EU program “FIT FOR 55” and its impact on the development of EV infrastructure
In October 2022, after several months of negotiations, the European Union reached a political agreement to ban the manufacturing of new non-electric cars from 2035 effectively. The agreements provide for a 100 percent reduction in carbon dioxide emissions for new vehicles (cars and minibusses) at the final round of the reform. Still need to guess what it’s about?
This legislation still needs to be formally approved by the Council and the European Parliament to become binding in the European Union, which is one of the largest automotive markets and home to the largest companies in the sector. I won’t drag the intrigue — it’s “Fit for 55”. I will tell you more about it below.
What is the “Fit for 55” package?
“Fit for 55” is a package by the European Union designed to reduce the European Union’s greenhouse gas emissions by 55% by 2030. “Fit for 55” aims to update existing legislation in line with the EU’s 2030 climate target and introduce new policy measures.
However, the EU’s decision to stimulate the production of EVs after 2035 will face difficulties due to a great many infrastructure problems. After all, gas stations are widespread and convenient, and maintenance and refueling are clear, fast & affordable.
Instead, EV owners are constantly faced with similar problems — insufficient number of charging stations, unstable power supply, and an unstable electrical grid.
Planning long-distance travel creates many challenges and uncertainties. Also, questions arise for entities that provide charging services since the quality of the provided services depends on them.
EU risk assessment
Currently, half of the charging stations in the EU are located in two countries — Germany and the Netherlands.
The risk is that consumers will hesitate to buy an EV until there is adequate charging infrastructure, while investment in infrastructure requires greater certainty about the level of electric cars.
In addition, in the event of a sharp increase in new types of electricity consumers — EV drivers — electricity suppliers must modernize the existing infrastructure and increase electricity production. States must strategically consider the methods of electricity generation on their territory (nuclear, thermal, alternative, or hydropower).
The European Commission estimates that more than half a trillion euros will be needed to modernize Europe’s energy network this decade.
The European People’s Party and others have argued that emissions must be cut, but the legislation is a too crude instrument. It will simply lead to Chinese and American manufacturers with more flexibility taking traditional automotive business away from Europe.
But supporters of the measure said companies would be given enough time to transition, with an interim target of a 55 percent reduction in carbon emissions by 2030 from 2021 levels for cars and a 50 percent reduction for vans.
It seems that such a decision by the EU is slightly emotional, and the existence of problems with the infrastructure can pose difficulties for both car manufacturers and entities providing charging services, as well as for states and direct car buyers.
It’s still unclear whether such a rush will backfire, as most automakers with headquarters and production in Europe and counting on this market may find themselves in an uncomfortable competitive position vis-à-vis American, Japanese, and Chinese car holdings.
European car giants will need to take into consideration the rules of the target reduction of CO2 emissions by 100% when developing new car models and create a sufficient number of concepts that will go on sale by 2035. Only time will tell whether this will be enough and whether the unprofitability of such haste won’t manifest itself in EU policy.
It’s essential that European car manufacturers will be ready for these changes and see only the advantages. The EU, in turn, helps the industry with the transition, in particular, with renewable energy sources, public charging infrastructure, and access to raw materials.
Conclusions
So, the proposal of the European Parliament and the Council to amend Regulation (EU) 2019/631 on strengthening the CO2 emission standard for new passenger cars and minibusses (LCVs or vehicles with a gross vehicle weight of fewer than 6 tons) aims to reduce greenhouse gas emissions and to achieve climate neutrality of the EU in the world.
However, during the implementation of this policy of the European Union, the weak points in this area must be taken into account, and not forget to take care of those parties on whose shoulders the direct implementation of the above-mentioned ambitious goals in everyday life fell.
