Last month, the European Parliament approved a law that effectively bans the sale of new petrol and diesel-powered cars in the European Union from 2035.
Its aim is to speed the transition to electric vehicles. The legislation states that by 2035 carmakers must achieve a 100 per cent reduction in CO2 emissions from new cars sold, making it impossible to sell new fossil fuel-powered vehicles in the 27-country European Union. The law also sets a 55 per cent cut in CO2 emissions for new cars sold from 2030 versus 2021 levels, which is higher than the existing target of 37.5 per cent.
I have been forecasting this ban for some time. The EU wants its automotive industry to maintain its leadership position by providing vehicles that support global efforts to reduce carbon emissions. European car brands have already made commitments to go fully electric in the near future, including Alfa Romeo (2027), Mercedes-Benz (2030), Mini (2030), Volvo (2030), and Audi (2033). Others will now need to follow suit quickly.
Of course this has implications for New Zealand. Our lawmakers have mooted a similar ban anywhere between 2030 and 2040. However, as we are a taker of automotive technology what happens here will follow the automakers out of Europe, Japan, Korea, China and the US.
In December 2022, almost one-half of the new passenger vehicles arriving in New Zealand were new energy vehicles (hybrids or electric). So it’s not hard to forecast that fewer ICE vehicles will be arriving as we progress through this decade.
I’m most interested to see what the Japanese carmakers do next. With senior management changes at Toyota, the incoming CEO, Mr Koji Sato, is signalling a hastening of EV adoption by the company. Sato immediately announced a range of electric vehicles that will be led by the Lexus brand. In a presentation to the media, he stated; “we must drastically change the way we do business, from manufacturing to sales and service.”
This is significant, with Toyota’s message being this is a manufacturing transition. That means the changes to manufacturing won’t just be incremental shifts away from the internal combustion engine, rather, a complete overhaul. While we probably imagine that making EVs is an extension of the process to making internal combustion engine vehicles, it really isn’t.
In theory, EVs have fewer components, so they should be easier to produce. The reality is, the body architecture is unlike that of traditional vehicles, as is the assembly. EVs need a whole new set of electronics and wiring, while the parts require different modes of handling and storage, and are made using other machines. In addition, much of the manufacturing process revolves around the battery, which can account for 40-50 per cent of the cost of an EV.
Complex manufacturing is why, at one point, it took Volkswagen 30 hours to make one of its ID.3 models while Tesla could knock out one of its cars in just 10 hours.
For a firm that has been lauded for its production-system prowess, known as the “Toyota Way”, this will be a big change. It will include speeding up the integration of hardware and software so that drivers can adapt EVs to their diverse needs.
This new offensive from Toyota began with the first CEO change in over a decade, and looks to be a serious shift that could pave the way for EVs to be produced en masse. Hopefully one of those new models is a Hilux.