Saturday, August 27, 2016

The Slow Death of Diesel

If diesel's demise is rapid and electric vehicles arrive quickly, over half of these engine production plants could be at risk (Credit: Click to Enlarge.
Tesla, the electric bogeyman to Germany's wheezing carmakers, has its own problems ...  But Elon Musk won't have to write down a bunch of legacy diesel plants.  It's no wonder [European] carmakers trade on such lowly earnings multiples.

The balance sheet hit will depend on how quickly electric vehicles take off. They account for less than 2 percent of Europe's car sales and the industry thought they'd be a minority pursuit for years, giving it time to depreciate investments at a manageable pace.

Yet with battery costs plummeting, Bloomberg New Energy Finance expects the cost of owning an electric vehicle to fall below conventional fuel vehicles as soon as 2022. Having dragged its heels, even Volkswagen says as many as one quarter of its sales will be electric cars by 2025.

Ideally, carmakers would halt diesel spending. Unfortunately, they'll have to keep investing to hit Europe's tough 2021 emission targets. Electric cars won't have picked up the slack by then. So they're stuck.

Read more at The Slow Death of Diesel

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