Nearly one in four cars sold in France, Germany and the UK by the end of 2022 was battery electric. So, just as Christmas turkey, mulled wine and craft gifts are on everyone’s minds, I’d like to take stock of another bumper year for electric vehicles. What’s Santa’s 2022 naughty or nice list when it comes to clean cars in Europe?
The Naughty list
- Let’s start with what’s on the naughty list. Without wanting to trivialise the horrors of the war against Ukraine, Putin – and the energy crisis he plunged Europe into – is top of the list. This has meant that average residential prices for electricity in Europe grew by 50% in the year to November 2022. But even though the costs of charging an electric car have risen, they are still 48% lower than the costs of refuelling a petrol car.
- And while it is still cheaper to drive electric, the energy crisis and broader inflation meant that the costs of most materials increased. In particular, this had consequences for the price of raw materials needed to make batteries, such as lithium, nickel and cobalt. The price of lithium shot up almost tenfold from its levels in early 2021. For the first time in lithium-ion battery history, average global battery pack prices increased by 7%, to $151 per kWh. Fortunately, the price for battery electric cars isn’t too badly affected as manufacturers switched to batteries without nickel or cobalt (LFP). Innovations in battery design and manufacturing scale-up will bring affordable mass market electric cars in the second half of the decade.
- The other name high up on the naughty list is the EU Commission’s Euro 7 regulation, AKA the new empty shell pollution standards proposed in November. This is the chief law that’s supposed to reduce toxic pollution from cars and vans across Europe. Close to 100 million petrol and diesel cars are expected to join the fleet between now and 2035, yet carmakers were successful in convincing the Commission that the costs of pollution-dampening technologies are too high, despite the price tag being less than the average paint job.
Luckily, there was a lot to celebrate this year:
The nice list
- 2022 will go down in history as the year Europe locked in the phase-out of combustion engines, paving the way to 100% zero emission cars and vans by 2035. So, both Europe’s climate chief Frans Timmermans and the European Parliament’s lead negotiator Jan Huitema top T&E’s clean cars’ nice list. The European Parliament was first to cast a historic plenary vote on 8 June in favour of the 2035 milestone. The European governments followed suit three weeks later but left a door slightly ajar to e-fuels, or so called green magic fuels that, in cars, can be summarised as much ado about nothing.
- New rules on the way carbon emissions from plug-in hybrids are calculated are also on T&E’s nice list this year. The real-world emissions of plug-ins are, on average, three times what’s officially declared today. This means that drivers pay a lot more for fuel than they should, while artificially low CO2 models help carmakers meet the EU emissions targets. But the new rules, kicking in from 2025, will mean the official CO2 ratings of plug-in models will be closer to how they are driven in the real world. That means drivers will have real data on how much they will spend on fuel, and carmakers will not be able to use them as a compliance trick anymore.
- The final name on the nice list goes to another historic decision just before Christmas; the agreement on the European sustainable battery regulation. This will be a game changer for the sourcing, production and recycling of batteries for electric cars, which are already far better for the planet than burning oil. The new “battery passport” will ensure that only clean, ethical and circular batteries are sold in Europe regardless of where they are produced, making it a blueprint for battery regulations worldwide.
2022 was both a historic and tough year for Europe’s auto industry. Having attracted much investment – with battery factory announcements reaching 1000 TWh by 2030 – Europe’s electric car policy has been an industrial success so far. But the recent landmark Inflation Reduction Act on the other side of the Atlantic now risks syphoning investments away from Europe. How Europe responds, including the upcoming Critical Raw Materials Act, will determine success in 2023.
One thing is clear: now is not the time to cast doubt on the 2035 cars agreement. Instead, that investment signal should remain crystal clear and be beefed up with smart industrial policy to accelerate “Made in Europe” batteries, electric cars and the clean materials that go into them.