Silicon Valley competition.

Fairytale #4:

A fast transition to producing only fully electric cars could create social unrest.

The social unrest is created by the messaging. What is the motivation for the transition, and who is to blame? Telling your workers that many, many will go unemployed because politicians made the stupid choice to demand a premature, unnecessary transition to only halfway-usable electric cars will create unrest and resentment, if not a new yellow vest revolt.

Telling the workers that for over a century the internal combustion engine was the best technology to advance human society and you are proud of the progress the company helped to create — that sounds very different. Follow this by saying that there is now a new technology that is better for human health and the health of the planet, that it will become a lot cheaper and help even more people on the road of progress. Tell them that, true to its tradition, the company will use this new technology. Telling it this way will make it a lot more acceptable.

Tell them that, as part of this transition, there are many well schooled technical workers needed to build a better grid, solar farms, wind turbine parks, and zero-emission homes, many more workers than are made redundant by the end of production of fossil fuel powertrains.

Tell your workers that most will be needed to make the cars with this new technology, that some will be offered early retirement and others help with finding new jobs — that unemployment is not likely for most of them. Tell them that the company will provide many training opportunities for these new jobs, many paying better than the jobs they now have. This will create a run for these new opportunities, making it hard to keep the employees needed to make the BEV. This can happen without any social problems, other than from the Luddites that protest all progress.

Fairytale #5:

We need a productivity increase of 10% for 5 years to compensate for the more expensive electric powertrain. This is because the middle class can not find a new car for €30,000. That is a problem. New electric technologies cost 50% more than internal combustion engines.

For an industry that worked very hard to realize a 2% to 3% productivity increase year after year, this is difficult.

This confusing statement about productivity is about lowering cost producing the same product. Overall, in the European economy, efficiency increase of the last decades lowered the cost (increased productivity) by about 2% per year on average. The legacy car industry has experienced the same progress as the rest of the economy. Not all products have the same cost development. The famous “Moore’s Law” predicted 50% per year and kept at that rate for decades. Other products have similar laws working on them.

The high price for electric powertrains has several causes. The biggest is the price per kWh for batteries. The second is what every new technology has in its infancy. It is expensive because of small scale and inefficient design and production.

The battery price drops by 14% each year, solving the biggest part of the high price of electric cars. The electric powertrain will become cheaper than a comparable ICE powertrain in the next 2–5 years, depending on the size of the car — just because of larger scale and learning how to use the new technology effectively.

Newer and better designs and production methods can lower the production cost significantly. As an example, the Renault Zoe has had an above average price erosion since its debut. Its successor in 2024 will be a lot better and 30% cheaper than the current Zoe when it enters the dealer’s showroom.

About 5 years ago, I made this graph below explaining the solution to the problem that shocked Tavares today. I used Moore’s Law’s cousin for batteries, predicting 14% price erosion and 5% density increase to make this graph. I showed it to a number of legacy carmaker managers at IAA in Frankfurt that year. They all thought it impossible nonsense.

Stellantis and the other legacy carmakers should not expect that the platform they used to build their new generation of CAFE compliance electric cars will be the foundation for their models in this decade. They need a completely new platform in about 2–3 years, and need to make another new generation in 6–7 years from now, or faster. Those that survive this decade of disruption can go back to a slower pace in the next decade. But the comfortable world of ICE dominance where just enough innovation was needed to shout “NEW” to the customers to keep selling the same cars will not return in the foreseeable future.

Meanwhile, in the real world

New competitors with a different cultural background, a different vision on life and progress, will keep innovations coming. The slow-walking of the transition in the last decade has given new entrants an opening to enter this industry. It is too late to keep them out.

In the market for new cars, more and more shoppers are asking: ICE vehicles — to buy or not to buy? They mostly find that the answer is not to buy.

Now that the worst effects of the Covid-19 pandemic are starting to subside, signs of an emerging Osborne effect are starting to show.

Osborne effect showing decline in demand for current product before production os succesor reach volume.

From now on, it can go fast. Companies that are not prepared will follow Osborne, Kodak, and the dinosaurs.

Featured photo by Alexander Migl (CC BY-SA 4.0 license).


 

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