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What are the consequences of the ban on the sale of fuel vehicles?
The UK has announced a plan to ban the sale of new fuel-powered vehicles by 2040, aiming to cut air pollution and accelerate the transition to greener transportation. This move could mark the end of the internal combustion engine era, which has dominated the automotive industry for over a century. Let’s dive into what this means for the future of car technology and the broader economy.
One of the biggest challenges is the shift in market share between electric and hybrid vehicles versus traditional gasoline-powered cars. In 2016, only 0.2% of new passenger cars in Europe were fully electric, while including hybrids brought that number up to 1.3%. This highlights how much work remains before electric vehicles become the norm.
Another major concern is the impact on employment. Internal combustion engines consist of around 1,400 parts, while electric vehicles have only about 200 components. The production process also differs significantly: building an engine takes roughly 3.5 hours, while assembling an electric motor can be done in just one hour. This shift could lead to significant job losses in traditional manufacturing sectors, especially in countries like Germany, where the automotive industry plays a crucial role in the economy.
According to the German Automobile Manufacturers Association (VDA), a 2030 ban on internal combustion engines could result in over 600,000 lost jobs in the automotive sector, with 436,000 of those directly related to car manufacturers and suppliers. There are currently around 126 engine factories in Europe, employing about 112,000 people. The largest of these is Volkswagen’s plant in Kassel, Germany.
However, the transition to electric and hybrid vehicles may also create new opportunities. A 2017 study by AlixPartners found that the shift could generate 25,000 new jobs in the automotive industry. Hybrid vehicles, in particular, offer a bridge to the future, as they combine both electric and internal combustion technologies. Their production requires more time than pure electric vehicles, but they help preserve some of the existing workforce during the transition.
A key factor in the success of electric vehicles is battery cost. Currently, 60% of the production cost of an EV comes from the battery. However, the price of batteries has been dropping rapidly. In 2010, it was around $1,000 per kWh, and by 2016, it had fallen to about $227. Analysts at Barclays predict that when battery costs reach $100 per kWh, electric vehicles will become cost-competitive with traditional cars. This tipping point is expected to occur between 2020 and 2030.
By 2025, it's possible that the total cost of owning an electric vehicle will be similar to that of a conventional car, assuming higher diesel taxes. If this happens, the UK could see a complete shift to 100% electric vehicles by 2035, according to ING analysts.
Another challenge is the need for better infrastructure. Electric vehicles require more charging stations, and London alone would need to invest around €10 billion to build the necessary network. So far, funding for such projects has been limited, making the transition slower than expected.
The UK’s decision also poses a challenge for Germany, which relies heavily on the British market. In 2016, the UK was the largest export market for German automakers, with over 800,000 new cars sold there—accounting for 20% of global exports. A ban on fuel vehicles could disrupt this important trade relationship.
As the world moves toward electrification, the automotive industry must adapt quickly. While the path forward is not without obstacles, the long-term benefits for the environment and public health make this transition essential. Stay tuned for more updates on the evolving landscape of car electronics and sustainable transportation.
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