EU's conspiracy: Will leasing companies be forced onto a "dead end for electric vehicles" by 2030?

The EU has been exposed as secretly planning a new regulation to "take a shortcut" to accelerate the promotion of electric vehicles.

This plan is not aimed at ordinary consumers, but at car rental companies (such as Hertz and Sixt) and large enterprises with a large number of official vehicles and company cars for employees.

According to insider information, the European Commission is quietly discussing and may announce a draft as early as the end of this summer, requiring these car rental agencies and corporate fleets to replace all the new cars they purchase with electric vehicles before 2030.

This is five years earlier than the EU's previous plan to ban ordinary people from buying new fuel - powered vehicles by 2035.

The EU is doing this to bypass the difficult problem of directly asking the public to buy electric vehicles (after all, many people think they are expensive and charging is troublesome), and instead target these "big buyers".

Because the car - buying decisions of car rental companies and enterprises are more centralized and are more easily influenced by policies.

If this regulation is passed, it will directly affect about 60% of new car sales in the EU, which is a huge market!

It is said that people in the European Commission admit that they are indeed working on such a plan, but they are reluctant to say more about the specific details.

However, this "shortcut" plan has sparked a lot of controversy and concerns.

The car rental industry was the first to oppose it. Companies like Sixt have been reducing their electric vehicle fleets. They complain that there are too few charging piles (especially in tourist destinations), car repairs are expensive and troublesome, and most importantly, electric vehicles are hardly worth anything when sold second - hand after a few years (low residual value).

They warn that mandatory purchases of electric vehicles will greatly increase car rental costs, and many tourists are simply unwilling to rent electric vehicles for vacations.

Some European MPs have directly pointed out that this plan is "unrealistic".

Critics believe that the EU's strong push for the green transition is putting huge pressure on the entire automotive industry and the economy. If car manufacturers fail to meet the standards (not selling enough electric vehicles), they will be fined. At the same time, they have to invest a large amount of money to transform factories, develop battery and charging technologies, and upgrade the power grid. More seriously, this may lead to a large number of job losses. Recently, the automotive giant Stellantis threatened that if the EU presses too hard, they may have to close factories. A former high - ranking EU official even warned that the entire process of transitioning to electric vehicles may cost Europe 600,000 jobs.

Automobile manufacturers are calling on the EU government and member states to provide more subsidies and practical support. They are worried that European car companies will lose even more miserably to their two major competitors, China and the United States, and lose more market share.

Reshaping the Market Structure and Cost Curve

On the surface, the EU's electric vehicle plan targeting rental companies and corporate fleets is an environmental protection policy.

But in fact, it aims at industrial acceleration and risk transfer.

Its brilliance lies in that it skillfully avoids the toughest nut to crack - ordinary consumers, and instead targets the most easily "controllable" key players in the automotive market.

That is, it focuses on rental companies (such as Hertz and Sixt) and large enterprises with a large number of official vehicles and company cars for employees (corporate fleets).

The car - buying decisions of these "organized buyers" are centralized, and they are more directly and obediently influenced by policies and regulations.

Mandating these "big customers" to buy all electric vehicles by 2030 is five years earlier than the 2035 ban targeting consumers!

The effect is immediate. It artificially and forcibly creates a huge and stable pool of electric vehicle demand in the market instantaneously.

What does this mean for struggling car manufacturers? First of all, it is a huge "reassurance pill" and a "stimulant".

Car companies no longer have to mainly rely on painstakingly persuading individual consumers to buy electric vehicles as before.

Now, the policy directly "guarantees" a surprisingly large "guaranteed market".

As long as they can win over the procurement departments of these rental companies and enterprises, sales are strongly guaranteed.

This can greatly accelerate the large - scale production and popularization of electric vehicles, paving the way for the full ban on the sale of fuel - powered vehicles by 2035.

Car companies can finally invest money more confidently in transforming production lines, developing new models, and arranging battery supply chains, because they know there are definite big buyers waiting ahead.

Secondly, large - scale production will inevitably lead to cost reduction (that is, the so - called "learning curve effect").

When car companies ramp up production to meet this large order, the average cost of each electric vehicle will be diluted, and ultimately, electric vehicles are expected to become cheaper. This is a long - term benefit for the entire electrification transition.

However, the other side of the coin is a drastic market restructuring and potential risks.

This policy is like a powerful lever that has pried the structure of the entire automotive market. The most direct subsequent impact will appear in the second - hand car market. Think about it. Rental company cars are usually phased out and replaced after a few years (for example, 3 years), and corporate fleets also have a similar replacement cycle.

This means that a few years after the policy is implemented (around the mid - to - late 2030s), a huge number of second - hand electric vehicles will suddenly flood the market. It's like opening the floodgates.

This "flood of second - hand cars" will have a dual effect:

Lowering the threshold: A large number of relatively new and cheaper second - hand electric vehicles entering the market is a blessing for ordinary consumers with limited budgets who couldn't afford new electric vehicles before. They can join the electrification ranks at a lower cost.

Impact on residual value: On the other hand, this exactly hits the biggest pain point of rental companies at present - the uncertainty of electric vehicle residual value.

EU policymakers seem to be betting on "scale will eventually stabilize the market", but this is a huge gamble.

If the second - hand car residual value collapses, the first to fall may be these rental companies that are forced to buy new cars, creating a vicious cycle.

Rental Companies Become Victims

If this policy is implemented as discussed, rental companies (such as giants like Hertz and Sixt) will be pushed into an extremely embarrassing and dangerous situation - they have become the "front - line soldiers" forced to charge in the EU's green transition gamble, or rather, a huge "buffer pad".

The core lies in their unique business model: they are the ultimate payers of the "full - life - cycle cost" of vehicles.

Buying new cars, using them for a few years, and then selling second - hand cars to recoup funds - this cycle is their lifeline. However, electric vehicles have planted "landmines" in every link of this cycle.

Rental companies make a huge one - time investment when buying cars. They calculate carefully and estimate how much the car can be sold for after a few years (residual value) to determine rental prices and profits. But for electric vehicles, especially those that are forcibly promoted by policies and flood the market in a short period, the residual value is a nightmare.

Technological iteration is so fast that it's dizzying (the "top - of - the - line" model bought this year may be outdated in three years). The battery health status is difficult to accurately assess (buyers are worried about a sharp drop in battery life). Even more terrifying is that when tens of thousands of "same - age" retired rental electric vehicles flood the second - hand car market after 2030, oversupply will inevitably lead to a price collapse.

Rental companies may very well face a financial disaster of "spending a fortune on new cars and getting scrap - metal prices for old cars".

This will directly threaten their survival foundation.

Moreover, electric vehicles are not problem - free just by plugging them in. The maintenance and repair network is far less mature than that of fuel - powered vehicles. There is a shortage of knowledgeable technicians, the working hours are long, and the fees are high. The most troublesome part is the battery - once it is damaged by a collision, the sky - high repair cost may directly render the car useless, and even insurance companies are headache.

Not to mention the large rental market for cross - border travel in Europe - the charging standards, network coverage, and payment methods vary greatly from country to country, and long queues at charging piles are commonplace.

These operational troubles and additional expenses will either erode profits or be passed on to car rental users - pushing up rental prices.

So a new problem arises. What if users don't rent or are less willing to rent?

The charging network in Europe, especially in scenic but remote vacation destinations, is far from perfect.

Ordinary car rental users have extremely low tolerance for "range anxiety" and inconvenient charging.

Mandating rental companies to provide a large number of electric vehicles, but users (especially vacationers) avoid them or complain a lot after renting, which directly hits rental demand and the company's reputation.

The CEO of Sixt warns that mandatory electrification is likely to "scare off" customers due to user resistance and insufficient infrastructure, or significantly increase rental prices due to rising costs, making car rental less accessible.

What's the result? The car rental industry is forced to swallow the bitterest "pill" during the entire transition period.

They have become the "guinea pigs" for testing the market, educating users (and even educating repair shops), and enduring insufficient infrastructure.

Smaller, under - funded rental companies may not be able to survive. They may be annexed by large companies or simply go bankrupt. To survive, the survivors may either significantly increase rental prices or simply shrink their business scope - avoiding remote areas or long - distance routes where charging is difficult and the risks are high.

This will invisibly hinder the popularization and experience of electric vehicles.

The pain of the car rental industry is just a precursor to the "earthquake" in the EU's automotive industry.

The risk of 600,000 job losses warned by former European Commission President Breton points to a deeper and more extensive "creative destruction".

As the internal combustion engine is "sentenced to death", the huge supply chain supporting the fuel - powered vehicle industry - thousands of parts factories, material suppliers, and professional technicians - will experience a devastating contraction.

Exaggeratingly speaking, it's not just a simple reduction in production, but the shrinkage of the entire industrial ecosystem.

The structure of electric vehicles is much simpler than that of fuel - powered vehicles (the number of parts may be reduced by one - third or even half), and it is easier to achieve automated production.

This means that even if the production volume of electric vehicles increases, the direct manufacturing jobs it can provide may not be as many as those in the production of fuel - powered vehicles of the same scale. The trend of replacing humans with machines will be more obvious.

The emerging electric vehicle industry requires completely different talents, such as engineers and technical workers who understand battery chemistry, are proficient in motor control, are good at software programming, and can manage smart grids.

Is it realistic to ask a master who has been making engines for 20 years to debug a battery management system?

Obviously not.

A large - scale and effective retraining program requires a huge investment and a long time, while the transformation speed promoted by policies is like a high - speed train.

The risk of a "skills gap" is extremely high, and a large number of traditional workers may be permanently unemployed because they cannot adapt to new technologies.

The "factory - closing warning" from the automotive giant Stellantis (which owns brands such as Peugeot, Citroën, Fiat, and Jeep) is a direct manifestation of this risk.

Transforming a traditional fuel - powered vehicle factory into a modern electric vehicle factory requires an astronomical investment.

If the EU cannot provide strong policy support (such as large - scale subsidies, tax incentives, and infrastructure construction), ensure the reliability and competitiveness of the local supply chain (especially for batteries), and prove that this market forcibly promoted by policies can really make car companies profitable, then the cruel business logic will come into play: closing old and high - cost factories in Europe and shifting investments to regions with more friendly policies (such as the huge subsidies in the US Inflation Reduction Act) or lower production costs (such as some Eastern European countries or Asia).

This will directly lead to the hollowing - out of European local manufacturing and an unemployment wave.

Geopolitics and Industrial Competition

China's "overwhelming advantage" remains a lingering shadow for the EU.

From the extraction and refining of key "oil for electric vehicles" (key minerals) such as lithium, cobalt, and nickel, to the manufacturing of core components of batteries (cathode and anode materials, separators, electrolytes), and finally to large - scale battery production, China has established a huge, efficient, and cost - competitive complete ecosystem.

European car companies, no matter how reluctant they are, are heavily dependent on importing batteries or key materials from China.

It's like Europe wants to make electric vehicles, but the lifeblood of the "heart" (battery) is in someone else's hands.

In the short term, one of the biggest beneficiaries of the EU's mandatory rapid transition to electric vehicles in the internal market may actually be Chinese battery giants, because they have ready - made, unrivaled production capacity and price advantages.

Although the plans for building local battery factories in Europe are ambitious (such as Northvolt), in terms of scale, speed, cost, and technological accumulation, they simply cannot compete with China in the short term.

The demand created by the policy is likely to just provide larger orders for Chinese suppliers.

Meanwhile, across the Atlantic, the United States is waving the "Inflation Reduction Act" (IRA) like a "money - attracting net".

The core of this act is to provide unprecedentedly large subsidies and tax credits, with clear conditions: electric vehicles and their key components (especially batteries) must be produced in North America or use materials sourced from North America.

European car manufacturers and battery suppliers are facing a business decision: should they stay in Europe and bear higher energy costs, more complex regulations, and relatively fewer subsidies, or should they shift billions of euros in investments to the United States or Canada to obtain the huge subsidies of the IRA and ensure the competitiveness of their products in the huge US market?

The answer is obvious. We have seen companies like Volkswagen and Northvolt suspend or re - evaluate their plans for some battery factories in Europe and instead give priority to North America.

The EU's internal subsidy plan (such as the "Green Deal Industrial Plan") not only has a much smaller funding scale than the IRA, but also the speed and efficiency of coordinating the distribution among the 27 member states are widely criticized.

The EU is being left far behind by the United States in the industrial subsidy competition.

This constitutes the most core dilemma for the EU. It tries to artificially and rapidly create a huge electric vehicle demand market in the internal market through mandatory policies (such as targeting rental and corporate fleets), but fails to simultaneously solve the fundamental problems supporting this market.

The instability of the foundation is reflected in three fatal weaknesses:

Weak competitiveness of the local supply chain (especially for batteries): High costs, small scale, and difficulty in catching up in technology, making it difficult to meet the surging demand.

No guarantee of the supply security of key minerals: A fragile supply chain that is heavily dependent on external sources (mainly China), which may be "choked" at any time.

Lack of effective "weapons" to counter the industrial policies of China and the United States: It neither has China's control over the entire industrial chain nor the "simple and crude" large - scale subsidy attractiveness of the US IRA.

What will be the ironic and embarrassing consequence? Who may end up taking the biggest "slice of the cake" in this "big European electric vehicle market" that EU officials have painstakingly and secretly promoted through legislation?

It is very likely to be Chinese electric vehicle brands with cost and technological advantages (or their locally produced products in Europe), as well as (European or non - European) car companies that prioritize the layout of advanced production capacity in North America to chase US IRA subsidies and then turn back to serve the European market.

European local traditional car companies and suppliers may further lose their competitiveness under the cost and transformation pressure forcibly increased by policies, and fall into a situation of "making little profit at a high cost" or even being eliminated.

This is like Europe digging a gold mine with great effort, but the mining tools and transport fleets belong to others, and most of the gold is also taken away by others.

To make matters worse, the "secret" way of promoting this policy is seriously undermining its own foundation - legitimacy and enforceability.

According to media reports, the draft was "secretly discussed" in Brussels and is planned to be suddenly announced at the end of summer.

"Black - box operation" will inevitably arouse strong doubts.

The representatives of the industries most affected by the policy - especially the rental companies