On 18 September 2015, the US Environmental Protection Agency (EPA) accused VW of installing illegal software in some of their diesel cars to hide poisonous emissions – the start of the “Dieselgate” scandal, which soon morphed into a global issue involving many industry giants.
These “defeat devices” allowed the cars to meet regulatory standards during testing while emitting dangerously high levels of pollutants, particularly nitrogen oxides (NOx), on the road. Previously, the International Council on Clean Transportation (ICCT) had registered excessive emissions in several VW cars sold in the US, and notified the EPA.
For more background, read our timeline of the Dieselgate scandal.
Clean Energy Wire: Looking back, how do you assess the Dieselgate scandal? To what extent has it changed the German automotive industry?
Peter Mock: At the time, it seemed like a huge turning point for both politics and the industry. Politicians in Germany suddenly behaved very differently and no longer trusted car manufacturers – there was a great deal of disappointment and scepticism. It also appeared to be a major turning point for the automotive industry, because it became very clear at the time that diesel was not the future, and combustion engines in general probably weren’t either. This triggered many commitments to electric mobility.
But from today’s perspective, I would say that it wasn’t as big a deal as we initially thought. Politicians and car manufacturers returned to business as usual relatively quickly. The same old collusion between the automotive industry and politicians is back. At the same time, some companies are moving away from earlier commitments to electric mobility, and there is even new hope at some companies that they may be able to continue selling their old combustion technology.
Why did the companies take the huge risk of systematic fraud at the time?
German car manufacturers in particular had arrogantly set out to conquer the world with their diesel engines. They wanted to make the technology a global success story – at any cost. At the time Europe, and Germany in particular, were the only markets where diesel sold well. They wanted to take this success out into the world.
Instead, they should have realised much earlier that the diesel technology didn’t have a future. They should have consistently focused on pure electric mobility – as China has done. To make matters worse, they took two further detours: first hybrids, and then the nonsensical hope for synthetic fuels.
But instead of making sensible use of hybrid technology to build almost purely electric cars with a small reserve tank for range extension, they used the technology to boost engine power and put really big, heavy SUVs on the road. Then, in another minor scandal, it emerged that most hybrids are barely driven on electric power.
The companies may have lost tens of billions of euros in the scandal, but they always had enough resources for a decisive change. Instead, they repeatedly deviated from the long-term strategic path towards electromobility.
Where does the industry stand today? German car manufacturers unveiled new electric models at the IAA in Munich last week.
I believe that there is still hope for the German car industry because their new models and technology are actually very good. German car manufacturers simply have a great deal of experience in building cars – and marketing them, an aspect that should not be underestimated. At the same time, there is this paradox that they present great products at car shows like the IAA and then a few days later lobby against these very products at the EU in Brussels.
I believe this contradiction stems from the fact that the companies are simply too focused on the next quarterly results – short-term profit. This pushes the long-term strategy into the background – Questions like: Where do we want to go in the long term? Where do we need to take our customers and politicians in the long term? Neither customers nor politicians can jump back and forth quickly; they need to know where the journey is headed.
Can German manufacturers even catch up with Chinese manufacturers in terms of technology and price? Or are they already out of reach?
The Chinese companies are not out of reach yet, but it could happen quite quickly. We now have some very critical two or three years ahead of us, in which the race will be decided. It is absolutely clear that electric mobility will prevail – it is simply the more attractive product. But the question is: who will produce these electric cars in Europe in the long term?
Other environmental NGOs accuse manufacturers of greenwashing. They argue that manufacturers are using the IAA as a fig leaf to conceal their fossil fuel business model. Would you agree with that?
I think that’s a bit of an exaggeration. The electric vehicles presented at car shows like the IAA are a serious part of the companies’ strategy, and there are many people within the companies who are actually planning strategically for the longer term, and developing great products. On the other hand, however, there are the bean counters who only have their eyes on the next quarterly figures. These two factions are in competition within the companies. At the IAA and other auto shows, you naturally tend to see the creative, strategic people. But you shouldn’t believe that they represent the entire corporation’s opinion.
We have just looked back over the last 10 years, now let’s look 10 years ahead. Would you like to make a prediction as to what the global car market will look like then?
First of all, we currently have a trend where the major markets of Europe, China and the USA have started to isolate themselves – I’m not sure if that can still be reversed. Therefore, in the long term, European manufacturers may be able to continue to have their market in Europe if they are good enough. Whether they will be able to do so again in China or the USA is very questionable, however.
But beyond that, there are many emerging markets that are currently growing very strongly and where electric mobility is growing at an incredible rate: Vietnam, Thailand, Turkey, Brazil and so on. These are all potential export markets for European manufacturers, and that should not be underestimated. We often look at China and say, oh, they are so far ahead, we can’t catch up with them anymore. But there are many other markets beyond that. And it is far from decided who will win the race there. There is still an opportunity for Volkswagen, BMW and Mercedes to keep up, especially in the upper segment of the market. But to do so, they must of course offer attractive products, and in these markets, that definitely means electric vehicles.
Manufacturers are currently lobbying again for a relaxation of the EU phaseout on combustion engines in 2035. What will the European market look like at that point, and how important is it that the target stays in place?
Norway provides an instructive answer to this question. About ten years ago, Norway was pretty much where we are today in the EU. Electric cars now account for over 90 per cent of new registrations in Norway. This will also be the case in the EU in 10 years at the latest. Regardless of the legal situation, we will be close to 100 per cent electric cars by 2035. Without a strict regulation, perhaps 90 per cent, otherwise, of course, at 100 per cent. Electric cars will prevail in any case because they will simply be the more attractive and cheaper product. Electric cars still have a huge learning curve ahead of them, while combustion vehicles are mature. In addition, fossil fuels are likely to become more expensive.
Nevertheless, the phase-out target for combustion engines in 2035 is an incredibly important signal because customers have to adjust to it. It is also very important for investors. Anyone who wants to build a battery factory now needs clarity that all new cars will be electric in 2035.
There will soon be another car summit at the Chancellery. What should happen there?
It is an illusion to believe that Germany can now save the combustion engine. This decision will not be made in Germany nor Europe, but worldwide – and the trend clearly points towards electric cars. No matter what is decided in Germany – we cannot decide here whether combustion vehicles will still be sold in 20 or 30 years.
It would be much wiser to acknowledge the shift to electric mobility on the outset and then ask: How are we positioned? How can we ensure that we not only survive in this market, but shape it as a leader? What do we need to do this? How can we bring battery production to Europe or Germany? How can we ensure security of resources? And so on.
These strategic questions make much more sense than deliberating on how to delay CO2 regulation at European level. That achieves nothing. It’s a head-in-the-sand strategy.
Clean Energy Wire. Reprinted with permission.
