Struggling to Be the Top Automotive EV Player in Europe #32

Caesar00:01:32

Welcome back everyone to another episode of Black Beauty Jag. Glad to be here with you, Chloe.

Chloe00:01:37

Oh, I am too, Caesar. I'm ready to dive into the next segment in our discussion about what is going on in the EU.With all the buzz about EVs and fires, like even the Los Angeles fires this past year and all of the issues that have been discussed and what that has changed, if anything.

Caesar00:01:55

Oh, there is definitely a lot that is going on, Chloe, but I'm not sure how much of it has changed, truly.But that is why we are trying break down the headlines and the facts to see where the real deal is and how that affects us as Jaguar owners and Jaguar F-Type lovers. With Jaguar's intent on going ev.

Chloe00:02:12

Alright then, let's hop to it, shall we, Caesar?

Caesar00:02:15

Let's look at the bigger strategic picture.How do these safety realities, the data, the public perception, how does it all tie into Europe's huge climate ambitions and the future of its massive auto industry? Just four years ago, Europe was really planting its flag, wasn't it?Positioning itself as the global climate leader, betting big on this electric car car revolution.

Chloe00:02:36

The EU proposed that the 2035 ban on new gas and diesel car sales, not just an environmental thing, they framed it as a generational task. Remember, save the planet and put Europe's famous car industry at the forefront of innovation.

Caesar00:02:53

As we discussed here on Black Beauty Jag, Jaguar Land Rover was looking at pausing sales to prepare for EV sales and their focus on EV only automobiles, especially in Europe, looked like everyone was pulling in the same direction. The feeling was, we can do this, we'll lead the planet.But fast forward to today and the reality on the ground feels a lot more, well, chaotic than that. Is it what they hoped?

Chloe00:03:17

Yeah, bumpy road.

Caesar00:03:18

The continent's auto industry is facing serious economic struggles. We're seeing companies cutting jobs and struggling to compete with China again.In our podcast episode about the CEO change at Jaguar Land Rover, we heard about the changes going on there with the reduction in force.

Chloe00:03:33

But even with all of the cuts, it is a challenge. China's cost advantage is huge.

Caesar00:03:39

So true, Chloe. It is the mature supply chain, lower labor costs, state subsidies, and look at the market value.Europe's five biggest carmakers combined dropped from $364 billion to $197 billion since mid-2021.

Chloe00:03:58

Ouch. That's a massive hit.

Caesar00:04:00

Tells you something about the financial pressure cooker they're in. That dream of leading the EV revolution is hitting some very harsh economic walls. And this economic pain is absolutely fueling political pushback.A real rethink of that 2035 deadline seems to be underway.

Chloe00:04:15

You're seeing it across the board.

Caesar00:04:17

Right leaning politicians and car industry lobbyists are increasingly training their ire on the EU's regulation. They're saying it's too fast, too rigid, it's threatening a vital European industry.

Chloe00:04:28

Protecting jobs becomes the priority.

Caesar00:04:31

Exactly. Jens Giesecker, a German member of the European Parliament with the European People's Party, said, we need flexibility on the 2035 target.We don't want to kill off the industry. And Italy's Prime Minister, Giorgio Meloni, took it further and called the target ideological madness, vowing to correct it.This reflects a growing mood, doesn't it, that maybe climate ambition needs a stronger dose of economic pragmatism.

Chloe00:04:53

Those are some serious statements from some heavy hitters. It is more than just a simple recalibration, though. It is that too philosophically true.

Caesar00:05:02

It's not just a minor squabble. It feels like a broader shift across Europe.That triumphalist wave of ambitious pledges we saw a few years ago has turned into a much more fractious debate about how far and how fast climate action can realistically go without causing major economic or social disruption. So that 2035 target is now under particular scrutiny, especially because there's an upcoming EU review period that could open the.

Chloe00:05:26

Door for changes opportunity for lobbyists.And for those of you who may have missed last week's episode of Black beauty, Jag, the EU goal for 2035 is what they call the generational task, and it is the goal to be EV only by the year 2035. This is basically what we are discussing in these three podcast episodes last week, today and next week.

Caesar00:05:51

Thank you, Chloe. And as you were saying, yes, this is making the situation a really precarious moment for Europe's climate goals.Julia Poliskanovo, a senior director from the Brussels based Transport and Environment Group, seems a bit concerned.They strongly advocate for decarbonization and she warned that there's a big risk it will be watered down and that that could, quote, essentially extend the gasoline age in Europe, end quote. This would be a major blow to the EU's climate leadership image.With all of this going on, the whole mood has shifted from confident ambition to, well, cautious reassessment.

Chloe00:06:23

Indeed.And what's interesting is that initial enthusiasm for 2035, while maybe genuine in some places, is now meeting this dose of hard reality that even industry leaders are openly acknowledging. They see the writing on the wall. Sigrid De Vries, who heads the European Automobile Manufacturers association, nailed the shift in thinking.She said, and I quote, the idea that if you simply prescribe rules, it will all happen. It's just too. Simply put, that realization is starting to sink in. End of quote.

Caesar00:06:53

More complex than just setting a date?

Chloe00:06:56

Much more complex.It's not just about the economic headwinds, you know, it's the sheer difficulty of transforming an entire industrial ecosystem, one that supports millions of jobs, generations of expertise.

Caesar00:07:08

Yeah, the whole supply chain, exactly.

Chloe00:07:11

Maybe that initial policy was based on a perhaps overly simple view of how quickly you could achieve such a profound industrial change without huge friction, massive investment, or unintended consequences across a whole continent. It's a recognition, maybe, that grand visions need practical, flexible roadmaps to actually work.

Caesar00:07:30

That idea of a more flexible approach brings us right to a potential compromise that's being talked about a lot. Allowing plug in hybrids with the acronym PHEV or PHEVs for plural to be sold beyond 2035.

Chloe00:07:44

Yes, the hybrid question.

Caesar00:07:47

Critics argue that this would essentially extend the gasoline age in Europe. Others see it as maybe a necessary bridge to get more people comfortable with electric driving.

Chloe00:07:55

The hybrid debate is really contentious, and it gets to the heart of a crucial question Europe is wrestling with right now.That crucial question is whether or not embracing hybrids may be, as a stopgap, a necessary bit of pragmatism, you know, to protect the industry, protect jobs, avoid social upheaval, maybe even help consumers adopt electrification gradually. Or is it a dangerous compromise?Does it risk prolonging fossil fuel reliance, slowing down the build out of proper EV charging infrastructure, and ultimately jeopardizing those crucial Net zero goals by just kicking the can down the road. Which is it?

Caesar00:08:26

A real dilemma? I mean, getting down to the nuts and bolts of it, it is.

Chloe00:08:30

You've got legacy automakers like Ford and Toyota who are doubling down on the idea that consumers need and want more hybrids. They frame it as a practical bridge for people not quite ready for a full ev.

Caesar00:08:43

The auto manufacturing giants claim they are meeting consumers right where they are, which, marketing wise, would be considered admirable and great advice, but what is the basis for it and what is the goal?

Chloe00:08:54

Some would argue that's the argument.But then you have critics, environmental groups, some EV startups, who say this is just spinning this argument for their own benefit and justification for not investing in electrification bigger and sooner. And then it gets confusing.Basically, the critics accused them of putting forth a stalling tactic to delay the full transition, whether that was the intention or not.

Caesar00:09:18

Let's not forget our very own JLR. Jaguar Land Rover also produces PHEVs. I'm not sure if their intentions have come into question and certainly we are not questioning them.They have already been attacked enough for that ad campaign in 2024.

Chloe00:09:32

I think that is one reason they do not come under attack as much as far as whether or not they are using stall tactics or whether or not they are fully committed to an EV future.

Caesar00:09:42

What, because they were already attacked in public postings by President Donald Trump and people like billionaire Elon Musk?

Chloe00:09:49

No, because they have made it clear, like stalling sales, etc. And all that we chatted about during the CEO episode that they were purposefully stalling sales to focus on EV and ramping up for EV sales in 2026.I think they are so publicly committed to that and have really put themselves out there that people realize they are not playing games. Their intentions are clearly stated. We've mentioned the Jaguar F. Pace and Jaguar E Pace.Coming back to the critics for a moment, another concern for some people is the actual effectiveness of PHEVs and that it may be cutting into real world emissions that's also under intense scrutiny.

Caesar00:10:21

How so? Oh, and thanks for reminding me of Jaguar's PHEVs too, Chloe. Now back to your comment about emissions. How so?

Chloe00:10:29

Well, studies commissioned by the European Commission itself have found a pretty concerning trend. European owners of plug in hybrids run more on the internal combustion engine, sometimes referred to as ice, than previously estimated.

Caesar00:10:45

So they're not plugging them in as.

Chloe00:10:46

Much as hoped Often, no. A classic example is company car drivers.They might get tax breaks and a fuel card for the phev, but maybe not an electricity card or home charging support.

Caesar00:10:59

Ha. So no incentive to charge. That makes sense. They are probably not trying to be, quote unquote bad or disrespectful.You get working and the tax break helps and you intend to plug in the company car.But your first electric bill is very disconcerting and so you decide not to plug in the PHEV the next day and the next day and well, you sort of never get around to it after that. I get that.

Chloe00:11:23

Exactly. So they just don't bother plugging in. They end up relying mostly on the petrol engine, which kind of defeats the purpose. Right.The car operates more like a traditional hybrid or sometimes just a heavier gasoline car, largely negating the environmental benefit. From the perspective of strong EV advocates In green groups, PHEVs face some pretty serious criticisms.

Caesar00:11:45

So true.They're often accused of hogging up chargers at public stations, taking up space that fully electric vehicles actually need because that's their only fuel source.

Chloe00:11:54

Right? Charger etiquette.

Caesar00:11:56

Then there are concerns about rapid battery degradation due to their small capacity. The idea is these smaller batteries might get cycled more heavily, potentially shortening their lifespan compared to larger BEV batteries.

Chloe00:12:08

Hadn't considered that.Oh, and let's define bev in case our audience has not heard that acronym, BEV stands for battery Electric vehicle, as opposed to phev, which is plug in Hybrid Electric Vehicle. So, in the comparison of vehicle types, there's the fundamental criticism about the ability for a PHEV to run on fossil fuels without any limits.Even if it has some electric range, there's nothing forcing the driver to use.

Caesar00:12:36

It depends entirely on driver behavior.

Chloe00:12:39

Precisely.So some CPVs, mainly as a way for manufacturers to greenwash their fleet without truly changing behavior of themselves or the customer, gives the appearance of progress, maybe without the full environmental impact. Now, on the flip side, proponents argue that some PHEV models can have enough electric range to meet typical daily driving needs for most people.You know, a short commute could be entirely electric if the driver chooses, if they charge it.And they argue that even if people only charge intermittently, PHEVs could still make a huge dent in gas consumption for transportation, still contributing significantly to emissions cuts, even if it's not as much as a full ev.

Caesar00:13:26

So a stepping stone versus a detour.

Chloe00:13:28

That's the core of the debate.Are they a genuinely necessary step for a big chunk of the population not ready for full EVs, or are they just a delay tactic, a compromise that undermines the urgency of the climate transition and might prove to be a costly detour in the long run. Europe's grappling with that right now.

Caesar00:13:46

Okay, beyond the policy fights and the whole hybrid cushion, what are consumers actually doing? At the end of the day, any transition, especially this big, needs buy in from the people actually purchasing the cars, right?

Chloe00:13:56

Absolutely. Market acceptance is key.

Caesar00:13:59

The best policies mean nothing if the market isn't there. So, looking at sales figures for 2024, the numbers show a pretty big G between that 2035ambition, the generational task, and today's reality.

Chloe00:14:11

Yeah, the uptick isn't matching the target pace.

Caesar00:14:15

Just 13.6% of new cars sold in the EU are fully electric now. That's up from 9% back in 2021 when the target was proposed. So there's growth.Sure, progress is being made, but it's far below the uptake needed to meet the 2035 target of a full ban. The Adoption rate just isn't accelerating fast enough to hit that deadline suggests a real disconnect.The main obstacle everyone points to seems pretty simple.

Chloe00:14:39

Cost still too expensive for many.

Caesar00:16:07

Exactly. The average European EV sells for €42,000, which is about $52,000 for a lot of people across Europe. That's just not affordable.It's still largely a premium product trying to penetrate a mass market. That is a fundamental hurdle.And Europe's own legacy automakers, even though they initially backed the 2035 ban, have been finding it incredibly difficult to churn out more affordable EVs at the scale needed.

Chloe00:16:32

It's a massive SH shift for them.

Caesar00:16:34

Huge companies that started planning years ago have hit these massive, unprecedented roadblocks.Reconfiguring factories built for combustion engines, retraining workers with decades of different skills, losing decades of optimization in their old manufacturing methods.

Chloe00:16:50

I hadn't thought of that.Decades, maybe even centuries of fine tuning systems and strategies and putting money into those efficiency practices, training, everything, only to basically scrap it and start over with a more expensive production. It seems it's a massive undoing of generations of process.

Caesar00:17:10

So true.And oftentimes it involves buying super expensive batteries from elsewhere because they hadn't built up their own production fast enough, not including the expensive equipment and sometimes the staff needed too.

Chloe00:17:22

All of that adds hugely to the cost.

Caesar00:17:25

Totally.So facing these challenges and the huge investment costs for new platforms, new software, Europe's carmakers often tried to pad their profits by sticking with gas models, which have higher margins. Their hope seems to be to be able to pay for the production of those premium model EVs that they are highlighting in their marketing.

Chloe00:17:42

Protect the bottom line in the short term.

Caesar00:17:45

Makes sense from their perspective. But it left them vulnerable in that growing affordable EV segment, didn't it?Which is exactly where Chinese manufacturers are now making serious inroads. Look at Volkswagen, Europe's biggest carmaker. Their journey is a really compelling, maybe cautionary, tale of this transition.

Chloe00:18:00

They went all in initially, didn't they?

Caesar00:18:03

They did, especially after the diesel gate scandal around 2015. They needed an image change, launched this ambitious electric offensive under their former CEO Herbert Deiss, who was a real EV believer.But the falsification was not the right approach and it did not end well. For those who were found guilty of fraud, the path was anything but smooth. The software for their new EVs proved clunky, delaying model launches.They got lots of complaints from early buyers. It really hurt adoption.

Chloe00:18:30

Software issues plagued them, and fraud is not a good way to mix it up. Is it big time?

Caesar00:18:37

Ambitious plans to make their own batteries in Europe got downscaled as the investment reality and complexity hit home. Dice, the CEO pushing EVs was replaced in 2022.

Chloe00:18:47

That signaled a shift in strategy out of necessity. Between the problems, the scandal, everything going on at the time seemed like it.

Caesar00:18:55

And then last year, Volkswagen announced plans to cut 35,000 jobs by 2030. Highlight the immense restructuring, the cost cutting pressure this transition brings. Volkswagen still says the future of mobility is electric.And they recently talked up plans for a new entry level EV, maybe around €20,000 for 2027. They clearly see the need for affordability.

Chloe00:19:17

Trying to compete at the lower end.

Caesar00:19:19

Exactly. But their current CEO, Oliver Bloom, has been very clear in calling for politically hyphen, flexible transition periods.He's emphasizing that policies need to reflect the realities of how quickly e mobility is spread and not just stick to rigid deadlines. It's a much more cautious tone. And this overall uncertainty is a big problem in itself, isn't it? It creates ripples everywhere.

Chloe00:19:43

Yeah, clarity is needed for investment.

Caesar00:19:46

A Green Party mep, someone you'd expect to champion faster EV adoption, even noted that European carmakers are not as clear on their strategy as they were three years ago.

Chloe00:19:55

Mixed signals from the industry.

Caesar00:19:58

Exactly.And that muddled approach, combined with what he called a cultural war against electric cars being fanned by some polit in media outlets, just creates wider uncertainty for everyone. Consumers might hesitate to buy an EV with all these mixed messages.And investors with their capital is crucial for building out Europe's EV supply chain. But uncertainty makes them nervous.It's this complex brew of policy, economics, consumer feelings and global pressure that's going to decide how fast Europe's EV transition actually happens and whether that 2035 deadline ultimately holds.

Chloe00:20:28

Yeah, that uncertainty really hangs over everything right now.

Caesar00:20:33

So while Europe's dealing with all these internal things like the safety worries, the economic pain, the policy debates, the consumer adoption hurdles, they have to worry about the competitor on the EV scene. A new player compared to other automakers, but one they have seen coming, and that we have already mentioned it, is China.And China should not be ignored. Especially since they're rapidly dominating the global EV scene.

Chloe00:20:55

Yeah, the elephant in the room.

Caesar00:20:57

It really feels like we're watching a new automotive superpower rise almost in real time, and it's putting immense pressure on Europe.

Chloe00:21:05

That's absolutely right. If you zoom out to the global industrial chess board, China's rise is a strategic game changer.Not just for Europe, for the whole global automobile industry.

Caesar00:21:18

What's their edge?

Chloe00:21:19

Well, decades of strategic planning, first off, plus battery expertise, state subsidies and a hammerlock on crucial minerals. It's this integrated approach from mine to final product.

Caesar00:21:33

It allows them to produce cheaper EVs, significantly cheaper.

Chloe00:21:38

Often, their carmakers have essentially taken over the Chinese domestic market, a market where Volkswagen used to be king. Almost untouchable.

Caesar00:21:47

Losing ground in China hurts European profits immensely.

Chloe00:21:50

So true. And it gives Chinese manufacturers this huge scale and cost advantage as they now look to expand globally, including into Europe. It's not just cost.Chinese companies like Catl has the coveted position of being the world's largest battery maker now. And BYD recently surpassed Tesla as the top global EV seller. They are also innovating and doing so incredibly fast.

Caesar00:22:16

Technologically advanced too.

Chloe00:22:18

They've introduced things like new battery charging technology that would make recharging an EV nearly as fast as filling a gas car.

Caesar00:22:27

That's incredible. That tackles a major consumer pain point directly.

Chloe00:22:30

Definitely. Range anxiety, charging time. They're hitting those head on.So that tech leap combined with their cost efficiency puts European manufacturers at a serious disadvantage. Not just in China anymore, but increasingly right here on their home turf. For example, in Europe.It's a really formidable mix of factors challenging Europe's traditional auto strength. And the impact in Europe, it's profound. It's immediate. Chinese brands aren't just exporting cars anymore.They're making serious inroads, bringing the competition.

Caesar00:23:00

Right to their doorstep.

Chloe00:23:02

Exactly. Intensifying competition in what used to be a fairly protected market. The EU's response?They've immediately slapped them with tariffs on imported Chinese EVs. A clear defensive move.

Caesar00:23:15

Are they trying to level the playing field or protect incumbents?

Chloe00:23:19

A bit of both, probably. But what's really striking are these reports.There were discussions and I think comments on articles that apparently European companies tried to import cars made by European brands but built for the Chinese market. These were cars that are often cheaper and more advanced technologically.And these cars were allegedly impounded and destroyed to protect the high prices they demand in Europe.Now, this is what was posted on the Internet, and I do not know if this happened or someone wanted attention and wrote it on a posting, but that is the information that was available.

Caesar00:23:49

Publicly destroyed. Seriously.

Chloe00:23:52

That's the report.If true, it shows the extreme, almost desperate measures being taken to shield the European market and legacy automakers from this intense new competition. It's not a friendly game.It's an aggressive, dynamic competitive landscape where Europe suddenly finds itself playing catch up in a race it thought it was leading just a Few years ago we did do some research and did not find these reports for ourselves. So we cannot say that this is really happening.It is only an Internet report, but it is concerning that it is reported and that people think that way even in a fictional state. But when we checked around, there seemed to be some validity. You choose for yourself.

Caesar00:24:25

Faced with that kind of challenge from China, Europe's clearly not just sitting back and doing nothing.They seem to recognize the strategic threat and they're hitting back with this ambitious industrial policy, trying to forge their own self sufficient battery ecosystem. Feels like a real moment of strategic reawakening for the continent.

Chloe00:24:42

Exactly. This is where that word sovereignty comes roaring back into the conversation with real urgency. French Finance Minister Bruno Le Maire put it starkly.He says, we have been able in less than one year to build a new industry in Europe. The example of batteries shows that when we have strong direction, determination and a public private partnership, we can do it.He sees E mobility, especially EV production and their key components, as fundamentally a matter of sovereignty. His argument is simple.If Europe just keeps importing batteries, which make up maybe 40% of the cost of an electric vehicle, then Europe risk losing the value added part of the production chain and the technology.

Caesar00:25:16

Not just profits, but control. Ah, okay.

Chloe00:25:20

Control over a critical future industry, ensuring strategic autonomy, preventing dependence on other global powers for the very engine of future transport. It's about not making the same mistakes they made in other sectors.And that realization, after seeing China dominate solar panel manufacturing, where Europe did loads of R and D but lost the mass production name, that directly spurred the creation of the European battery alliance, the EBA, back in 2017, which is an EU backed initiative specifically designed to create an innovative and competitive ecosystem for batteries in Europe.

Caesar00:25:53

A whole ecosystem approach.

Chloe00:25:55

Yep. The EBA pulls together governments, universities, EU bodies and tons of businesses, including the big carmakers.It's genuinely a bold attempt to put Europe's economic interests first. Comprehensive scope, mining and refining the raw materials such as lithium to manufacturing batteries, all within Europe.Ideally, it is a full spectrum industrial strategy and the scale of an investment. The ambition under the EBA is enormous.The alliance has helped channel something like 100 billion euros of announced public and private investment just into battery cell manufacturing.

Caesar00:27:46

100 billion. That's serious money.

Chloe00:27:49

It is. And the goal is truly ambitious. Establish up to 25 gigafactories in the EU.

Caesar00:27:55

Gigafactories? What kind of scale is that?

Chloe00:27:58

Well, a single gigafactory can produce enough battery cells for hundreds of thousands of EVs per year. So 25 of them. That would genuinely transform Europe into a battery production powerhouse.Projections suggested European battery cell manufacturing could grow and surpass US capacity if it has not done so already. It shows a clear strategic commitment to building that domestic integrated battery supply chain, breaking free from dependency, especially on China.

Caesar00:28:28

Okay, so with this massive push, all this investment, who are the key players actually leading this charge in Europe? Who are the champions emerging from big industrial policy push?

Chloe00:28:38

Well, one of the most visible pioneers in this European battery effort had at one time, not too long ago, definitely been Northvolt.

Caesar00:28:48

Right, The Swedish company.

Chloe00:28:50

Yeah. Founded by Peter Carlsson, who used to be a manager at Tesla.His vision was explicitly to create a European rival focusing on sustainable, locally sourced batteries.

Caesar00:29:03

Ambitious goal. Very. Maybe it was too ambitious. They were working on completing what was called their dress rehearsal for other plants in Vastora, Sweden.But Northvolt filed chapter 11. And even this week there was a press release noting that Northvolt had been acquired by Leighton out of San Jose, California.

Chloe00:29:23

In talking about what Northvolt accomplished, especially in those early years, it shows how specialized this knowledge is and then how quickly things can change. In talking about the acquisition, it is like a ping pong game involving different companies and even world leaders.

Caesar00:29:39

Exactly. Highlights the global nature of it. The need to learn from established leaders even as you try to build your own capability.Northvolt certainly got strong backing though. Secured 1 billion of funding from Volkswagen, Goldman Sachs and IKEA. Big names, serious investors.That one was expected to have up to 40 gigawatt hours of capacity by 2024. Enough juice for maybe 500,000, 600,000 electric vehicles a year.That was a key advantage for Northvolt up there in Sweden, their energy costs were projected to be about a quarter to 1/3 of China's because of the cheap, abundant supply of hydropower.

Chloe00:30:10

That's a significant competitive edge in energy hungry battery production. It sounded like a good plan.

Caesar00:30:17

Absolutely. And word was Northvolt had even bigger plans. A joint venture with Volkswagen for another factory in Salzgitter, Germany. Maybe 24 kilowatt hours.Their ultimate ambition. 150 gigawatts of capacity by 2030. Just colossal scale, really.

Chloe00:30:34

Aiming high.

Caesar00:30:36

Yeah.Now, while Northvolt initially got strong backing from partners like Scania AB Vestas and got cheap loans from the European Investment bank, the path to actually scaling up production is clearly tough, as is clear with the bankruptcy and acquisition.

Chloe00:30:49

That is sad that they are no more, but demonstrates the challenges of the industry.It shows that even with excellent planning and presumably well thought out Financial planning, it does not always work out in the way it was projected originally.

Caesar00:31:04

So true.Now other European efforts, like acc, that's the joint venture between Stellantis and Mercedes Benz, are ramping up production at their first gigafactory in France. So there's progress elsewhere.

Chloe00:31:15

Okay, so it's a mixed picture, definitely.

Caesar00:31:18

ACC has apparently paused plans for other factories in Italy and Germany, citing economic pressures and slower than expected.Ev it really underscores that while the ambition is sky high, the actual environment for scaling up domestic battery production in Europe is dynamic, challenging, and definitely not immune to setbacks and adjustments based on market realities.

Chloe00:31:40

This whole approach, this EB initiative, the push for gigafactories, all of it really represents a significant shift in European policy thinking, doesn't it? It is a case of moving away from a purely hands a free market approach. More interventionist now seems that way.Historically, the EU really emphasized open market, strict controls on State A.But facing this intense competition from the US and China, both of whom have very active industrial policies, there's been this profound rethinking and embrace of a new more hands on industrial policy. And the strategic importance of this shift.

Caesar00:32:10

You can't really overstate it.Even the EU Competition Commissioner, Margaret Vestager, who normally champions free markets, has stated that industrial strategy should now explicitly support the development of key value chains and technologies that are of strategic importance for Europe. Direct support for key sectors?

Chloe00:32:29

Yes, directly linked to achieving technological sovereignty. Making sure Europe isn't totally reliant on external powers for critical stuff like batteries.It's about controlling their own destiny in these future industries. A big recalibration. But there's a major challenge baked in raw materials.

Caesar00:32:48

Ah, the upstream pot.

Chloe00:32:50

Exactly. Brussels identified mining projects across 10 EU countries that could potentially supply maybe 30% of lithium production by 2030.That would be a big step towards reducing import reliance.

Caesar00:33:04

Okay, 30% of something. It is.

Chloe00:33:07

But here's the catch. Europe currently has basically no lithium refining capacity.

Caesar00:33:13

So they can dig it up but not process it.

Chloe00:33:15

Largely, yes. Raw lithium needs complex processing to become battery grade material.That refining step is a huge bottleneck in achieving true circularity and sovereignty. It's a glaring gap in the value chain that Europe still needs to plug if it wants full independence.The EU is also cleverly using regulation as a tool not just for domestic control, but to project its standards globally.

Caesar00:33:38

How does that work?

Chloe00:33:39

They were aiming for a major overhaul of regulation for batteries by 2023. Not sure where we are with the progress on that.It includes setting new environmental standards for Mineral extraction and cell production, maybe even software standards like enabling vehicle to grid capabilities where cars feed power back to the grid. And critically strong recycling mandates for old batteries.

Caesar00:34:03

Setting the bar high.

Chloe00:34:05

Exactly.And that would give Europe a chance to shape the global market according to its own norms, potentially forcing even Chinese manufacturers to meet these tougher environmental standards if they want to sell their batteries or cars in the huge European market. It's using market power to enforce values. But not everyone is thrilled with this shift towards interventionism.The critics, well, yeah, some argue that trying to reshore all stages of production in Europe is a kind of a feature that is like being a protectionist. They worry it could ultimately increase inefficiency and harm competitiveness by creating sheltered industries that aren't globally competitive.

Caesar00:34:49

Risk of complacency.

Chloe00:34:50

That's the fear. There's a concern the whole process could become the proverbial camel.That is a horse designed by a committee, meaning a messy compromise trying to please everyone, resulting in something inefficient, bloated and slow because of too many competing interests and political meddling. It really highlights that fundamental tension Europe is navigating with strategic autonomy versus free market efficiency.A balancing act they're actively, sometimes painfully, figuring out as they try to secure their industrial future in this rapidly changing world.

Caesar00:35:20

Okay, so we've talked cars, fires, policy, economics, batteries, China.But beyond the cars themselves, beyond the factories making them and their batteries, there's this other massive, often invisible, but absolutely fundamental challenge Europe's facing.

Chloe00:35:35

Ah, the grid. Well, we've covered so much today, we do have to leave something for our final episode on this topic of the EU and the generational task, don't we?

Caesar00:35:45

We sure do, Chloe. And thank you everyone for tuning in today in our three part series on the EU and the future of ev.We look forward to finishing this up next week with you here on Black Beauty Jag. Catch you then.