For years, even when electric vehicle sales weren’t on a straight upward trajectory, the global auto industry was geared toward battery power by one overriding factor: the EU’s 2035 ban on new internal combustion vehicles.
But that’s it He was reportedly about to go out the window. This week, European Union officials, under enormous pressure from the auto industry, are expected to unveil a new set of standards that would take the gas car ban off the table. Is this a moment of relief for the auto industry, or an opportunity to double down on 20th century technology while competitors from China get faster and better?
The industry’s must-read technology report.
Welcome back to Critical materialsour morning report on industry and technology news. Also on deck today: Getting rid of America’s stricter fuel economy rules won’t save any real money, according to a new analysis, and BYD is setting its sights on the luxury market. If you like what you see here, Subscribe Get it in your inbox every weekday morning.
25%: What will happen if the European Union backs down from its gas car ban?
Photo by: BMW
EU regulators have sought to end new internal combustion cars on the continent as part of an ambitious effort to combat climate change. But automakers have long complained that switching to battery-powered, software-driven cars before buyers are “ready” would effectively destroy the continent’s most important manufacturing sector.
No country has beaten that drum more than Germany, home to Europe’s largest car industry, and German Chancellor Friedrich Merz last week described the move as a win: “We need to correct conditions in Europe as quickly as possible so that this industry in Europe has a future,” he said at a news conference.
But what kind of future? The problem with Europe is that Chinese automakers have not only visited it, but have actually moved into some rooms and invited their friends. Chinese brands – typically electric and hybrid vehicles – are increasingly stealing sales from local automakers Establishment of European factories as well.
So an expert spoke up Bloomberg Question: If a change in regulations allows European automakers to double down on their ICE efforts, what guarantee is there that they will have the technology needed to compete with China?
Although breathing may be a welcome prospect in an industry that accounts for about €1 trillion (US$1.2 trillion) of economic output, it also carries risks. Too much flexibility threatens to slow development and increase the technology gap with Tesla Inc. And Chinese competitors such as BYD. This could lead to the EU becoming a bastion of yesterday’s technology and doing little to bolster the sector’s declining competitiveness.
“What is happening now is a wake-up call for the industry,” said José Delbecq, a professor at the European University Institute in Florence and a former senior EU climate official. “Some flexibility may be needed for good reasons, but it must be temporary; otherwise we risk missing climate targets and losing the technology race.”
There are some positive aspects to the change in EU plans, Bloomberg Reports. Incentives will be expanded, especially for small cars made in the region. And automakers can be too On the hook to cut CO2 emissions by 90% for its fleets from 2035 onwards – still a challenging and ambitious target.
But if automakers get regulators to ignore it once, they may be able to do it again. This is bad news for the climate, technological competitiveness, and ultimately for jobs.
50%: America’s looser fuel economy rules likely won’t save us money
When it came to going back to using gasoline, America looked to the rest of the world and said, “Hold my beer.” Not only has the Trump administration eliminated EV tax credits and Biden-era rules driving a more electric vehicle market, but it recently announced lower fuel economy standards — ostensibly, to make new cars cheaper.
but Car News The analysis shows that even if new car prices drop by a whopping $900 or so, as the White House has predicted, any savings drivers get will be wiped out by paying more at gas stations:
But if the proposal becomes official, companies would abandon fuel-saving technologies and consumers would pay at least $187 more over the life of the vehicle, even with the expected price savings upfront, according to an appendix to the NHTSA proposal.
The net cost of ownership of passenger cars and light trucks will increase between $187 and $506 over the life of the vehicle, driven by an overall increase in fuel costs from $1,112 to $1,431 for the 2031 model year, NHTSA said.
When asked about the net losses to individual consumers, NHTSA spokesman Sean Rushton said the agency’s analysis “does not take into account how the Trump administration has already saved millions for the American people by unleashing domestic oil production to record levels” and that the Biden administration “raised auto prices through its illegal EV mandate and anti-energy agenda.”
NHTSA’s calculus assumes that fuel prices “will generally remain at about” $3 to $3.20 per gallon through 2050. The numbers also suggest prices will fall below $3 per gallon in 2028.
The Trump administration has blamed pressures from fuel economy regulations and the push toward electric vehicles for the rise in new car prices. But as the Automotive News story points out, even federal regulators can’t fully support that idea. That story is worth reading in full.
75%: BYD is moving higher, because it has to
Chinese automaker BYD has proven this this year It will be a force to be reckoned with in the automotive industry for a long time. But even she’s experiencing some growing pains. Its sales are slowing, especially in China, where competition is fierce and the market is cooling after years of unprecedented growth.
So, if you can’t win on volume, you’ll win on margins. That’s why BYD is betting big on its two new luxury brands: Denza and Fangchengbao. The first is a kind of high-performance Porsche competitor (not to be confused with BYD Yanguangwhich does similar things) and the other is an off-road-focused luxury competitor to Land Rover. Here’s more Nikki Asia:
Off-road-oriented Fangchengbao began delivering vehicles to customers in November 2023 and plans to expand its product lineup to include a sedan in 2026. BYD positions it as a non-traditional brand, appealing to a segment not covered by the company’s mass-market vehicles such as the Ocean and Dynasty series.
The Bao series of off-road hybrid vehicles feature high performance even on rough terrain. The Tai series, designed for off-road and urban driving, debuted this year.
The Tai 7 is a hybrid electric device, like the Bao 5, and is comparable in size. The model has less power and acceleration than the Bao 5, and its exterior design is simple and geared toward city driving. But its price starts at 179,800 yuan ($25,500), which is 60,000 yuan cheaper than the Bao 5.
Tai 7 sold about 20,000 units in October, which helped push Fangchengbao’s sales that month to 31,052 vehicles, an increase of nearly 400% year-on-year. Tai 7 became Fangchengbao’s biggest hit to date.
“We currently have a waiting period of six to eight weeks for delivery, so we will increase production capacity to meet the demand,” Xiong Tianbo, general manager of Fangchengbao, told Chinese media.
It might just work. BYD is a smart company when it comes to product planning, and is branching out into… Kei electric cars in Japan and Plug-in hybrid real estate vehicles in Europe. He has a tendency to know what buyers want. Now, will they bite outside of China?
100%: If you drive an electric car, will you go back to using gas?
Photography: Patrick George
Look, I’m not going to kick and scream if you drop an old Porsche 911 in my garage tomorrow.
But beyond that, I’ve been driving and testing EVs long enough that I no longer have any interest in buying a new gas car again. I’m pretty much done and I’m glad I did. What about you? Are any of these regulatory moves enough to tempt you back into a gas car, or do you remain flexible? Let us know in the comments.
Contact the author: patrick.george@insideevs.com
