Editor's letter: Legal flip-flopping means car makers can't make decisions

A shock policy announcement can uproot a car firm's entire 15-year plan, as Ford's EV boss tells us

The impact - and often then despair - surprise regulatory announcements have on those running car companies was laid bare earlier this month by Ford Model E COO Marin Gjaja. 

While he was in the air from Dearborn to Slovenia for the launch of the new Ford Explorer, the European Commission had announced plans to impose tariffs on Chinese electric cars and less than 48 hours later the Labour party in the UK, widely expected to win the 4 July election, had announced it would bring back a ban of the sale of non-electric cars by 2030.

"We make 15-year capital bets and we're sitting here with profound changes made in the last 48 hours,” Gjaja told me. “Now you have to look at all your business cases, all the investments you're making, and adjust what your expectations are.

"It becomes very difficult, and I think that level of uncertainty is the fundamental challenge all players have in the market now."

While on the Explorer launch, Gjaja said he was in touch with Ford's government relations team to try and find out more about Labour's announcement and Ford would plan accordingly. Ultimately, it was warmly received by Ford's UK boss Lisa Brankin.

Constantly changing regulations, he said, lead to "inherent risk, and the risk of our business has gone up" as legislators flip-flop around the transition to electric cars.

Gjaja holds up Norway as a good example of how to manage the transition to electric cars by not incentivising the new technology but rather penalising the existing one. 

Incentives cause "huge swings in consumer appetite depending on the level of the subsidy, which can be eliminated fairly abruptly". They cause the market to "bounce up and down".

Rather than constantly run scenarios and plans based on the latest legislative flip-flopping, car makers should be left to focus on "creating products that get people excited about what EVs can do" to ensure that behavioural change can happen towards EVs.

"The key thing we need is to get customers into the vehicle and drive to experience them. Once we have them in and they own it, they won't go back."

He senses further legislative disruption might be ahead with the onset of range-extender (REx) powertrains. which use a generator to support the battery that drives the wheels - something that's quickly gaining traction in China, the world's largest car market. However, as they produce CO2 emissions they would be banned in the UK and Europe in the 2030s, as things stand. 

"I've got data from China that says 80% of the miles driven [in RExs] are electric and if you look at where the other 20% are being driven then they're quite efficient because of the size of the engine.

"How are legislators going to approach a vehicle that cuts 90% of the emissions, even though as it has an ICE component it is not zero emissions?

“If I were a regulator, I’d be doing cartwheels in the streets if I could get 90% of the emissions out [of an internal combustion engine] that doesn’t compromise by taking care of charging and range anxiety. You can charge whenever you want rather than what you need to.

“This is blowing up in China and we have people in China saying it will be 40% of the market. Right now, none of the regulatory regimes allow for that as where the EU has landed [with EVs] has spread globally."

However, Gjaja said that Ford, like other western OEMs, has not yet made major investments in the technology due to future legislation having already effectively banned it.

This shows how dangerous it is to prescribe the technology rather than the goal: legislators have forced car makers down the route of battery electric vehicles and development in other technologies, bridging or otherwise, get ignored. Development and progress is stunted.

Editor's letter: Legal flip-flopping means car makers can't make decisions

Editor's letter: Legal flip-flopping means car makers can't make decisions

Editor's letter: Legal flip-flopping means car makers can't make decisions

Editor's letter: Legal flip-flopping means car makers can't make decisions

Editor's letter: Legal flip-flopping means car makers can't make decisions