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Germany and Italy Try to Pump the Brakes on the EV Transition

Francesco Radicati
Mar 20, 2023

Charging station for electric vehicle

Italy and Germany are leading the charge against EU rules that would ban sales of new internal combustion engine (ICE) vehicles in the bloc by 2035. In both cases, those opposing the ban are motivated, at least in part, by a desire to protect their county’s largest industry, but doing so risks holding back the competitiveness of the EV sector. Accordingly, EV groups and at least one large automaker have criticized their governments’ positions.

A Tale of Two Governments

The German government’s opposition to the deal is a little surprising, given that the ruling coalition is headed by the center-left Social Democrats and the Green Party, along with the more business-oriented Free Democratic Party (FDP). However, it makes more sense when considering that, by some estimates, 1 in 7 German workers is employed in the auto industry in some capacity.

Germany’s position is that the EU rules should make more allowance for synthetic fuels, which the FDP also champions. Yet Audi, which has committed to an all-electric transition, has criticized this position. One can argue that in either case, it’s a question of incentives: the government’s incentive is to protect automakers’ employees, and Audi’s is to protect its investment in switching to EVs.

The calculation by the Italian government is more complicated. Like Germany, one of its incentives is to protect one of its largest homegrown industries. However, the government is headed by a populist coalition of the Brothers of Italy and the League, which have shown a willingness to turn anything into a culture war issue (as one example, Italy’s transport minister has also criticized moves to allow card and touchless payments at small retailers). It’s hard not to see this opposition through that lens as well.

Tide and Time Wait for No Man

There are legitimate reasons to want to slow the EV transition, not least the cost to consumers of switching to EVs. Italy and Germany have been joined in their opposition by some Eastern European EU members, who argue that switching to EVs will represent a large price jump compared with ICE vehicles, especially for lower income consumers. EVs also require charging stations, which means additional costs for towns to install them.

Yet the holdouts have to acknowledge that this change is inevitable, and fighting against it puts them at risk of being overtaken by other players. For example, another key part of Italy’s economy is tourism from the rest of the EU, and if it drags its feet on building out a charging network, the country will become less attractive as a destination for EV-owning EU citizens who want to visit by car.

They also have to acknowledge that the change is already partly here. For instance, on holiday in northern Italy in February, I saw numerous Enel X charging stations in the ski towns I was visiting. Though these towns catered to many tourists from just over the French border, they weren’t large resorts; it’s clear that the infrastructure is expanding even to more remote areas. The important thing for the EV industry, then, is to ensure that this growth can continue—and that ideological opposition doesn’t stop the Italian and German economies from pivoting to make the EV transition work for all citizens.