The condemned internal combustion engine (ICE) won a stay of execution this week when the EU watered down rules that will result in the petrol- and diesel-dependent technology being consigned to history in a few years.
Instead of an expected outright ban on the sale of new ICE vehicles after 2035, the EU allowed the continued use of those employing carbon-neutral synthetic fuels, or e-fuels. The UK, which had planned to ban ICE technology after 2030, may follow suit.
The EU decision won’t halt the trading bloc’s transition towards emissions-free new energy vehicles (NEVs) but it may give motor companies breathing space in what some consider an ill-considered, headlong dash towards the future. Most NEVs are electric vehicles (EVs) but hydrogen and other forms of clean energy are also being developed.
Nearly all motor companies are betting the farm on EVs becoming the dominant technology. German companies are among them but they, along with their federal government, have been lobbying the EU to extend the lifespan of ICEs using e-fuels.
There is also a push, not just from Germany, to delay the phasing out of hybrid electric vehicles with twin petrol/diesel and electric motors. As things stand, their sale will be banned in the UK after 2035 and in the EU after 2040, making consumers dependent on rechargeable battery-electric vehicles.
Environmental groups have condemned the EU’s e-fuels decision. Greenpeace has called it a “stinky compromise”. Engineers, however, say it will have only a limited effect on the shift to EVs. E-fuels are expensive to make and only one plant, in Chile, does so commercially. Porsche is reported to be a shareholder in the plant, while BMW has invested in a US venture, Prometheus Fuels.
Though e-fuel costs will eventually come down, engineers say that in the short to medium term, they can be justified for use only in high-priced cars. Ferrari, Aston Martin and McLaren are among brands showing interest.
In an interview with Bloomberg, Gerrit Marx, CEO of Italian truckmaker Iveco, said the high price of e-fuels made them “the champagne of propulsion”.
Unlike EVs, whose engines are claimed to emit no carbon dioxide (CO2), those of e-fuel ICEs do. Their advocates, however, say they are carbon-neutral because these emissions are cancelled out by CO2 drawn from the atmosphere to make the fuel.
In e-fuels’ favour is the fact that they can be distributed through existing liquid fuel retail networks. They also allow motor companies to make lighter vehicles not weighed down by heavy battery packs.
What does this mean for the South African motor industry, which exports more than half of its vehicle production to the UK and EU? Cars and bakkies made here are almost exclusively ICE; two companies, Mercedes-Benz and Toyota, make some hybrids.
They, along with their competitors, are keen to increase EV production but are waiting for a comprehensive government incentive policy. The 2021-2035 automotive production and development programme (APDP) offers the same benefits to EV and ICE technologies, but companies say they need more to justify the high cost of switching to EVs. They also want the government to offer price incentives to consumers, to generate local sales.
An NEV white paper, setting out policy, was due in 2021 but has still not been published as the government wrestles with the problem of how to pay for extra incentives.
The motor industry says it needs a decision urgently, if it is not to lose half of its sales when the UK and EU go all-electric. Some companies, however, have indicated they may shift their medium-term export focus to developing countries that aren’t yet ready for EVs.
The EU’s unexpected turnaround this week could allow South Africa a little latitude, but no-one is taking anything for granted. Most executives contacted this week say they are studying the decision.
Renai Moothilal, director of the National Association of Automotive Component & Allied Manufacturers, says the EU decision underlines the fact that no single propulsion technology is suitable for all future markets. The South African motor industry is ready for anything the rest of the world needs.
He says: “The South African automotive manufacturing industry is well suited to respond to global markets, irrespective of propulsion, given the diverse makeup of the supplier base. The APDP is technology-neutral and any changes made in an NEV context should also take into account the developments in European policy.”