These 3 major automakers may team up to save themselves, build cheap EVs Leave a comment

Plan A isn’t working, so it’s time for Plan B. Three major legacy automakers are considering a creative approach to staying in the game amid fierce competition from Tesla and Chinese rivals – all in an effort to make cheap EVs, and a whole lot of them.

Volkswagen, Renault, and Stellantis are weighing possibly joining together to make cheaper electric vehicles – fearing it’s their only option. The urgency is growing as European automakers are being far outdistanced by BYD and Tesla. “A business-as-usual approach is a losing option,” reports Bloomberg. Hmm, didn’t anyone get the memo sooner?

Carlos Tavares, CEO of Stellantis told Automotive News Europe that there is a “perfect recognition that in the future, the companies which are not fit to face the Chinese competition will put themselves in trouble.”

Ideas on the table range from “pooling development resources to bundling businesses across European borders to better compete in the once-in-a-generation shift.” Whatever happens, it will happen soon, within months, the report said.

2024 has so far served up a series of obstacles impacting EV sales, and automakers are saying they have been woefully unprepared. Among the issues, some governments have reduced or dropped EV incentives, rental companies are scaling back on EVs, and anti-EV buzz is brewing during what will be a tense election year in the US and Europe. Even Tesla is feeling the burn at this point, with a 20% share low this year wiping out about $150 billion from its market capitalization, more than double VW’s value, Bloomberg writes.

Next challenge is tighter emissions rules coming into effect in the EU next year, meaning it’s do or die for automakers: make more BEVs or pay hefty fines. To get a sense of what’s possible, if not a worst-case scenario, VW could face fines of more €2 billion ($2.2 billion) if it doesn’t reduce fleet emissions, Bloomberg writes.

Meanwhile, BYD plans to show off its latest EVs at the upcoming Geneva Motor Show, including a Mercedes G-Class rival luxury SUV – which is all rather anxiety-inducing among the Europeans.

Renault CEO Luca de Meo has suggested forming an “Airbus of autos” – which refers to the pooling of resources from Germany, France, Spain, and the UK to vie with Boeing – by bringing together three of Europe’s biggest automakers to build cheap EVs, and build them on a large scale.

Still, most analysts agree that 2024 will be a weird year, and that the “slump” in EV sales certainly won’t last – and that the biggest barrier is cost, with consumers needing to spend more on insurance in some cases, as much as twice as much in the UK, alongside higher upfront costs.

VW, Stellantis, and Renault are all (separately) working on new BEVs priced at €25,000 or less, while Mercedes and BMW plan to launch new EVs with improved technology by 2025. VW, which has been plagued with buggy EV software, may need the help more than anyone, despite its massive EV investment after the 2015 Dieselgate scandal.

Electrek’s Take

All roads seem to be leading to a big push from automakers to convince the EU to slow down its ramp-up to EVs, just as is potentially happening in the US – actions that could have a devastating impact on the climate. According to Bloomberg, the EU is already due to review the plans, with automakers getting their lobbyists ready for a fight soon after the European parliamentary elections in June.

Of course, automakers have failed to sort out a working plan in their EV transition, and that is falling on the backs of an entire industry that employs millions of people, and represents 7% of the entire EU economy. Companies such as supplier ZF Friedrichshafen has spent billions to prepare for EVs, but now may slash as much as 20% of its staff as automakers are pulling back on EV production. Meanwhile, thousands of other jobs – the good-paying kind with benefits and protections – are on the line, with Volkswagen cutting thousands of jobs in Germany to slash $11 billion in costs, and auto suppliers in the EU laying off tens of thousands of workers – just this week a major auto supplier for Tesla, VW, and Ford announced it was slashing 10,000 jobs. 2024 will be a bumpy year, indeed.

What about the US? Well, General Motors and Ford are both scaling back EV investments while also indicating that they are “open to partnerships with peers.” Of course, they have more time to play with than their European counterparts, especially if Biden shifts back the EV strategy in the coming months.