it's really a slice of the damage as a result of these intensive is rarely strikes. asking questions don't you see are your future when you see the state of the country today, we're forcing from the action for answering to uh, seeing another talk here within the law. like from documentary, i'll just say it was teams across the world. when you closer to the thoughts of the story, france wants to saw european union plans to find car makers who failed to make enough electric vehicles. europe plans to switch to all east by 2035. but it's huge . automotive industry is struggling with the change. so why is it in trouble? and why are politicians so worried? this is inside, so the

hello and welcome to the program. i'm how much i'm shown. france once a hall to plans by the you define european car makers who failed to meet targets for electric vehicle production. this is in contrast to its position of backing tariffs on chinese, e. v in ports something the european automotive sector is against france as late as call to ease the pressure is a reflection of the difficulties facing europe's car, making industry with stiff competition from china, producing cheaper high quality ease, and also a fall in demand in europe. the sector faces serious challenges. politicians are worried about the future and the millions of people, the sector employees. so how serious is the situation and is a huge overall needed? and what does it mean for the price of cars? we'll get to our guest enrollment, but 1st this report from comes on how much are a defensive government passcode for? he think when you're looking unit plans to find comic us who bring venus gus packets by feeding to produce enough electric vehicles. it's something of

a changing approach from process bucking of bodies against china. caustic as outlined by its president for going through a difficult time because the european markets shrinking on this very strong competition from china. i think it's necessary at times like these festival, to protect ourselves so as to establish in a way that rules. when you have subsidies for certain manufacturers in china, it's normal to set tariffs to compensate full. then. last month, the union impulse, i teddy's on chinese business, he's saying it wants to still be from flooding. it's market. most of the time being, we want to be you in china that are open to the world beyond your political and g o economic realities. for this reason, we are committed to almost dialogue to address existing tension that was last of the result of the announcement of the imposition of tariffs on chinese electric

vehicles. they do denies that positions and sees the products with concrete between the u on china, which are chunk builders. i want to emphasize that the european commissions insistence on conducting n t subsidy investigations on china's electric vehicles and imposing high tariffs is a typical active trade protectionism. wilhelm china e. u industrial and supply chain cooperation and home the interest. so if you are paying consumers for the auto industry and support 6 percent of the use jobs, but sales of electric vehicles have slowed down. in recent months of the government to remove subsidies, youtube's biggest comic on volkswagen, which also a mixed electric vehicles, has announced plans to shut down the factories in germany. and frank officials, once you goes, i had with its threats of finding your pink time because, well done with its thought for requirements on e. b sales complete to the last of millions of jobs,

hands and data for insight study. all right, let's go ahead and bring our guests in berlin, bin iris founder and editor in chief of be in in tell him who is a business media company focusing on global emerging markets in both from germany, for nan doing an offer director at the center for automotive research and in london, nick gibbs correspondent for automotive news, europe, the continents leading automotive business publication. a warm welcome to you on thanks so much for joining us today on inside story make. let me start with you today. these new e u rules that come into force next year are going to require carmakers to cut carbon emissions by increasing the proportion of electric and hybrid vehicles sold, or they are to face large fines. well, most european carmakers actually be able to meet these tighter emission targets set by the as well. um, before any big rule change in the common, cuz when say how difficult it is to meet it and then go,

go ahead and meet it. no call make it wants to pay a fine, they will eventually get better anyway. but they do, they do want to fly got, but it's not easy selling electric cause these calls, the more expensive and the, the profit margins on them onto the high has a bad traditional combustion engine equivalence. so they're in a bit of a bond really box. what we all seeing is that finally they are launching new cheaper eaves. so these are the costs that will make up the bulk of the market because europe mainly buys us and want to cheat because then, and that will allow them eventually to hit. but this talk is been, you heard next, they're talking about the price of ease. and i want to ask you more about that because i've read that the cheapest new e v in europe last year, costs almost double the cheapest internal combustion engine vehicle in europe. are eaves actually affordable in europe?

the problem is, this is a technology that's in, in progress, and so much as the developing and the cost of developing it. and it's expensive. and so the base at the moment, much more expensive and then the combustion engines. and as you mentioned up until now the, the production because it's been a green gold in order to, to reduce these a common fossil fuels that they've been subsidized. the price is of them, which has made them more affordable. so we go to the point now where the subsidies being removed and so the now more expensive and then that's depressing sales. and then that causes a problem because the profit a bit as it goes down. and so the investment goes down and you need that investment, you need mass production in order to get the economy's discounts bring the cost of these cars down again. so they can compete directly with the, with the, with the combustion engine to ferdinand, where do europe and car makers stand in the all of this right now are all of them against the stricter regulations and are all of them asking for more flexibility

when it comes to the roll out of these new rules or, or is it a mixed bag depending on which country and which, which car maker you know, as we see it all call make us against the this, the terry's which is the you wanted and implemented it. a few days ago, see what's going on is what we need in your office. we need to price a glass, a funding for the electric reg and see if we have that, then the, the old mach them to grow and go up by and go up the dispute, how they invest a call, make us to step into that business to go into mess production to go into scales. so we just very important. so the 2nd thing us, the european market, the end of the you can call me guess i'm very afraid that the chinese government could call them the retail, the actions and the retaliation. for example,

to say that the a combustion burning and change, which is the trouble, tommy, goes to sell and, and, and china. then we go any critical situation because of all the profits, the german comic us doing at the moment in the premium market, into the luxury market on due to cost of german and european comic coast. so it in china. so there's a big that be great in the doing what the competition is doing. so the situation in which should be your commission is acting really hurting the europe. income of car industry. olive chancellor told back to the commission or the your commission doesn't tier to anything. it's just to be you commission. it's something like a line you've got and they do what they think it's the right approach. and they

back us, it's nick. as we know, france wants to stall european union plans to find car makers who fail to make enough electric vehicles. how significant is this challenge from france to these you commission rules? could this be seen as france reversing its position because they have back tear everything has china which big players in the european automotive industry like bmw and b w. we're against oh yeah, i'm not sure he's got i'm not sure he's going to hold it. i think the front to get his way here. i think that from what i understand that talking about the funds for next year. so these are the top uh, the top uh, c o 2 limitations that come into force it towards 252 gets to hit the target. it's under an average of 95 grams per let's see. i see it has been pub commitments or a c o 2 to hit those talk is comic a saying they've got to sell around a 5th of that total output needs to be electric. so they don't see the

market for those in, in, especially in countries like for example, southern europe and it's late in eastern europe. some of that are big word that they're going to have to force these costs into the market through discount thing. and that by the 18 you into that profits, or even making a loss. so i that, that, that say maintenance the say do you know they, they, they have the cause of already they knew these, this change was coming on. it's being flagged in advance for about 7 years, so it's nothing new. and you could argue that the economy because if they have struggled to sell it next year, is a problem of that road making? been a how much do the divisions within the you reflect, national invested interest? germany for example, has a huge automotive sector, but there are differences on tariffs with france for example. why, why is this so in the same thing, that protectionism against the,

the market against china. i mean, within europe as well. i mean, i said that there is a big, important employer and the age government is very interested in supporting the industry because of the employment, the money that generated generates in terms of taxes and sales. and so, you know, the use is not perfect. the free market in the way that it should be of various governments. so i guess making sure that the cop products uh, protected and continued to function and grow. and in the same way now, the whole of the market is being attacked by these very competitive chinese products, which are cheaper and a better policy. and so they're putting up the tech space, the terrace around the you in order to safe got the business that they do have inside. and so the, you know, it finds itself in a very difficult across rise if you like, whereby they have to continue to innovate. and so these costs develop them, invest them as my colleague. and they'll come with saying that, you know,

they need to get up to the scale in order to spring down the cost by uh, this kind of economies. and suddenly, if they're going to have a big chunk of the market taken away by impulse from other countries, and that's going to be a huge problem for an end. you were saying before that it was really only from your perspective. you did. one of this happened, i want to ask you, if you think there's any chance that the you could perhaps alter the timeline of these emission targets that they're set to impose. might they listen to france or other countries or car makers that are asking for more flexibility? and i think of it doesn't make sense to change regulation. now if you do that and give them more time, then you're good to go to the d. a problem of the regulators, so as hard as it is, they should stay with the regulations. however, they should up some time theories in which the ratio

and which of the payments on the have to be made. for example, of, of the give it a range of 5 years or so, and 2nd, they really better than the regulation gives them some bonus. so, be looking for a system which should we go with the regulation. however, the don't destroy all call make us i think that wouldn't be possible. and in this game, in this game, it's very important that we stop please this trying to batteries and to or i think so we just saw it at the commission. we need to sell more electric vehicles, even the market goes up due to a broader range of cos. this china is caused by the rate changes cause i always a bmw your menus or no, sir, or some the do some smart from,

from the home that there's a, there's, there's a cost electric rigs via produce in china, off and imported to europe. and we put axes on that, so it's, it's under unbelievable. what's the, what's going on? so let's do the regulation as it is. all right, well, stop the terry discussion. go back to the norman fair trade we have in the past. if we can do that, then i'm pretty sure that'd be fine. distribution in the way it had to make a great but it's really searching the next deals and the oral comp make us have a chance to make a big box is that bought nick volkswagen is the biggest car maker in the u. they've warned that they need to close 3 plants and acts thousands of workers. how much does that signify? the state of things for european carmakers right now, and it kind of challenges that they're facing. well, it's interesting. i think it,

it, it reflects the situation in china quite quite clearly because they, who as we've heard, they've been able to rely on china upfront of about profit. some of the loss of a 1015 years. and, and those are now being eroded because of the jew to the competition. we've been showing that the competition is coming to europe as well, but into smaller and smaller numbers. and the but also using, you know, v w is the fact that the hallmark itself is ranking. so they've got the, they bought the fuel cell to play with. and the gap you're looking at other and other reprice and competitors as well hire and i care. toyota generally to get into the don't use um into markets and may not be was to is it built, it's causing a very high cost country, so it can be on the company brand. so and they, they failed to tackle the costs for years because of the unique way it's structured

with this data on a ship. so what are they going to do? it's a, it's kind of a, it's a bottle for the sauce, let be helping you a nice and it's want and is more of an internal bottle that needs to get through. to come out of the, on the sideline, or in fact, i don't think the, i'm the see the why the world is important. and what is happening in china are, is a key aspects of that. but a lot of the problems that feed only has, are internal and they need to get that work through those and become a, a better business been, um, china has already come up a few times in this conversation and some of the answers we've heard. i want to ask you, how much is the competition from chinese e. v manufacturers rattled, western e v make are so far. the competition question here is absolutely key. and the problem is that the automotive industry, particularly in gemini, is having symptomatic of the changes that are going on. and this has to do is um

the, the, the changes in the, in the basic structure of the economy, particularly in germany. as a result of the crime war, in the end of cheap russian gas, the energy prices in europe doubled at the same time, best fed through to inflation. and so you've got a cost of living crisis. this just in 2020 to 10 percent of germany's heavy industry has closed down because it was no longer economically viable. and now we're seeing that not through to the consumers and incomes stegman, germany, the whole of europe is on teacher on the edge of a recession. and there's a general assumption that this is temporary, but i think there's been a fundamental change here and the, this, the depression and consumption is now aging into, into the, what's the most here. and this all comes in the context of, um marietta drive. they just released the report just of the change of leadership in, in the us saying that europe is now funded mentally uncompetitive. that is for them

behind the states. and now increasingly is bullying, or at least the chinese are catching up in a way that's not the temporary change. this is a permanent change. and the directly cause the drastic action i, he was talking about investing 800000000000 euros every year. this is more money than it was spent to rebuild europe after the 2nd level in order to catch up. and i had to, i figured that zip points to this is in 1991 that the europe was collected, ged was bigger than the states. and today is the fed, smaller, and europe is falling behind and the trouble, the, the automotive sex. it was simply a matter of mexican business being under investment here, it was very slow. so investing as china is rapidly caught up and now overtaking. and so you put in protective power tires and protect your van automotive from these chinese inputs. but that should only be a temporary measure. wow. you know, your pin manufacturers investing catch up,

but that's simply not happening. but you know, you have needs of revolution in order to catch up and make it so invested. yeah, but it's plays with all of these problems. my colleague unbuckling was talking about the regulations, the tax. this is more regulations, this is more rules that they're going to have for the development of the sector. that needs to be a complete change mindset. and i think the us just woken up to this 5 of them in the striking report which sent shock waves through everyone government. and now they're starting to grapple with this is going to be a very difficult long term problem. i think you're able find yourself slipping backwards and the european automotive companies will find it increasingly difficult . and what they'll do is they'll just leave. they'll go instead of factories in china or in, in bed mom. and it ends in easier. and that's in america where all the drain markets are in order to maintain their profits. and he, and i just have to model the model through and back here. i'm in your for and then let me ask you to follow up on a point that ben was making there. you were talking about china,

setting up plants and other countries. a china is setting up a car making and battery production plants in hungary, and that's a member of you. what might this mean for the sector going forward? i think uh, so what we just heard is uh, the explanation why we offer a euro show we we uh so we, because we are not gotten that right go, we have high energy prices. interestingly, the highest energy prizes, introvert. so, to, to call us back to our political systems, our political system was not in a position to make it clear cut strategy in which we built up natural competitive advantages for europe. now we are in a very bad position and in that bad position, but they just think on the on protection and, and think they ought to be better by production. that's wrong. see what uh the, the,

the better re production facilities which are built up and then and then and you said you're all, they are very important and we should supports them because they help us. uh they have them. and austin, our call me just to have the cost directive batteries for each cost and the electric very good. up to 40 percent of the cost of the car on due to the battery. so very come to be where the black comes to see a po, ready to come do of us in year of we can do and become or can be better if we call the rate another go into into a wall between each of the same applies for 5, javin and china. we have to do more direct investments in china from to call make us because there is so the innovation of the call, we need the innovation of not catching me. nick, the you as oppose higher tariffs on chinese made ease. critics say that

protectionism is not the answer here. base ring says the terrace will harm trade between the you and china. what could the ramifications of all of this be? well i think we're already saying when i never already thing reduction in the number of chinese eaves tony to be sold in europe as a look for all the markets for them as how to knock on effect on. for example, you k, which hasn't impose additional terrace yet, so that will come out of tony's comment because selling costs in the u. k. norway is another market which tony's call because of uh, taking a picture. um, i think uh well we were nice to be seen as well. the chinese will absorb the tyrus to take a hit some profits and uh, sell calls that from the same cheap price is just to build market share. and then within the hour of the building and not with this. yeah. so they can then make

it a just a fire factory as we were hearing say, and hungry or stuckey or somebody like that. i think a, i think the, so the impacts of boss has shown. but terrorist wilhelm for sales, particularly it's a, you know, so the lower end of the markets. i'm, you know, that's the comic is the non kids, particularly the ones that who have a business to protect in, in china. and also some of the countries don't like it, particularly those who are trying to attract chinese, the in with directing jeff investments bank for example. um, so i that i think what we're going to be seeing is that this got the, what we've already seen a space. but what we've done in uh quite is how the chinese comic has a come to react. and with that,

how that plans are going to be changing been they wouldn't get that. and that's in both of this, from your perspective, what needs to happen, what are the concrete steps need to be taken in order for european carmakers to start meeting targets when it comes to the market share and production going forward. i mean, is there, is it a complete overall that's needed at this point? i think so. i think a bit of a revolution is cool for um, at the end of the day it boils down to say it was an investment that you needs boost sales. uh, it wants to generate the purpose, the revenue, you know, it as part of that back into, into the innovation. and that's a long, difficult, slow process. um, the real question here is like the, the governments have, you know, done 2 things. i mean, on the one hand, they put a protection as barriers in order to protect the domestic industries. but at the same time that withdrawn withdrawing the subsidies that make the cost cheaper and affordable, which allows comic this to the volume. and the, the advantage for the government is the, you know, it's, it's saving us of money uh,

not having to subsidize these industries and put the cost on china. and that's the, see another political calculation. but, but i think there's probably a strong argument that this is relatively young industry. it needs to be subsidized, particularly when you're past this emissions to actually get rid of combustion engines completely in the next few decades. that's a very ambitious target for the sake of the environment, and you have to put your money where your mouth was. and my colleague was suggesting, i thing is corporation that one of the other issues. here's a question, the southern see that the going to be definitely is in the 1st time in this whole, 87 year history working in germany. it's going to close the plots. and that looks very bad. most of german jobs that are going to be lost and unless to chinese manufacturers with them. and so the, one of the solutions here is, is to corporate. so invite an investment. and so, and i'll be likely to set up big factories across europe. so already doing so and with the batteries, as i mentioned hungry and not only i think this similar projects in half

a dozen of the central european countries going on. and that brings down the costs to everyone because at the end of the day it's demand industry, the consumer, the surface that protection is barriers. the duties are a tax and it's the consumer. the 1st thing buys the cost of that pays that tax. and so again, you just add to the cost of living crisis to drive a, make a, causing your more expensive, and they remain low quality than the competition because china hospice shows of cause in china. now i these and they went through this process of producing cause, the huge graveyards of earlier models that have been passed by more sophisticated models. and they just simply got thrown away practically new cost because they did the new models that came out were better and cheaper and more efficient. and so they got bought um that's the very expensive process to go through to. and i thing give is not pets to that name by how you want to keep it for 1015 years like normal

. so so that there's a huge, huge challenge is, is to not, as i said, i think personally, i think the way to go is, is not have to try barriers to encourage investment outside sacrifice the solvency and bring down the price to get the boat himself. so more costly comic this can make than the fast of the whole innovation process will go. all right, well we have run out of time to we're going to have to leave the conversation there . thanks so much to all of our guests been iris. ferdinand didn't offer and nick gibbs and thank you to for watching. you can see the program again any time by visiting our website obviously, or com. and for further discussion, go to our facebook page. that's facebook dot com, forward slash ag inside story. you can also during the conversation on x, r handle is add a j inside story for me, how much i'm drawing the whole team here. bye for now the a todd,

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