By Nick Carey, European Autos Correspondent
Greetings from London!
The European Commission is getting ready to issue updated carbon emissions targets, including an existing 2035 ban on fossil-fuel vehicles that the continent’s auto industry has decried as impossible to implement.
As that update nears, the volume on both sides of the argument has been steadily increasing.
German Chancellor Friedrich Merz has written to the Commission, echoing appeals from auto industry executives that plug-in hybrids and "range extender" vehicles should play a role in the green transition, alongside biofuels. Merz was cheered on by Stellantis’ new CEO Antonio Filosa - the automaker’s chairman John Elkann has also warned the industry faces "irreversible decline" if the EU does not ease its targets.
Meanwhile, European climate group T&E issued a report calling on the Commission to resist industry pressure on biofuels, saying they are in short supply and not truly carbon-neutral.
The Commission must now come up with a solution that provides some form of compromise to mollify the Germans and yet avoid annoying anyone who has already heavily invested in charging infrastructure and other EV-related technology. No pressure.
Which brings us to today’s Auto File…
China exports its factory capacity problem
More bad news for Tesla in Europe
Britain’s EV tax
China’s global gasoline rush
China’s auto industry has become best known for the nifty electric vehicles that have pummelled the sales of the foreign automakers that formerly dominated the world’s largest car market. The tariffs in place in the European Union and United States are largely aimed at EVs.
But the decline in Chinese market share for legacy automakers has also hit their local joint-venture partners, leaving China’s auto industry with the unused factory capacity to make anywhere up to 20 million internal combustion engine cars a year.
So China’s state-owned automakers have joined a rush to expand outside China into emerging markets and are making vast numbers of gas guzzlers to do so. You can read more about it here.
Fossil fuel cars make more sense than EVs in markets like South Africa, Chile, or even Poland, where charging infrastructure is in its infancy, and help to keep Chinese car factories busy.
Emerging markets are also fair game. For decades, global automakers have tended to sell lower-standard cars in emerging markets. But now, the Chinese are flooding them with cars stuffed with the latest software and safety features at comparable prices.
Chinese automakers’ global market share is expected to hit 30% by 2030, which, as one expert tells Reuters, “will come at the expense of everyone else.”
Recommended reading:
European firms seek non-Chinese supply chains
Russia’s rail bailout
Nexperia disputes abound
Tesla’s Europe problem
It’s getting harder by the month to pretend that Tesla TSLA.O does not have a European problem.
Early on this year, some argued that the U.S. EV maker’s problems were down to CEO Elon Musk’s courtship of far-right political parties – indeed his politics did spark protests in parts of Europe.
But the reality is that Tesla’s real problem still comes down to a lack of shiny, new products in a market filling up with them. Take Britain, for instance, where there are over 150 electric models on the market with 50 more coming next year, none of which are Teslas.
This week we saw yet more bad sales results for Tesla in November in several European markets.
What stood out in Reuters coverage was a nugget from Escalent. A study from the data analytics and advisory firm showed that 38% of respondents to a survey in Europe's five largest car markets feel Tesla’s brand novelty has worn off and it trails competitors on design, quality and emotional appeal.
That means that if Tesla is interested in growing sales, it needs something really new to get ahead of the competition.
Taxing EVs in Britain
As part of Britain’s new budget, the country’s government has decided that as of April 2028 EV owners will have to pay a new tax set at 3 pence (about 4 U.S. cents) per mile for electric cars and 1.5 pence per mile for plug-in hybrids, payable annually.
This is an issue that any government reliant on tax revenue from fossil fuels will have to face as more people go electric - they need somehow to replace that revenue.
So it’s understandable that the UK government would want to make up that shortfall.
But as the new tax’s many opponents have pointed out, Britain’s government is at the same time trying to persuade car buyers to switch to electric. Adding a new tax will hardly encourage sceptics to buy an EV, making the transition that much harder.
GWM plans European plant
China's Great Wall Motor 601633.SS plans to produce 300,000 vehicles annually at its first European car plant by 2029 and is already scouting locations for the factory, GWM International president Parker Shi told Reuters colleagues Qiaoyi Li and Josh Arslan. You can read more about it here.
GWM teams are weighing up sites in Spain and Hungary, among other countries, Shi told Reuters at the company's headquarters in Baoding in the northern Chinese province of Hebei.
The Chinese automaker has not done well in Europe with its EVs, where its sales slipped 41% to 3,706 vehicles last year, according to JATO Dynamics.
In its bid to revive European sales, GWM will build all vehicle types at its new factory – ranging from fully electric cars to traditional combustion engine models.
Fast Laps
- Toyota's 7203.T global production rose for a fifth consecutive month in October, lifted by strong U.S. demand for hybrid vehicles that offset weaker sales in Japan and China.
- A Japanese labour union group representing major manufacturers will seek an increase of at least 12,000 yen ($77) in monthly base pay for 2026, the same target as this year.
- China's CATL will train up to 4,000 workers to operate what will be Spain's biggest battery plant, executives said at a groundbreaking ceremony for the joint venture with Stellantis STLAM.MI.
- India's Mahindra launched a seven-seater electric SUV with a starting price of around 2 million rupees ($22,409) as it eyes a bigger share in a segment dominated by rival Tata.
- Britain's car production fell 23.8% in October as the sector continued to feel the impact of an unprecedented cyberattack at Jaguar Land Rover, the country's largest automaker.
- Russia's largest carmaker Avtovaz AVAZI_p.MM plans to restore a full five-day working week on January 1 after three months of reduced working time as its production outlook improves.
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(Editing by Tomasz Janowski)
((tomasz.janowski@thomsonreuters.com))