VW: EV battery exit a bigger challenge than EU combustion engine ban

MUNICH, June 29 (Reuters) – The EU’s deal to phase out combustion engine cars in just over 12 years is tough, but a bigger hurdle will be making enough batteries to power the cars electrics needed, said a senior Volkswagen executive. Wednesday.

The comment came after European Union countries reached agreements on proposed laws to tackle climate change early Wednesday, including one requiring new cars sold in the bloc to emit zero CO2 from 2035 .

This would make it impossible to sell cars with internal combustion engines.

The European Commission first proposed the package last summer, aimed at cutting global warming emissions this decade, but the overnight deal makes it likely the proposal will become EU law.

“It’s a tough goal. We think it’s doable,” VW chief financial officer Arno Antlitz told Reuters in an interview at the Reuters Automotive Europe conference on Wednesday.

“The toughest topic is not the ramp-up of auto factories. The toughest topic will be the ramp-up of the battery supply chain.”

VW has said it will stop selling combustion engine cars in the region on the target date, but some automakers further behind in the race to develop electric vehicles (EVs), such as Toyota, may struggle to achieve this. The Japanese automaker declined to comment on Wednesday.

FOCUS ON BATTERY SUPPLIES

Major automakers have been scrambling to secure the supply of battery cells, but finding enough battery raw materials may be a bigger issue.

Failure to secure sufficient supplies of lithium, nickel, manganese or cobalt could slow the shift to electric vehicles, make such vehicles more expensive and threaten automakers’ profit margins.

Stellantis CEO Carlos Tavares said last month he expects a shortage of electric vehicle batteries to hit the auto industry in 2024-25 as manufacturers try to boost sales of electric vehicles. electric vehicles while building new battery factories.

On Wednesday, Tavares said the EU decision “is not a surprise to us…so for us it’s not good news, nor bad news, it’s exactly the assumption that we have in our plan”. This plan calls for Stellantis to sell only electric vehicles in Europe by 2030.

Tavares was in Tremery, France, to announce plans to ramp up production of electric motors at a plant that was for years the largest diesel engine production operation in the world.

The deal in Luxembourg was reached after more than 16 hours of negotiations, with Italy, Slovakia and other states wanting a postponed phase-out until 2040.

The countries eventually backed a compromise that kept the 2035 target and asked Brussels to assess in 2026 whether hybrid vehicles could meet the target.

The 2035 proposal is designed so that in theory any type of car technology, such as hybrids or cars running on sustainable fuels, could comply, as long as it means the car does not emit carbon dioxide. of carbon.

The Commission’s 2026 review would assess technological advances in hybrid cars to see if they can meet the 2035 target.

(Reporting by Ilona Wissenbach, Jan Schwartz and Joe White in Munich; Additional reporting by Nick Carey in London, Kate Abnett in Brussels and Satoshi Sugiyama in Tokyo; Writing by Josephine Mason in London; Editing by David Evans and Paul Simao)

Kevin A. Perras