Electric vehicles hurdles to outweigh benefits for more than a decade - BASF CEO

01 March 2018 09:00 Source:ICIS News

LUDWIGSHAFEN, Germany (ICIS)--The prophets of electric vehicles (EVs) who think the end of combustion engines is approaching should be more realistic in their assumptions and recognise the costs of electric transport still largely outweigh its benefits, the CEO at German chemical major BASF said this week.

Kurt Bock added that production of EVs is a “hugely capital intensive” industry and manufacturers are still years away from making profits in that sector.

Moreover, he added that it would be somehow counterproductive for countries like China to expand their fleet of EVs if they are going to be powered by electricity produced out of coal thermal stations, which are big emitters of carbon dioxide (CO2).

“Transport will be electrified [at some point], but we need to be realistic about the assumptions. It’s a hugely capital-intensive industry, and at this point nobody is making real, good money on the electrical mobility value chain: everybody believes the other side is making tonnes of money,” said Bock.

“There are sustainability issues, when we talk about mining for example, and there are technological challenges in terms of the batteries’ performance as well as vehicles themselves. There are also acceptance issues and there are infrastructure issues.”

According to Bock, combustion engines will still dominate the market in 10 years, adding that he would not venture into predicting what mobility will look like in 30 or 40 years.

The BASF CEO's views contradict those of the most optimistic analysts. A note published earlier this month by chemical analysts at Bernstein Research projected that by 2029 it would be “game over” for combustion engines.

“In 2030 most cars will have combustion engines and actually a good combustion engine is more sustainable than a battery-driven car, especially in China because the country produces its electricity with coal, which is very CO2-intenstive,” said Bock.

Expanding on his views about recycling and how the EU still has a long way to go when it comes to a unified approach to the issue, Bock said that BASF is “absolutely not worried” about the potential disruption that new regulations could bring to its operations.

The EU’s executive body, the European Commission, published in January ambitious targets for recycling, aiming for all plastics produced in the 28-country bloc to be recyclable by 2030, with 55% actually recycled.

“There is absolutely no need to worry. The chemical industry will continue to grow due to underlying demand in most parts of the world which want to have better living standards: for that you need better chemistry and better products,” said Bock, pictured.

Asked specifically about products like styrenics, which recyclability is very difficult, Bock conceded that “some products will come under pressure” in a more circular economy where products and materials are reused, but he said that “recycling itself will not replace” the need for more materials on the back of increasing demand.

“There is large underlying demand [for products produced by the chemical industry]. Doomed scenarios [predicted by some] will not materialise due to the need for new materials,” he said.

The challenge for the petrochemical industry may come in coming decades, however, from the replacement of crude oil- and natural gas-based feedstocks, which down the line can make reuse difficult.

However, he warned over putting in the same bag products which can be seen as renewable but in truth are not sustainable at all, specifically mentioning sugar cane or palm oil.

“Sugar cane or palm oil are not sustainable. It depends on how you do it [work with that raw material] but they are not overly sustainable, while oil and gas are hugely sustainable because you use basically 99% of the energy content of the raw materials,” said Bock.

“If you burn fuel in a combustion engine, it is not too efficient, but if you use it for chemistry is hugely efficient.”

Pictured above: A charging station for electric vehicles in Hamburg, Gemany
Picture sources: imageBROKER/REX/Shutterstock and BASF

Interview article by Jonathan Lopez

By Jonathan Lopez