European Internal Market Commissioner Thierry Breton expresses concern over the “gigantic disruption” likely to be caused by the EU’s decision to ban combustion cars by 2035.
In an interview with several European media outlets published on Friday, Mr Breton said that he worried about huge lay-offs in the sector.
The car industry provides close to 13 million direct and indirect jobs and Mr Breton expects the transition to electric cars to wipe out 600,000 of these.
“What proportion of employees will it be possible to convert to electric cars and which part will have to be reconverted [to other sectors]?” Mr Breton said, quoted by French daily Les Echos.
Mr Breton said he had insisted that EU legislators include a review clause when they voted for the ban last week.
The clause could be activated in 2026 and allow the 2035 deadline to be pushed back if needed.
“I said that it was very important that we have a review clause as soon as possible, so that we have the time to react if it is necessary — because we are talking about a gigantic changeover of an entire industrial sector, in the largest sense,” Mr Breton said, online news website Politico’s Brussels newsletter Playbook reported.
Playbook described Mr Breton’s warnings as meaning that “he’s now the carmarkers’ closest thing to a friend in Brussels" while Les Echos wondered whether Mr Breton was "saying out loud what the European car-making industry has refrained from saying publicly".
It is standard practice to have review clauses and “not anything to get particularly excited about”, an EU commission representative said on Friday.
“There is no blurring of the political message here," said energy spokesman Tim McPhie, responding to a question from The National.
"It is very clear for the co-legislator that the 2035 target is going into law and now we are doing everything we can to help make that a reality," Mr McPhie said.
"You have a huge move as well within the industry, manufacturers setting their own targets, sometimes even more ambitious than this, in terms of when they will stop selling CO2-emitting vehicles in Europe."
Mr Breton also said that Europe will need to figure out how to buy enough raw material to switch to electric vehicles.
“We estimated that we will need 15 times more lithium, four times more cobalt and graphite. And we will need three times more nickel by 2030,” he said.
Europe will have to generate 150GW more electricity, the equivalent of 15 times more than it currently does, according to Mr Breton.
The commissioner said that Europe needs seven million public charging points by 2030 and currently has only 350,000, with 70 per cent of them in France, Germany and the Netherlands.
Mr Breton encouraged producers to continue making combustion-engined vehicles despite the looming ban because non-European countries will transition less rapidly to electric vehicles.
“The market of the combustion engine will remain very important outside of Europe. We have to help our industries to maintain a presence there,” he said.
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How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
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