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View from Brussels: a large battery pack?

The number of electric cars is on the rise, but the industries that are popping up to support the production of the vehicles could grind to a halt if no new regulations are introduced. A review of the EU’s CO2 targets for cars is seen as an absolutely crucial fork in the road.

Even the pandemic cannot stop them: sales of electric cars continue to rise in Europe and beyond. According to Bloomberg NEF, their market share could reach 70 percent globally by 2040, even if no new policies are introduced.

But automakers are not on track to build enough electric vehicles in the next decade to absorb all the battery-making capacity that Europe will soon set up.

Clean mobility group T&E warns that so-called battery gigafactories are in danger of becoming underutilized.

New analysis by the group calculates that 462 Gigawatt-hours (GWh) of battery production capacity will be available in the EU and the UK by 2025, but only 174 GWh of demand will be supplied if the current trend continues.

Billions of dollars are being pumped into the industry by investors who want a solid return on their money. The EU has built much of its next-generation industrial policy around battery manufacturing, trying to keep up with or even outshine rivals in South East Asia.

Those investments and the dozens of green jobs that come to giga factories are at risk, warns T&E. Raising the EU’s CO2 targets for cars and vans, as part of a review due in the summer, could prevent the battery collision.

Current rules require automakers to reduce their fleet’s CO2 emissions by 37.5 percent by the end of the decade.

The law includes incentive super credits for zero-emission vehicles and fines for violations of the CO2 benchmarks.

By this summer’s review, that target could rise to 50 percent and a new update to engine standards under the ‘Euro 7’ rules will also push carmakers to build fewer internal combustion engines in favor of electric motors.

Whether it will all work out is difficult to predict at the moment. Policymakers are still tinkering with a different set of rules setting battery standards that are designed to make battery reuse and recycling more streamlined.

Unlike an electric motor, the EU rulebook contains many moving parts and getting them all to move in sync is an art in itself.

With thousands of jobs disappearing in polluting industries like mining, the sustainable shift of the transportation sector will have to provide alternative sources of employment.

If Brussels is wrong, the fledgling Green Deal may not reach maturity. There are plenty of promising signs to counter the worst-case scenario.

The number of EVs is increasing despite the pandemic, major brands such as Volkswagen are converting production lines to electric and the current set of rules seems to be working.

Other stumbling blocks, however, are that the EU may include road transport in its carbon emissions trading scheme, which NGOs such as T&E say will not be as effective as CO2 targets or engine standards.

The UK is arguably better placed, as there is a 2030 phase-out date for all non-hybrid vehicles. A de facto ‘combustion engine ban’ is unlikely to materialize in EU regulation, as there are doubts about its legality in the internal market and several Member States would oppose it.

Whatever happens in the control room, it seems indisputable as the mass adoption of electric cars approaches. And it is fast approaching.