Putin’s war on energy is testing solidarity between EU nations
Putin’s war on energy is testing solidarity between EU nations
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Russia’s continuing war in Ukraine is causing a “very, very challenging” situation in Europe, which is testing its countries’ solidarity not only in how they react to Putin’s aggression, but also in how they deal with the aftereffects.
The conflict’s impacts on energy have rippled across Europe: Germany has scrambled to bolster its natural gas storage, French President Emmanuel Macron has encouraged people to cut their gas usage by 10% ahead of winter, and Italy is looking to scale back gas consumption by 7%.
“We have never experienced such a challenging experience,” Paolo Gentiloni, the EU’s economics commissioner, told CNBC on Oct. 12.
“I’m calling [for] European action, European solidarity, because the experience we had in the previous crisis … was that acting together, responding together, you are not only able to avoid divisions among European countries but you have a strong, strong reaction,” Gentiloni said, referring to the unanimous, albeit “slow” procurement and rollout of Covid-19 vaccines in 2021.
Gentiloni also referred to a “common tool” that could be used across the EU to help member states combat the energy crisis.
“I’m not calling for further common debt,” Gentiloni highlights, “because we have a big common debt for what we call next generation EU. I’m calling for a common tool based on loans to face the emergency that we have,” he said.
Divisions in the ranks?
But divisions are starting to show in how countries are approaching the energy crisis.
Poland, Belgium, Italy and Greece are among the countries proposing a gas “price corridor” across Europe in an attempt to tackle soaring prices.
The gas price corridor, “should act as a circuit breaker and disincentive to speculation. It is not meant to suppress prices at an artificially low level,” according to a draft proposal, as reported by Reuters.
But other countries, including Germany, are thought to oppose the plan over fears that capping prices could have negative impacts on energy security.
The corridor is thought to have been discussed on Oct. 7, but no further details have been released.
Meanwhile, Germany has already put provisions in place as winter approaches.
Chancellor Olaf Scholz announced a 200 billion euro ($193 billion) package to subsidize basic consumption for households and small and medium-sized companies on Sept. 30.
But Germany working independently of the wider European community has prompted questions over the country’s commitment to a unified response to the energy crisis, with fears that the package could have a negative impact on the country’s neighbors.
When asked whether Germany should commit to not buying energy ahead of other European countries, Gentiloni said that would be “a very good move.”
“I would say not only for Germany, [but also] for Italy, for other countries that are understandably on their own in looking for energy sources, alternative[s] to Russian fossil fuels,” Gentolini said.
“I’m not criticizing Germany,” Gentiloni emphasized, “but asking for something more from the EU.”
Others have been more direct in their disapproval of Germany’s role in Europe’s energy crisis, including Polish Prime Minister Mateusz Morawiecki.
“This is our collective problem,” Morawiecki said, “it cannot be so, that one country, which is the richest and the most developed in Europe like Germany … can block everything which is now happening,” he said, referring to the proposed gas corridor.
“We don’t want to be patronized by some countries which then behave in a completely different way than they were expected to do just before,” he told CNBC’s Charlotte Reed in an exclusive interview on Oct. 6.
Poland’s Finance Minister, Magdalena Rzeczkowska, took a more balanced approach, saying that while Europe should try to “find common solutions for all” that won’t “disturb the equal playing field in Europe,” she could understand why countries may put forward their own proposals.
“The energy discussions are taking too long,” Rzeczkowska told CNBC’s Geoff Cutmore at the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group in Washington, D.C.
“Poland is [also] doing our own programs, our own solutions, because we cannot wait. But still, we need to be strong, we need to have a coordinated approach,” she said.
Eurogroup President Pascal Donohoe said he too could understand why countries are bringing forward their own policies rather than waiting for an approach with EU-wide approval.
“Every single government is looking at the right measures for their own governments,” he said, also speaking from Washington.
IMF chief economist Pierre-Olivier Gourinchas said he was unable to comment on whether Germany’s plan would work as “we don’t have details yet.”
While specifics have yet to be released, the plans are set to run until 2024, and include electricity and gas price brakes, reactivation of the Economic Stabilisation Fund, which was used to bail out Lufthansa during the pandemic, and a reduction of gas VAT.
On today’s fleet-focused episode of Quick Charge, we talk about a hot topic in today’s trucking industry called, “the messy middle,” explore some of the ways legacy truck brands are working to reduce fuel consumption and increase freight efficiency. PLUS: we’ve got ReVolt Motors’ CEO and founder Gus Gardner on-hand to tell us why he thinks his solution is better.
You know, for some people.
We’ve also got a look at the Kenworth Supertruck 2 concept truck, revisit the Revoy hybrid tandem trailer, and even plug a great article by CCJ’s Jeff Seger, who is asking some great questions over there. All this and more – enjoy!
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Thanks to Trump’s repeated executive order attacks on US clean energy policy, nearly $8 billion in investments and 16 new large-scale factories and other projects were cancelled, closed, or downsized in Q1 2025.
The $7.9 billion in investments withdrawn since January are more than three times the total investments cancelled over the previous 30 months, according to nonpartisan policy group E2’s latest Clean Economy Works monthly update.
However, companies continue to invest in the US renewable sector. Businesses in March announced 10 projects worth more than $1.6 billion for new solar, EV, and grid and transmission equipment factories across six states. That includes Tesla’s plan to invest $200 million in a battery factory near Houston that’s expected to create at least 1,500 new jobs. Combined, the projects are expected to create at least 5,000 new permanent jobs if completed.
Michael Timberlake of E2 said, “Clean energy companies still want to invest in America, but uncertainty over Trump administration policies and the future of critical clean energy tax credits are taking a clear toll. If this self-inflicted and unnecessary market uncertainty continues, we’ll almost certainly see more projects paused, more construction halted, and more job opportunities disappear.”
March’s 10 new projects bring the overall number of major clean energy projects tracked by E2 to 390 across 42 states and Puerto Rico. Companies have said they plan to invest more than $133 billion in these projects and hire 122,000 permanent workers.
Since Congress passed federal clean energy tax credits in August 2022, 34 clean energy projects have been cancelled, downsized, or shut down altogether, wiping out more than 15,000 jobs and scrapping $10 billion in planned investment, according to E2 and Atlas Public Policy.
However, in just the first three months of 2025, after Trump started rolling back clean energy policies, 13 projects were scrapped or scaled back, totaling more than $5 billion. That includes Bosch pulling the plug on its $200 million hydrogen fuel cell plant in South Carolina and Freyr Battery canceling its $2.5 billion battery factory in Georgia.
Republican-led districts have reaped the biggest rewards from Biden’s clean energy tax credits, but they’re also taking the biggest hits under Trump. So far, more than $6 billion in projects and over 10,000 jobs have been wiped out in GOP districts alone.
And the stakes are high. Through March, Republican districts have claimed 62% of all clean energy project announcements, 71% of the jobs, and a staggering 83% of the total investment.
A full map and list of announcements can be seen on E2’s website here. E2 says it will incorporate cancellation data in the coming weeks.
Read more: FREYR kills plans to build a $2.6 billion battery factory in Georgia
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Tesla has reportedly delayed the launch of its new “affordable EV,” which is believed to be a stripped-down Model Y, in the United States.
Last year, Tesla CEO Elon Musk made a pivotal decision that altered the automaker’s direction for the next few years.
The CEO canceled Tesla’s plan to build a cheaper new “$25,000 vehicle” on its next-generation “unboxed” vehicle platform to focus solely on the Robotaxi, utilizing the latest technology, and instead, Tesla plans to build more affordable EVs, though more expensive than previously announced, on its existing Model Y platform.
Musk has believed that Tesla is on the verge of solving self-driving technology for the last few years, and because of that, he believes that a $25,000 EV wouldn’t make sense, as self-driving ride-hailing fleets would take over the lower end of the car market.
However, he has been consistently wrong about Tesla solving self-driving, which he first said would happen in 2019.
In the meantime, Tesla’s sales have been decreasing and the automaker had to throttle down production at all its manufacturing facilities.
That’s why, instead of building new, more affordable EVs on new production lines, Musk decided to greenlight new vehicles built on the same production lines as Model 3 and Model Y – increasing the utilization rate of its existing manufacturing lines.
Those vehicles have been described as “stripped-down Model Ys” with fewer features and cheaper materials, which Tesla said would launch in “the first half of 2025.”
Reuters is now reporting that Tesla is seeing a delay of “at least months” in launching the first new “lower-cost Model Y” in the US:
Tesla has promised affordable vehicles beginning in the first half of the year, offering a potential boost to flagging sales. Global production of the lower-cost Model Y, internally codenamed E41, is expected to begin in the United States, the sources said, but it would be at least months later than Tesla’s public plan, they added, offering a range of revised targets from the third quarter to early next year.
Along with the delay, the report also claims that Tesla aims to produce 250,000 units of the new model in the US by 2026. This would match Tesla’s currently reduced production capacity at Gigafactory Texas and Fremont factory.
The report follows other recent reports coming from China that also claimed Tesla’s new “affordable EVs” are “stripped-down Model Ys.”
The Chinese report references the new version of the Model 3 that Tesla launched in Mexico last year. It’s a regular Model 3, but Tesla removed some features, like the second-row screen, ambient lighting strip, and it uses fabric interior material rather than Tesla’s usual vegan leather.
The new Reuters report also said that Tesla planned to follow the stripped-down Model Y with a similar Model 3.
In China, the new vehicle was expected to come in the second half of 2025, and Tesla was waiting to see the impact of the updated Model Y, which launched earlier this year.
Electrek’s Take
These reports lend weight to what we have been saying for a year now: Tesla’s “more affordable EVs” will essentially be stripped-down versions of the Model Y and Model 3.
While they will enable Tesla to utilize its currently underutilized factories more efficiently, they will also cannibalize its existing Model 3 and Y lineup and significantly reduce its already dwindling gross margins.
I think Musk will sell the move as being good in the long term because it will allow Tesla to deploy more vehicles, which will later generate more revenue through the purchase of the “Full Self-Driving” (FSD) package.
However, that has been his argument for years, and it has yet to pan out as FSD still requires driver supervision and likely will for years to come, resulting in an extremely low take-rate for the $8,000 package.
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