Is stopping diesel and petrol really a risk for the Italian car?

The European Parliament has given final approval to ban the sale of petrol and diesel cars on the EU market. And as in the past, a revolt began in Italy against the evil Europe, which, in the name of ecological ideology, destroyed our industry, left tens of thousands of people unemployed and prevented the poorest families from living. one or more four-wheeled vehicles for moving and working. According to industry bodies, the end of combustion engines for cars and vans by 2035 will result in 67,000 jobs lost in Italy over the next seven years. An average of 10,000 more unemployed per year. A figure that could rise if the tightening of fossil fuels also affects buses and trucks, for which Brussels has proposed a green transition plan for 2040. According to some experts, our country is most exposed to the return of the car with zero. emissions are even higher than in Germany and France. With the strength of its dominance in electric battery production, China may dominate the market in the near future. But is this really the case?

State of the automotive industry in Italy

Let’s move forward in points. First of all, it must be said that the crisis in the Italian automobile industry began a long time ago, and certainly not because of the electricity sector: if in the late 1980s we were producing about 2 million cars a year, in 2009 this number had fallen to just over 660,000. In 2021, the share fell further to 442,000. Meanwhile, Fiat (or FCA) came under de facto control of the French Peugeot-Citroen group, giving life to Stellantis: the brain in France, the tax authorities in the Netherlands and Luxembourg (already together with the FCA), six factories and around 66,000 employees in Italy. . The government has promised Stellantis 8.2 billion from today to 2030 to sustain production and employment. The company responded by announcing its electric car plans, but the unions (and the government itself) are deeply skeptical about the true scale of that commitment.

However, the main challenge for our automotive industry is represented by the sector that is best resisting the growing crisis of domestic production, namely the components sector. Firms like Brembo and Marelli gradually compensated for the loss in Italian orders with the increase in exports, and today a large company like Germany could not do without Made in Italy brakes and electronics. According to a survey going back to early 2022 by the Ministry of Economic Development with the support of chambers of commerce, the Italian components sector includes 2,200 companies with 161,000 employees and 45 billion turnover.

Again, according to the report, 101 of these are considered to be most at risk from the electrification: they deal with parts for gasoline and diesel cars and employ 26,000 people. Another 800 companies, with around 54,000 employees and whose business depends on specializing in the combustion engine, are considered moderately at risk. The ministry writes that only 40 companies are ready for the transition, thanks to their expertise ranging from data analysis to autonomous driving, from electric motors to batteries. Then it is necessary to consider all the relevant industries associated with oil and diesel, from refueling stations to transportation.

More work?

In this respect, the impact of the transition to electricity can be truly devastating for our country. However, not everyone agrees with this view. A study by Motus-E and Cami, the research center of the Ca’ Foscari University of Venice, argues that the electrification of transport in Italy will not create deindustrialization and unemployment, but will instead lead to a 6% increase in jobs in components. To this must be added 7,000 new jobs for the infrastructure and energy sector in the service of electric mobility (think charging stations, for example). The analysis by Motus-E and Cami begins with a less pessimistic survey of Italian companies’ preparation for the transition: there are currently 107 electrically powered companies and 40 not, as the government report reveals. Those most at risk, on the other hand, will employ 14,000 workers, almost half of those cited in the ministry’s survey.

Another positive element: “There is a sustained increase in collateralized manufacturing initiatives that can contribute particularly significantly to the creation of new jobs (…)” and reduce “dependence on non-EU supplies”, such as those of specialized Motus-E and Cami, currently in batteries that could create “4,000 new direct jobs” based on projected investments. There are other connected supply chains, such as accumulators and recycling, “the second activity in which Italy has enough experience to aspire to an international leadership role”.

Therefore, the results of this study are more optimistic. Another factor to consider, then, is the exceptions the EU directive provides regarding petrol and diesel engines: the first concerns luxury cars, an important sector for Italy (think Ferrari), which may have more time to adapt to electricity. The second, no less important exception concerns biofuels: European laws have left open the door to hydrogen and such fuels that could “save” internal combustion engine technology. Like? An emergency brake has been added to the Directive: if the transition will have serious socio-economic consequences (mass layoffs and unaffordable car prices for the poorest of the population), the EU Commission can decide on the basis of: reviewing the rules and (at least former minister Roberto Cingolani’s) This is the hope he expressed) to allow a derogation for vehicles running on biofuels, which are considered to be absolutely less polluting than diesel and gasoline. And here a new, interesting market may open for Italy.

investment node

But between saying and doing there are investments. If apocalyptic prophets are heeded less in major car-producing countries (e.g. the USA, Germany, and France), it is primarily because there is greater confidence in the possibility of using the crossover to their advantage. The United States has implemented a maxi incentive scheme (Inflation reduction law) that will pay hundreds of billions of euros not only for production, but also for the purchase of electric cars with components and batteries manufactured in the USA (not only the USA, but also Canada and Mexico ). Europe responded by removing bottlenecks in state aid, which would unleash investment from Germany and France, which above all had the funds and accounts to do so. Of the 540 billion subsidies allowed in the EU at the end of 2022, half came from Berlin and the other 30% from Paris.

Instead, Italian companies had to settle for 5%. And herein lies the biggest concern for our industry: investment is needed and a lot is needed to make the electric transition (and energy and digital more generally) a success story. In this, we suffer from years of delay, either because our ruling class lacks foresight or because high public debt breaks its wings. Today Italy can rely on Pnrr, but for various reasons it may not be enough. Thus, with the outbreak of war in Ukraine and rising inflation, both the Draghi and Meloni governments brought up in Brussels the need to create a new European joint fund to divert resources where they are not available. For the time being, however, opposition from the austerity hawks (Netherlands and Germany tops) has barred discussion. The European Commission has announced its intention to create a sovereign fund to link it to its plan to promote the green industry. But as of today it looks more like an empty box.