2023-12-31 13:27:35
In January 1886, a German man with a pronounced mustache walked into the Berlin patent office. He brought with him an innovative idea that he had already managed to make a reality with his wife, Bertha. The name of the man, a career engineer, was Karl Benz and his invention, which would completely change the world, the first vehicle with an internal combustion engine. Today, almost a century and a half later, the automotive industry faces the next great revolution. The objective, paradoxically, is to leave behind that great invention of Benz and enter a new era, the electric era, in a search for zero polluting emissions. However, this interest in the new era does not seem to occur as planned. And, with this, several firms in the sector have been forced to make moves to avoid a premature shipwreck.
Among them, a historical one like Ford perhaps stands as the best example of that paradigm of uncertainty that the electric car generates today. With a presence in Spain for more than 40 years thanks to the Valencian Almussafes plant, members of the multinational’s global leadership announced in mid-November to the majority union, UGT, that they were going to “postpone” without a date the investment promised in 2022 to electrify the factory. And, although company sources in Spain limit themselves to saying, officially, that “nothing has ever been said about a delay,” they do acknowledge that “the market situation is being studied” and that they will adapt “to the rhythm set by the client”. And that’s it adaptation and the lack of news, at a time when the electric car is not taking off, which has raised concern among factory employees.
Unforeseen context
“We are moving in a scenario that was not expected,” he says. Carlos Faubel, leader of UGT at the plant and president of the works committee, who highlights that there is “uncertainty and concern about how electrification will continue in Valencia and in Europe”, because there is no “clear situation.” It is a vision that shares Daniel Portillo, spokesperson for STM-Intersindical at the facilities, who points out the “impotence” that reigns in the Almussafes staff after the labor “sacrifices” made by the staff “have not been enough” for the multinational to clarify whether they are going to make that product. “We still don’t see the light at the end of the tunnel,” she remarks.
This feeling is understandable after the factory has suffered three years in the last four years – the last, in April, when 1,100 jobs were cut – which have left the number of workers at its historical minimum. Along with this, it has stopped producing three vehicles –Mondeo, S-Max and Galaxy–. The Transit van will also say goodbye in 2024, leaving only the Kuga in its future, a hybrid whose current sales are not enough to guarantee the necessary workload until the arrival of the electric models. In the desire of Portilloas in that of Francisco Segura, president of the cluster that encompasses the auxiliary industry of the Valencian automotive industry (Avia), would believe that future Ford cars in Almussafes would be “high sellers”, which would guarantee sufficient work for both the factory and the suppliers. “But today we don’t know anything and that’s why we hope he makes a statement,” he says. Fable.
Despite this context, the confidence that the electric workers will eventually arrive, say both union leaders, has not disappeared. Nor has he done so for the regional secretary of Industry of the Generalitat Valenciana, Felipe Carrascowho sees no “doubts” in Ford’s situation, but rather that the brand is “keeping pace” with the evolution of its market and its product.
In this sense, the American company has requested aid in the second edition of PERTE for the development of electric and connected vehicles, a framework in which it has already obtained 37.6 million for a battery plant in Almussafes. Of course, his resignation from the funds in the first phase is still in memory for not reaching the investment deadlines set in the call. And that fear of a new withdrawal exists, even more so if it is seen that the decision taken in the Valencian venue is not isolated, but rather one of many delays carried out by the firm around the world.
Two key reasons
Without going any further, in recent times it has reduced the productive capacity of its first lithium-ferrophosphate (LFT) battery production factory in Michigan (United States) and has delayed or directly canceled other similar facilities that it had planned in North America. and Turkey. Likewise, it has reduced the planned production of two electric models such as the Mustang Mach-e and the F-150 Lightning truck for 2024 and has paralyzed for a few months the launch of the expected electric Explorer that had been assigned to the Cologne plant (Germany). ). The explanation behind all these movements is the same. The advance of electric models is not being what the company expected.
The slow takeoff was recognized by the company’s CEO himself, Jim Farley, in September, when he outlined two key reasons for this. On the one hand, an insufficient charging infrastructure for the consumer to go shopping. On the other hand, a price that is still high so that the middle class, the majority in many countries of the Old Continent, can afford it. Both are the pillars of a “perfect storm”, in the words of one of the spokespersons of the Spanish dealer association, Faconauto.
In the case of the first, the charging infrastructure indicator prepared by the Spanish association of vehicle manufacturers, Anfac, with data from various European sources makes clear an electrical advance, although slow and at various speeds, on the continent. While the Netherlands and Norway have managed to deploy an adequate network for this type of vehicle, others such as Spain are at the bottom of the list. rankingfar from an average of the Twenty-Seven that does not currently meet the needs in terms of facilities such as electric charging stations.
“Europe demands that by the end of 2025 we have charging stations for passenger cars at least every 60 kilometers,” they recall in Faconuato. They are “duties” that in countries like Spain believe “are not being done.” However, for Felix Garcia, communication director of Anfac, more than on the road, the big problem with this lack of infrastructure that exists today in territories like Spain is the lack of agility for them to be installed in homes and public enclaves. “Direct aid is needed to set up points where the car can be left and charged,” he points out in this regard, but not before underlining: “Manufacturers want to sell the maximum number of vehicles and electric companies want to set up charging points, but for that we need to see business”.
For all this, improving at that point is key. But it is equally or more important that the client can pay for it. García recognizes that “the price of the electric car, compared to its combustion counterpart, is more expensive”, although he also considers that, for example, in Spain, where only 5% of the units sold are electric, “people do not have the perception that there is aid of up to 10,000 euros” for this purchase because “sometimes it takes a year and a half to collect it.
However, the slow takeoff goes beyond borders. If you look at the continent, sales of pure electric cars until November only represented 14% of the total, a percentage still very low when compared to non-plug-in hybrids (25.7%) and gasoline cars (35.7%). . A circumstance that for Faconauto is directly linked to high prices. “In European markets with lower per capita income they don’t sell,” he highlights, although he believes that little by little, as “technology evolves and prices are reduced,” there will end up being a greater entry of it.
Main competence
But while waiting for the future, until now this high price has always had a lot to do with the high cost of fundamental elements such as batteries, which require scarce materials such as lithium to be produced. And, despite the fact that, as BloombergNEF has estimated, in the last year the number of cells has been reduced by 14% – a downward trend that is expected to continue – and has reached a minimum, the situation that has been lived until now has led to another reality. And it is the progress achieved by China in relation to Western brands. “It has the key metals for the manufacture of batteries and a clear cost advantage,” he highlights in this line. Vicente Pallardóprofessor of Applied Economics at the University of Valencia (UV).
In his analysis, Pallardó He points out that Europe and its companies “reacted very late” on the road to the electric car and that, when they did, “there was not as clear a commitment” to the change of era as that of the Asian giant. Furthermore, he believes that the leaders of the Old Continent have made a mistake by providing “financing for the purchase of vehicles and not for production, because with that you will lose the race.” “These decisions lead you to have a flagrant inferiority with China, which today has better and cheaper cars,” he believes.
According to Faconauto, this context reflects that “a competitiveness factor” that is “needed” has been added. But for Pallardówith these circumstances it is “complicated” that in the future many Western companies will be able to compete with those of the Asian country when it comes to selling cars to the middle and lower classes of Europe, thus losing the majority market.
Other options
Those brands that do not have that space believe that they will choose to “leave” the continent, ally with China or other companies – Renault and Volkswagen, for example, would be exploring an alliance to promote a cheap model, according to German media – to “gain distance” or they will look for business space in higher-end vehicles – a range in which they would have to battle with another giant like Tesla and which was considered the most likely future for Ford Almussafes – aimed at a wealthier client. All of these options, however, imply to a greater or lesser extent a reduction in the workload and, with it, the workforce in Spanish and European factories.
For GarcíaHowever, the race with Beijing is not yet lost. “We must debunk the myth that the Chinese car puts the European car at risk today,” highlights the head of Anfac, who emphasizes that “more affordable products are going to arrive” from brands such as Renault, Citröen and Volkswagen.
However, so that this threat does not become a reality, he is clear about the need for the EU to “make a clear commitment to the automobile.” “We can greatly reduce the carbon footprint, relocate components linked to the electric car and produce, because under equal conditions we are capable of competing.” he adds. But for that “Europe has to preserve its industrial weight.”
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