Happy Monday to you from Victoria Waldersee in Berlin and Nick Carey in London!  

While everyone’s attention is focused rightly on the rapidly-spreading global banking crisis and investor fears of more to come, spare a thought for the humble electric vehicle battery pack. 

From a lack of charging infrastructure to scarce raw materials, we are constantly learning of unforeseen challenges or obstacles to overcome as we shift toward a future of zero-emission propulsion.  

How the industry deals with EV battery packs at the end of their lives, especially if EVs wind up in accidents, is the latest challenge to come into focus – as we shall see in today’s Auto File: 

• Scratched battery? Your EV’s a goner
• Russian court freezes Volkswagen assets
• VW Skoda warns 3,000 jobs could be lost to Euro 7

Damaged electric vehicles that have been written off by insurers at UK salvage company Synetiq’s yard in Doncaster, Britain.

Over the last century, the motor insurance business has been refined to the point where insurers know exactly what to do with a damaged internal combustion engine model and how to get it back on the road.  

Not so with EVs, a Reuters investigation shows. Insurers complain that many carmakers do not make EV battery packs easy to repair, and don’t provide them with third-party access to cell data to figure out what’s wrong in the first place. 

They’re also too expensive to replace – so insurers end up junking the whole car, making the EV a disposable item instead of a long-lasting zero-emission solution. 

Reuters found a large number of barely-driven Teslas, and models from Nissan, Hyundai, Stellantis, BMW, Renault and others, in a search of EV salvage sales in Europe and the U.S. 

Meanwhile, unwanted battery packs are piling up in scrapyards, blasting a hole in what was supposed to be a “circular economy”. Read the full story here. 

New cars are seen parked at the plant of Volkswagen Group Rus in Kaluga, Russia on March 30, 2022.

In the latest obstacle to Volkswagen’s attempted exit from Russia since Moscow’s invasion of Ukraine, a court has frozen all the carmaker’s assets in the country until a dispute is settled with Russian auto manufacturer GAZ, which was contracted to produce VW vehicles. 

GAZ is seeking more than $200 million in damages from Volkswagen for putting its interests at risk by ending its production agreement and exiting the Russian market.  

Until this is sorted, Volkswagen’s planned sale of its plant in Kaluga – which it had hoped to finalise in a matter of days – cannot go ahead, particularly because Russian law requires government approval for such a sale. 

Ever since the war broke out, analysts and journalists have repeatedly asked German carmakers whether they would also quit China if it invaded Taiwan.  Those carmakers have so far managed to avoid giving a firm answer. But the complexity of unwinding from Russia – a market which represents a tiny proportion of revenue – is a flashing red warning sign of how much harder it would be if political conflict with China forced businesses to make a similar choice. 

Czech carmaker Skoda warned it would have to cut 3,000 jobs and axe some of its models if the European Union’s Euro 7 emissions scheme takes effect in its current form – a hard pill to swallow for an industry already facing thousands of job losses from electrification. 

The proposed Euro 7 law, which EU countries and lawmakers will start negotiating this year, would tighten limits on cars’ emissions of health-harming pollutants, including nitrogen oxides. 

Carmakers such as Skoda and Stellantis have argued that the research and development costs required to meet the demands of Euro 7 regulation are so high that producing smaller models will no longer make financial sense, not to mention that the law would divert their resources from investment in electric cars. 

But with combustion engine cars still set to be on roads for quite a while, the lawmakers behind it argue that the health benefits are worth the money.  

Volkswagen is targeting a vehicle under 20,000 euros by 2027, the next step down the affordability ladder from its 25,000-euro vehicle it has promised to put on European roads by 2025. It doesn’t quite know how it’ll do it yet, but “we can’t wait” to bring affordable EVs onto the market, brand chief Thomas Schaefer told autos publication Automobilwoche over the weekend.

Want a Lamborghini? Get in line – the luxury carmaker’s order books are so full it is no longer taking new orders, it told the same publication, Automobilwoche, on Monday. Chief exec Stephan Winkelmann also said they are not planning an IPO, dispelling earlier rumours.

Three more execs leave VinFast, the latest in a string of staff exits at the Vietnamese electric vehicle startup just as it looks to break into the U.S. market.

Reuters Daily Briefing

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