Electromobility on the Rise: Opportunities, Challenges and Rules

Interview with Andreas Varesi, Chairman and Managing Director of the German Association for New Mobility Consulting (BBNM)

The adoption of e-mobility strongly depends on public opinion, advertising and regulations. This is why political regulations, such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the German Energy Efficiency Act (EnEfG) are just as important for creating acceptance as the price and other measures. So what’s the immediate effect of these regulations on ramping up electromobility, in particular for company fleets, in the coming years?

Let’s start by looking at the CSRD: In Germany, ca . 15,000 companies are subject to the sustainability reporting obligation, and the obligation to take sustainability measures. A large part of these companies have set themselves the strategic objective of having a fully electric fleet by 2030 or 2035. These are large corporations with large vehicle fleets. Deutsche Telekom, for example, is currently replacing its almost 19,000 passenger cars with electric cars. The suppliers of large corporations are also obliged to provide proof and take action to ensure receiving orders in the future. This trickle-down effect means that the number of companies forced to switch to electric vehicles is much higher than you would expect at first sight.

The EnEfG also affects considerably more companies than expected. BAFA originally expected 12,400 companies to be affected by the obligation to take energy-saving measures, which applies to consumption in excess of 2.5 GWh. Based on the most recent figures, the Federal Ministry of Economic Affairs and Climate Action now expects 55,000 companies to be affected. This is due to the fact that for many companies, the main energy consumption is caused by the vehicle fleet. For SMEs, over 50 percent of the total energy consumption is caused by transportation.

Adding up the actions for meeting the CSRD and EnEfG requirements, more than 30,000 corporations and large companies will have to decarbonize their fleets in 2025. If this leads to an average of 20 passenger cars being exchanged for electric vehicles, this will lead to 600,000 new e-vehicle registrations at a minimum.

Environmental protection and profit may be reconcilable when it comes to PV, but not when it comes to mobility, right? And certainly not for commercial vehicle fleet operators. Or maybe they are reconcilable after all? This, at least, is the conclusion to draw from what Thomas Mertens, Member of the Board of BBNM, said: “The initial investment acts as a deterrent for many companies, but this is a costly mistake”...

And it’s true. Unlike in the passenger car segment, for commercial vehicles, the price difference between combustion engines and electric drives is still substantial. Massive traction batteries with capacities between 200 and 1,000 kWh (Designwerk) make a big dent in the budget. But after the initial investment, there are many benefits: The operating costs per kilometer are less expensive thanks to high efficiency and dropping electricity prices, maintenance costs are also lower and batteries have a long service life – up to 1 million kilometers according to the latest studies. Zero-emission vehicles will be exempt from motorway tolls in 2025, and from 2026 motorway tolls for electric vehicles will be just around one sixth of those for internal combustion engines. This means that a 16 ton truck can save between 10,000 and 20,000 euros in tolls per year. What’s more, switching to electric commercial vehicles is rated an environmental measure under the CSRD and EnEfG.

You predict affordable second-hand electric vehicles to become available in a few years as fleets are renewed. How realistic is this prediction and what other factors play a role here? When will we achieve price parity? (Europe vs. China, battery prices below 100 euros , etc.)

China already has price parity, which is due to high subsidies and massive battery production overcapacities. We have already seen cell prices below 50 US dollars per kWh. Economies of scale, a simpler powertrain layout compared with internal combustion engines, and the resulting broader competitive base ensure that the trend towards cheaper and better e-vehicles is set to continue for quite some time. In Germany, price parity is certainly one or two years away. This is due to the new EU import levies, and to the fact that Chinese car manufacturers continue to focus on expensive models with high margins. It now all depends on which measures the new German government will take to meet the EU’s sector targets.

Doing nothing is not an option, because this would mean that in 2030, German taxpayers would be forced to finance the purchase of over 16 billion euros in emission certificates. I also wonder if, or rather when, Far Eastern car manufacturers will start setting up shop in Europe in order to avoid import levies. This could happen soon, if they decided to take over the factories that the VW Group intends to shut down.

Many conservative players are talking about the “ban on combustion cars”, which spreads uncertainty among the population. How does this discussion affect the ramp-up of electromobility in Germany? Which specific actions could drive the adoption of electromobility?

The populist term “ban on combustion cars” grossly misleads consumers. According to the EU emission standards for passenger cars and light commercial vehicles, only new vehicles will have to be carbon-free by 2035. Internal combustion engines using e-fuels will still be admissible, but the ban will have no bearing on vehicles already on the road. The population is led to believe that their favorite baby is being taken away from them. This has caused immense damage to the German car industry, because it has made consumers hesitant to buy a new car of any kind at all. Fortunately, the new EU Commissioner for Transport, Apostolos Tzitzikostas, and Wopke Hoekstra, Commissioner for Climate, have stressed their intention to maintain the so-called ban on combustion cars in order to provide planning certainty.

Electric vehicles will only be accepted by the general population if the vehicles are affordable for the average consumer, and if charging becomes easier and cheaper. Price parity is certainly one of the strongest drivers; implementing social leasing, similar to the model in France, with monthly rates under 100 euros and no credit checks, could lead to a significant breakthrough. Especially when money is tight, it is the price that decides in the end.

In 2025, the next level of a reduced vehicle fleet limit on the way to clean mobility will come into force. What does that mean for electromobility and OEMs? Can we expect another upswing?

Yes! Even though the level of carbon emissions permitted for OEM fleets is reduced by just 15 percent, the weight factor that permits heavier SUVs to emit considerably more CO2 than a small car, no longer applies. Volkswagen and Ford will have to slash emissions by ca. 30 percent in total compared with 2024. This can only be achieved with electromobility. It is no surprise, then, that Audi has already increased the price for combustion cars considerably while the VW ID.3 is now available below 30,000 euros.

I expect that – just like in 2021 – we will soon see lease offers for e-cars at monthly rates below 100 euros. OEMs will do everything they can to avoid fines. Depending on the size of the engine, a VW Touareg 3.0 emits up to 245 g of CO2 per kilometer; the permitted threshold in 2025 is just 93.6 g/km – 151.4 more than permitted. This will amount to a fine of 95 euros per gram of CO2 per kilometer emitted above the target per vehicle, or a whopping 14,383 euros for each SUV sold. The fact that car manufacturers are putting up the prices of combustion cars and lowering those of e-cars will also help achieve price parity.

What role should Power2Drive Europe play as a platform that drives the mobility transition, and what are you hoping the industry will achieve in the coming years?

The charging infrastructure is a key factor for the mobility and energy transition. Power2Drive Europe serves as a key industry meeting point, offering an ideal platform to communicate the essential requirements for a future-ready charging infrastructure to all stakeholders. Ultimately, four factors will decide on the success or failure of the entire industry.

1. Charging e-cars must be intuitive, safe and free from expensive surprises, just like making a cell phone call. The challenges we are currently experiencing with public charging are similar to the issues we once faced with cell phones. When the EU scrapped roaming fees in 2017, the problem was solved.
2. Charging infrastructure should provide comprehensive coverage and sufficient capacity. We should be careful not to repeat the mistakes we made when setting up the internet and cellular networks – the AFIR provides the right framework conditions for that.
3. That said, the industry should not rely on the government or grid operators but instead focus on developing innovative solutions to modernize the outdated infrastructure. Tesla built its own charging network right from the outset, Nio has demonstrated the practicality of battery swapping, and China has introduced mobile charging robots called ChargePal that bring charging directly to the car. Delivering charging to the car is a solution that Surve Mobility (formerly Chargery) has been providing in Berlin since 2017, using cargo bikes.
4. Bidirectional charging is gaining in importance. By 2025, the total battery capacity of e-car batteries will surpass the 104 GWh projected in the German government’s Electricity Storage Strategy as necessary for grid stabilization by 2030. In terms of technology, we need affordable EV chargers and management solutions that support bidirectional charging, so that earlier generations of electric vehicles can also be used for buffer storage. The industry should lobby for a suitable legal framework.