{"id":30935,"date":"2023-05-20T13:03:03","date_gmt":"2023-05-20T17:03:03","guid":{"rendered":"https:\/\/henrypayne.com\/?p=30935"},"modified":"2023-05-20T13:05:26","modified_gmt":"2023-05-20T17:05:26","slug":"ev-squeeze-how-the-us-and-europe-compare-in-mandating-a-battery-powered-future","status":"publish","type":"post","link":"https:\/\/henrypayne.com\/index.php\/2023\/05\/ev-squeeze-how-the-us-and-europe-compare-in-mandating-a-battery-powered-future","title":{"rendered":"EV squeeze: How the US and Europe compare in mandating a battery-powered future"},"content":{"rendered":"

Milan, Italy<\/em>\u00a0\u2014 European governments have historically been more aggressive than the United States in regulating fuel consumption with high gas taxes, favorable diesel tax breaks and escalating penalties on non-electric automobiles.<\/p>\n

That is about to change.<\/p>\n

Automakers selling in the United States will face exorbitant federal fines from regulatory bodies by 2026 if they do not meet electric vehicle sales targets. Together with the goal of California \u2014 America\u2019s largest auto market \u2014 to ban gas engine sales by 2035, that poses a significant challenge for automakers over the next decade in a market where customer prefer gas power.<\/p>\n

\u201cBy 2026, the United States will have the most strict emissions regulations in the world along with the Netherlands and France,\u201d said Alfa Romeo global product chief Daniel Guzzafame at the media launch of Alfa\u2019s first electrified vehicle, the subcompact Tonale SUV. \u201cThe fines won\u2019t be in the thousands, they will be in the millions on automakers in order to move them toward electrification.\u201d<\/p>\n

Unlike in Europe, however, U.S. customers are largely unaware of the costly EV transition as penalties are mostly born by automakers \u2014 not consumers. Across the pond, by contrast, auto buyers have for years paid penalties for owning less-efficient cars \u2014 to the point where gas-powered cars are forbidden in some urban areas. In the smaller land mass of Europe, customers have the option of ubiquitous public transportation when the price of owning a car gets too high.<\/p>\n

Yet, European governments still struggle to get consumers into EVs without massive subsidies. Italy, for example, has seen EV adoption rates stall below 4% of sales with subsidies at $3,300 per car compared to a $10,000 continent average. That has led to a push for synthetic fuels in order to keep internal combustion engines viable.<\/p>\n

\u201cThe challenge for EV adoption is consumer anxiety,\u201d said Stephanie Brinley, senior auto analyst for IHS Markit. \u201cPeople have to make changes in their lifestyle to drive an EV, and people like their gas cars and don\u2019t want to change.\u201d<\/p>\n

Crucially, the European Union\u2019s 2035 ban on internal combustion engines includes a loophole for vehicles to burn synthetic fuels that are under development \u2014 a loophole California (and other so-called zero-emission-vehicle states that have followed its lead) have resisted in their push to eliminate ICEs by ’35.<\/p>\n

\u201cItaly and Germany successfully won an exemption for e-fuels,\u201d said Guzzafame, \u201cthough they will likely be very expensive.\u201d Gasoline costs $7 a gallon in European cities like Milan.<\/p>\n

\"Europe\"Europe<\/p>\n<\/div>
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Escalating automaker fines have already pushed brands like Dodge to eliminate such popular gas cars in the United States as the Challenger coupe and Charger sedan by the 2024 model year. Other performance models like Chevy\u2019s Camaro are exiting the market because their thirsty V-8 engines make it hard for manufacturer fleets to satisfy government rules.<\/p>\n

European governments also penalize automakers for emissions non-compliance (measured in carbon dioxide grams per kilometer), but consumer markets also penalize manufacturers for making thirsty vehicles. Buy a powerful 505-horsepower, 3.0-liter Alfa Romeo Giulia Quadrifoglio in Italy, for example, and you will pay a stiff 15,000-20,000 Euro fine (the Euro is comparable in price to the U.S. dollar) for its fuel consumption (271 g\/km). Guzzafame said the Giulia would then be subject to another 3,000 Euro in annual fees.<\/p>\n

By comparison, the plug-in hybrid Tonale \u2014 Alfa\u2019s first electrified vehicle \u2014 emits only 26 g\/km on the government test and is subject to a penalty of about 1,000 Euro on purchase.<\/p>\n

\u201cA full-sized American pickup truck would be unaffordable here,\u201d said Guzzafame, who spent years as an engineer in the United States before assuming his current role at Alfa in Italy. \u201cIt would be a luxury vehicle.\u201d<\/p>\n

\"A\"A<\/p>\n<\/div>
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Older, inner-city European streets are also unhospitable to the large trucks and SUVs you see on U.S. roads. But in Europe\u2019s suburbs and rural highways, SUVs like Tonale (and Volvo XC40 and BMW X1) are common \u2014 though the SUV mix tends to be a size smaller than in the United States (America\u2019s best-selling SUV, the midsize Toyota RAV4 SUV, is a rare large vehicle here) due to the emissions penalties and $7-a-gallon gas.<\/p>\n

America\u2019s single-minded push toward battery-powered vehicles is one reason Alfa is exporting only its Tonale plug-in hybrid model to the United States as a bridge to full electrification. Like other small-volume luxury brands Cadillac and Jaguar, Alfa plans to go all-electric in the United States this decade.<\/p>\n

\u201cThey have to go EV. It\u2019s a demand coming from government, not consumers,\u201d said analyst Brinley, a performance car fan herself. \u201cAutomakers recognize that enthusiasts like sound and dynamics, but it may take some time to develop EVs that people will get excited about.\u201d<\/p>\n

In Europe, however, Tonale will be offered in diesel and gas-hybrid versions as well as full electrics. Alfa expects the powertrain trifecta to carve the market pie in equal slices, with the hybrid leading the way.<\/p>\n

In the 1990s, Europe\u2019s regulatory regime favored diesel for its superior efficiency over gas (lower CO2 g\/km), which led to a diesel stampede. A decade ago, some 80% of new European vehicles sold were oil-burners before Volkswagen AG’s Dieselgate scandal soured politicians and green fashion turned to battery power. Given the sheer quantity of diesel engines on the road, Europe maintains a love-hate relationship with the fuel and Italian diesel prices are typically a more affordable $6.70 a gallon compared to gasoline\u2019s $7.30. In the United States, personal diesel transportation never took off.<\/p>\n

Governments frown on diesels in European cities, and come 2025, diesel cars will be banned from Paris and Madrid. Other urban areas, including Milan, plan bans by 2030. Milan has a sliding Area A, B, C urban scale \u2014 with A prohibiting anything but electric cars.<\/p>\n

\"EVs\"EVs<\/p>\n<\/div>
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Automakers like Alfa expect similar urban regulation will reach the United States, and the Tonale hybrid\u2019s ability to run on battery power alone for 30 miles makes it compliant for highways and zero-emission cities.<\/p>\n

Though EVs are best suited for short-range, urban environments, Italians share Americans\u2019 cold feet for EVs. The Italian financial newspaper Il Sole 24 Ore found just 3.7% of vehicles sold in Italy in 2022 were electric \u2014 compared to 5.6% in the United States \u2014 despite Italy having the footprint of New Mexico and the population of California and New York combined.<\/p>\n

Those EV sales proportions pale next to Norway\u2019s EV new-car market share of 79%, the Netherlands\u2019 23% and Germany\u2019s 18%. EVs are scarce here in Milan\u2019s inner city, with a smattering of Tesla Model 3s and Ys and shoebox-sized Smart and Citroen Ami EVs. The generally high cost of vehicle ownership \u2014 and Italy\u2019s dense cities \u2014 has driven many urban residents to public transit.<\/p>\n

High EV adoption is being driven by state subsidies, say analysts, and Italy lags behind its neighbors. In Norway, government subsidies reach 50% of sticker price. The U.S. government subsidizes the purchase of EVs up to $7,500, but only 14 vehicles qualify under the complicated regulations of the Inflation Reduction Act passed last year.<\/p>\n

\u201cInternationally, EV incentives come in many forms, from outright subsidies to tax relief to carpool-lane access to the ability to drive into city centers,\u201d said Anton Wahlman, an auto analyst with the financial publication Seeking Alpha. \u201cIf the consumer had to pay the real cost, EVs would be a 1% market share proposition.\u201d<\/p>\n

Meanwhile, America\u2019s infatuation with hybrid Formula One racing might translate to sales as Alfa fields an F1 team with three U.S. Grand Prix on the calendar. Motorsport reflects the difference in U.S. and European approaches to zero-emissions transport.<\/p>\n

\"Outsise\"Outsise<\/p>\n<\/div>
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Stefano Domenicali, CEO of Formula One \u2014 the top rung of global motorsport \u2014 has ruled out EV racing, pointing to synthetic fuels as the sport\u2019s future. Beginning in 2026, all F1 team engines will be powered by e-fuels \u2014 one reason automakers like Ford, Audi and Cadillac have embraced F1 as a way to entertain customers while also meeting their net-zero goals.<\/p>\n

Under F1\u2019s new \u201826 engine package, the electric motor will produce nearly half of the hybrid race car\u2019s power \u2014 or about the same percentage the electric motor will supply to the Alfa Tonale.<\/p>\n

Henry Payne is auto critic for The Detroit News. Find him at hpayne@detroitnews.com or Twitter @HenryEPayne.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Milan, Italy\u00a0\u2014 European governments have historically been more aggressive than the United States in regulating fuel consumption with high gas taxes, favorable diesel tax breaks and escalating penalties on non-electric automobiles. That is about to change. Automakers selling in the United States will face exorbitant federal fines from regulatory bodies by 2026 if they do […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"_links":{"self":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/30935"}],"collection":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/comments?post=30935"}],"version-history":[{"count":1,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/30935\/revisions"}],"predecessor-version":[{"id":30937,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/30935\/revisions\/30937"}],"wp:attachment":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/media?parent=30935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/categories?post=30935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/tags?post=30935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}