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Renault CEO’s message to Germany: Car engines are dying, the future is electric

Renault CEO’s message to Germany: Car engines are dying, the future is electric

‘All the money is going into electric or hydrogen technology,’ Luca de Meo told POLITICO event.
The German government is trying to secure a future for the combustion engine, but it's likely too late, Renault's CEO warned Tuesday. That's because carmakers have already switched billions in investment to batteries and hydrogen.

Speaking at a POLITICO event, Luca de Meo, who is also chair of the European Automobile Manufacturers' Association (ACEA), said carmakers had already responded to EU plans to mandate a zero-emission sales policy for cars and vans from 2035 — effectively banning the sale of new polluting cars — by funneling billions of euros into clean vehicle technology.

"I don’t think there’s anybody ... that’s developing a completely new engine in Europe," said de Meo. "Nobody is, you know, from scratch developing a new combustion engine in Europe. ... All the money is going to electric or hydrogen technology."

All three main EU institutions have backed the EU's 2035 zero-CO2 emissions sales target, but a late rearguard action by Germany — along with Italy, Bulgaria, Poland the Czech Republic — has put final approval on hold. Berlin is now in direct negotiations with the European Commission over a fix that could provide a loophole for e-fuels — a synthetic alternative to petrol and diesel.

The issue is threatening to turn into an all-out war within the bloc ahead of an EU leaders' summit this week.

Italy has expanded on the German government's demands by asking the Commission — in a document seen by POLITICO — to prepare a detailed workaround for sales of cars running on all carbon-neutral fuels, including e-fuels and certain kinds of biofuels.

In an address to lawmakers in parliament in Rome, Prime Minister Giorgia Meloni argued Tuesday that the 2035 ban was "too ideological" and warned that efforts to green up the national economy would "bring us straight to deindustrialization."

But France and others have said they want to stick to the original 2035 deal, as has the European Commission, which told POLITICO Tuesday it would not reopen the green cars legislation agreed last year.

While some carmakers, including Renault, were initially keen to delay the 2035 phaseout date, most have already announced plans to switch to all-electric sales in Europe by 2030.

Volvo, Ford and Audi are among those to have announced definitive end dates for their production of anything but electric vehicle models inside Europe in a few years, putting most industry majors on track to end sales of polluting vehicles across the Continent within the next decade. Renault has said it is preparing to offer only electric cars across the Continent by 2030.

Instead of reinventing the engine, the key objective is catching up with China, which de Meo says is a decade ahead on electric vehicle battery technology.

De Meo stressed that he favored "technological neutrality" — meaning the EU emissions legislation shouldn't dictate how carmakers hit the zero-emissions target in 2035. As it stands, the rules effectively mean only batteries and hydrogen are viable alternatives to petrol and gasoline.

While e-fuels are currently "kind of a niche solution" because production is still minimal and industry needs to build up the supply chains, they are "an opportunity," the car executive said. "As always, you start from a niche."

Still, the Renault CEO agreed that electric vehicles are on track to become the dominant market solution to the challenge of getting to zero emissions.

The trend away from engines is irreversible, as suppliers — who have tens of thousands of employees across Europe — are shifting away from the combustion engine, he said.

"All the Tier 1 suppliers [which provide equipment directly to car manufacturers] are completely moving out of investing on combustion engines," he said. "You will see the wave coming."
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