For a business, nothing is worse than uncertainty. The bigger the business, the greater its devotion to certainty. It’s why businesses are fanatical about gathering data: to identify errors, reveal trends, and expose opportunities.
The longing for certainty also explains businesses’ increasing interdependence with governments, particularly in the realms of finance, but also in research, data gathering, information concealment, and consumer product regulation. The caricatures of a wily businessman conniving against the public-spirited regulator are as out-of-date as the internal combustion engine. Business and government are simply working opposite sides of the same street.
It was not an upswell in consumer demand that convinced nearly every automaking concern to tie their futures to battery-electric and hybrid-electric vehicles. To date, consumers’ interest in EVs is middling, at best. But prospective new-car buyers will have had some of the choices made for them once a wave of electric vehicles floods the market in the next five years. These EVs are the products of businesses (including activist and passive shareholders) collaborating with regulators because going along with the plan for carbon-neutrality will bring the certainty they long for – principally an end to decades of vehicle emission oversight. Easing their transition will be some nominal tax credits to induce buyers, and innumerable local and state rewards for new business start-ups.
And yet, nearly a decade into this business bliss, uncertainty is growing. In March Stellantis CEO Carlos Tavares shone a light on some of the uncertainties framing the EV inevitability, including fears of a shortage of lithium to power the number of fuel cells needed to match the projected numbers of new vehicles. “Not only the lithium may not be enough, but the concentration of the mining of lithium may create other geopolitical issues,” Tavares told an industry forum – alluding to what is a growing anxiety about the locations and conditions of the sites where the lithium ore is mined, and the accessibility and reliability of those raw material supplies.
He blamed the lithium problem for another concern about the inevitable automotive future – the cost of new EVs. “The affordability is not there because the raw materials are scarce and very expensive, and I would add very volatile,” according to Tavares. That may be minimizing the scale of the problem for the automakers expecting consumers to buy still-unproven products at what are presently premium prices.
And the Stellantis chief pointed to his own cohort for the uncertainty growing around them when he framed the drive to replace ICE technology on a compromised agenda: “Our societies are losing a lot of great potential by not having technology-neutral regulations,” according to Tavares. “This is a big, big loss of creativity, of scientific power that we are deciding upfront by imposing one single technology, instead of having a technology-neutral regulation that would create healthy competition.”
In other words, Tavares implied that the auto industry has walked into a trap, nearly all following the same plan – and with no back-up.
His industry colleagues and the regulatory bodies will not take that criticism well. Already there is growing consternation in Europe about the failure to fully embrace a plan to ban sales of ICE vehicles by 2035. The EU Parliament endorsed that program in February, but last month the German government invoked a loophole that will keep such cars available past that crucial deadline.
Why 2035? Because 2035 is 15 years before 2050. Those 15 years will cover the expected lifecycle of an ICE vehicle – and that timeframe will allow everyone to feel certain of achieving carbon-neutrality by 2050. You see, the EU Parliament previously made everyone legally bound to fulfill that net-zero agenda. It’s all been planned, except for the details of the plan, such as how to replace the reliable but unsavory Btus that make life and commerce possible.
For flipping the safety switch the Germans are being criticized by EU officials who fret that their 2050 agenda may be set aside, and by others in the industry who sense that the certainty of their forward planning is being challenged, and may need to be revised.
The specific discussion centers on the availability and carbon-neutrality of synthetic fuels (or e-fuels) that may be used to power ICE vehicles past the 2035 date – which critics maintain is a detail meant only to provide insurance to Germany’s important and influential automotive sector.
But, is it only self-interested? Is it not sensible to keep an eye on the calendar and consider where all the enthusiasm for carbon-neutrality is leading the societies of Europe and North America?
The Stellantis CEO raised concerns about the direction of EV technology and the lack of attention to alternative development programs, but its past time to demand some interim updating on the progress of these carbon-neutrality plans for the wider economies. .
Most important, will the rush to EVs indeed cut global greenhouse gases in the future – or have we merely agreed to go along with these efforts in order to gain some assurance about the present?