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October 23, 2016 | End of Gasoline Powered Autos by 2030?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Earlier this month, the German Bundesrat voted to ban new gasoline- or diesel-powered vehicles from EU roads starting in 2030.

Days later, the German Transport Minister Calls Internal Combustion Ban “Utter Nonsense”.

Let’s take a look at both stories.

all-electric-bmw

German Government Votes to Ban Internal Combustion Engines by 2030

Members of the German government have just passed a resolution to ban the sale of internal combustion engines in the European Union by 2030. Only zero-emissions vehicles would be allowed on the market after that time, according to the resolution.

The resolution was passed in Germany’s Bundesrat, the nation’s legislative body representing the sixteen German states, with across-the-aisle support.

The resolution implores the EU Commission to ban the sale of new vehicles powered by gasoline or diesel internal-combustion engines starting in 2030; vehicles sold before the ban would still be allowed, but after 2030, automakers would be banned from selling new fossil fuel-powered vehicles in the EU.

The Bundesrat has no direct authority over the EU, and cannot demand changes to the EU’s transportation regulations. But with the largest government and most powerful economy in the EU, German government decisions exert huge influence over the EU and the United Nations Economic Commission for Europe.

Partly in response to recent emissions scandals, European automakers are expressing a newfound interest in electric vehicles and other zero-emissions drivetrains. At the Paris Motor Show just a few days ago, BMW, Mercedes-Benz, Renault, Volkswagen and numerous other automakers all showed concept cars and future products that focus on emissions-free driving, whether via battery-electric or some other form of propulsion.

German Transport Minister Calls Internal Combustion Ban “Utter Nonsense”

According to German wire service DPA, as translated by Forbes contributor Bertel Schmitt, Dobrint called the plan “utter nonsense.” Dobrindt, whose office would need to approve the proposal, said that “a complete end of the internal combustion engine from 2030 on would be totally unrealistic.”

The plan was put forth in Germany’s Bundesrat, the country’s legislative body representing the sixteen German states, and won support across the political aisle. While the Bundesrat does not exert authority over the European Union, German government edicts have a strong influence on the EU and the United Nations Economic Commission for Europe.

In other words, the Bundesrat’s vote to ban the sale of new internal combustion engine vehicles after 2030 has no legislative teeth—it’s an ideological move. But Dobrint still doesn’t sound like he’ll allow the bill to pass his desk.

End of Gas-Powered Autos?

I suggest it is quite likely. There does not even have to be an outright ban. For the idea to work, some things need to happen. For example, cars will need to get far more miles out of a charge, and/or a battery changing station mechanism available.

Alternatively, people could swap one car for another via self-driving Uber or Lyft vehicles. It’s too early to say how this will shake out precisely, but the industry is clearly headed in this direction.

Mike “Mish” Shedlock

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October 23rd, 2016

Posted In: Mish Talk

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