France pledges extra funds for hydrogen, electric vehicles


France has passed a financial bill to invest an additional €10 billion ($10.5 billion) in its energy transition. The new funding will be invested in several sectors from energy production to green mobility, Kallanish learns from the government.

The mechanism has been designed to accelerate the battery electric vehicles’ uptake, as well as the charging infrastructure and the development of a green hydrogen value chain. This comes in addition to the country’s financial bill for 2024 announced in March to support the French economy.

“This unprecedented effort by the State allows us to be ready to deploy a roadmap [for energy transition] by meeting the crucial challenges of transport, energy, housing, biodiversity and water,” the ministry of ecological transition says in a note obtained by Kallanish.

About €800 million will be spent on green public and private transport and transport infrastructure. The new plan increases aid for “green vehicles” and strengthens support for the purchase of electric vehicles, while also providing a leasing system for EVs at €100 per month for low- and middle-income households. Investment will also be available for the deployment of national infrastructure.

The ministry will also implement a support mechanism for hydrogen production, investing €700m in 2024. This adds to the €4 billion earmarked for low carbon and green hydrogen projects for 2024, announced in August by the minister of the energy transition Agnès Pannier-Runacher (see related story).

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China to reduce output amid fewer exports: Macquarie


Market-driven Chinese production cuts may start to materialise in the fourth quarter, failing which mandated production cuts will likely be enforced, according to Macquarie.

Its Chinese crude steel production forecast for 2023 remains little changed, at 1.5% on-year growth.

The financial services firm says mills may reduce output on higher raw material costs, already-high visible inventories in flat steel products, plus its expectation that exports will eventually fall given the export arbitrage has narrowed significantly. This comes after domestic producers have suffered from weak and often negative margins throughout the year.

“Domestic steel consumption has not been as week as macro headlines would suggest, particularly around the struggling property sector,” Macquarie says in a report sent to Kallanish. Chinese domestic demand is forecast to inch up 0.5% in 2023.

Though long steel apparent consumption has been weak, declining 6%, it has far-outperformed developer new start data, which stood at -25% on-year year-to-date in July. Instead, long steel demand has better reflected total construction starts, which declined 10% on-year in the first half. Other sectors, including shipbuilding, have also helped to offset the weakness in construction, Macquarie observes.

While China's total exports have been on a downtrend, exports of steel-intensive products have remained robust, providing support to domestic steel consumption via indirect exports. This includes appliances – Macquarie forecasts steel consumption from the sector to increase by 12.6% this year. In the automotive sector, all of the 7.4% on-year production growth through July can be accounted for by a 74% rise in exports.

Chinese direct steel exports have nevertheless risen 28% on-year in the eight months through August, driving most of China’s output growth.

In 2024, Macquarie forecasts China crude steel production growth of 1% on-year, with a slowing annual growth rate thereafter. Domestic steel demand should increase 2.1% – including positive, albeit small growth from construction, as high frequency leading indicators are pointing to a likely lift in property sales. However, weaker export demand for both finished steel and manufactured products will partially offset this.

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BMW to invest €100m on new battery testing centre in Wackersdorf


BMW Group announced Friday it will invest around €100 million ($107m) by 2026 for a new battery testing centre at its Wackersdorf site in Schwandorf, in Germany’s Bavaria state, Kallanish reports.

The new facility will cover 8,442 square meters and be integrated into the existing building structures. The investments will primarily focus on test bench technology and upgrading the existing infrastructure at the building originally constructed in the 1980s. Structural works are already underway at the site, with commissioning of the battery testers set to begin in mid-2024.

Initially, BMW will test the performance of individual battery cells around the clock to simulate different use cases. In the final development phase, starting in 2025, the facility will also validate BMW Group’s battery-electric vehicles before they enter series production. The batteries will be subject to vibration and shock tests, as well as endurance tests that will simulate charging and discharging cycles. According to the company, the capacity for such tests is currently limited in the market, leading BMW to set up its own capacity at the new centre. 

“The BMW Group’s Wackersdorf location is set to become a major facilitator for the transformation towards electromobility,” says site manager Christoph Peters. “In addition to supplying our overseas plants, cockpit production and, from 2024, door production for Rolls-Royce models, this will become Wackersdorf’s fourth main area of activity.”

Last month, the German carmaker announced it had started the construction of a logistics centre outside the Plant Leipzig premises, in northern Germany, for the fifth-generation high-voltage batteries used in its car models (see related story). More recently, the group said it is planning to build a new battery assembly factory in Straßkirchen, Bavaria. 

As per previous announcements, BMW Group did not disclose specific capacity details of the new facility.

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UK mandates 80% ZEV sales in new car market by 2030, despite ICE ban delay


The UK government released on Thursday the final details of its Zero Emission Vehicle (ZEV) mandate, less than 100 days before it comes into force, Kallanish reports.

The regulation requires 80% of the new car and 70% of the new van sales in Great Britain to be zero emission by 2030, increasing to 100% by 2035. The mandate sets minimum annual targets, starting at 22% for new car sales in January 2024.  

Promising manufacturers flexibility, the government allows companies exceeding their annual targets to bank that compliance for years. This can then be used in future years or traded with other manufacturers that have fallen short.

To ease the early stages of adoption, manufacturers can also borrow up to 75% of their annual target in the first year. This will eventually decline to 25% in 2026, the government explains.

The automotive industry has welcomed the clarity provided in the mandate’s publication and its flexibilities, but it also stresses that demand must be matched with supply. “That means making ZEVs affordable by incentivising drivers to make the switch now and delivering the infrastructure to meet consumer expectations,” explains Mike Hawes, ceo of auto association SMMT.

The government says it has invested over £2 billion ($2.43 billion) to support electric vehicles and that it has “introduced several schemes to lower the upfront and running costs of owning an EV.” This includes a plug-in van grant of up to £2,500 for small vans and £5,000 for large vans until at least 2025; and a £350 discount on residential charger installation for those living in flats, it says. However, there is no restoration on purchase subsidies for individual car buyers.

The path to zero-emission vehicles “makes sure the route to get there is proportionate, pragmatic and realistic for families,” defends UK transport secretary Mark Harper. “Our mandate provides certainty for manufacturers, benefits drivers by providing more options and helps grow the economy by creating skilled jobs. We are also making it easier than ever to own an electric vehicle, from reaching record levels of changepoints to providing tax relief for EV owners,” he adds.

With 48,100 public EV chargers in operation across the country, the UK government says it’s “well on track” to reach its target of 300,000 public chargers by 2030. This would have to be achieved through a 30% increase per year. The auto industry and other stakeholders have recently warned deployment is lagging, standing far behind what it needs to be to reach the target by decade-end. The SMMT estimated installation rate must reach nearly 10,000 chargers/quarter, every quarter.

Earlier this month, the government announced a five-year delay on the ICE ban on new car and van sales to ease the burden on end-users. Yet, the mandate retains the most ambitious transition timeline of any major auto market in the world, but without any private consumer incentives.

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Trade barriers are leaky, subsidies difficult to counter, and excess steelmaking capacity is growing again, according to a session of the Global Forum on Steel Excess Capacity (GFSEC) held by the OECD this week and moderated by Kallanish.

Panellists at the Paris event also noted there remain incentives to locate steel capacity in the wrong areas and with the wrong technologies, and that new capacity would be difficult to replace.

Subsidies are continuing to distort steelmaking capacity, warned Alan Price, partner at Wiley Rein. There is a risk that subsidies are justified for being “green” and distort markets further. He noted that in China, support for steelmakers often has an environmental angle, even if it results in an expansion of polluting capacity. In order to be justified, subsidies should only be used for pre-commercial technologies such as hydrogen, and not for established technologies such as scrap-EAF or even DRI plants, he argued.

Martin Theuringer, managing director of German steel association WV Stahl, said that both subsidies and trade protection were often misaligned and not enough to carry out the steel industry’s transition to a greener model.

Trade measures such as the Carbon Border Adjustment Mechanism (CBAM) could only make the cost of producing steel through polluting methods equal, and could risk incentivising less green capacity to remain in production.

The German steel industry is meanwhile is pressing ahead with the transition away from traditional blast furnace-basic oxygen furnace steelmaking despite the blow of high energy prices and a lack of sufficient policy support, Theuringer added.

Meanwhile, in Southeast Asia, the steel industry is transitioning to a more carbon-intensive model, warned Yeoh Wee Jin, secretary general of the South East Asian Iron and Steel Institute (Seaisi). The region is seeing surging BF-BoF steelmaking capacity, driven largely by Chinese firms which have been rewarded for closing capacity in mainland China.

This is going to result in both overcapacity and in a surge in carbon emissions from the industry, he noted. The only way to overcome this is for local governments to become stricter in assessing investments, and insisting on new and greener technologies being used.

The efficacy of trade measures in ensuring a level playing field was meanwhile questioned by James Campbell, principal analyst at CRU. “Trade will find a way,” he noted. Whatever barriers are in place, trading companies are very creative in getting around. Sometimes this could be pushing the boundaries of trading norms, but sometimes this could be as simple as redirecting trade from new suppliers.

All panellists agreed that the problem of overcapacity is likely to remain for some time.

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