It came as no great surprise to learn that the EU competition authorities are crawling all over the three major -German car-makers, Volkswagen, BMW and Daimler, to investigate collusion via ‘secret technology working groups’ dating back to the 1990s. The most damaging allegation — reported by Der Speigel — is that the three groups colluded over the use of AdBlue, an additive that neutralises -diesel emissions, by agreeing to use small but inadequate AdBlue tanks in their cars when larger, more expensive ones might have done the job properly. (BMW denied that story, but the other two groups declined to comment.)
This follows the 2015 emissions -scandal in which half a million VW cars in the US were revealed to have been fitted with ‘defeat device’ software that switched their engines to a cleaner mode while undergoing environmental testing. Then last year, German and other European truck-makers — accounting for 90 per cent of all trucks made on the continent — were fined €3 billion for price collusion among other sins over a 14-year period. And Daimler, evidently in fear of further bad publicity and regulatory punishment, has just announced a voluntary recall of three million diesel vehicles across Europe to fit ‘software patches’ that will make them cleaner.
Some analysts argue in mitigation that this turmoil is in part the result of governments first favouring diesel engines with tax advantages, then belatedly discovering how noxious they really are. But what it also appears to show — put bluntly — is an embedded willingness to cheat in the German national interest across a sector that accounts for 20 per cent of the nation’s industrial revenues, employs 800,000 people and provides the most visible of all evidence of German economic dominance of the poorer parts of the EU.
But German marques are also -currently under threat of losing a quarter of a million car sales per year in the event of a hard Brexit (according to a much quoted Deloitte report) and losing the technology race for next-generation electric vehicles to the Americans and the Japanese. So they are very much on the defensive, and the accumulation of negative stories about them adds strength to two arguments. First, that the voice of increasingly embattled German business interests in favour of a -mutually helpful Brexit settlement will begin to drown out the voice of German centre-left politicians who want a deal that punishes Britain. And second (if you’re an ardent Brexiteer): who wants to be partnered up with these -cheating losers anyway?
An announcement of £246 million of government investment in batteries sounds like a desperate measure for when the lights finally go out in the 2020s as a result of the successive failures of energy policy I have so often warned against. But the vision set out by Business Secretary Greg Clark on Monday was about much more than making sure the torches are working in Downing Street. It included sponsoring a research institute that will aim to make the UK a world leader in emerging battery technologies, providing giant facilities for the National Grid to store surplus power from wind and solar installations, and enabling households to store their own solar-generated electricity with a view to selling some of it back to the Grid — all of which could save consumers ‘up to £40 billion a year by 2050’.
Even if that last figure was pulled out of the air, it was probably unfair of Clark’s Labour shadow Rebecca Long-Bailey to call the whole package ‘a damp squib’. But it is fair to point out that Clark is late into this game, and that his proposals are far too vague to be seriously useful. Scientists around the world have been working in this field for years, and our own –Spectator Money stock-picker Robin Andrews has long been scouring the investment horizon for the most promising battery technologies — of which, he points out, there are a confusing number from which to choose.
He tells me that in response to Clark’s announcement ‘nothing I am watching on the stock market leapt with anything resembling joy’. And that’s because if governments are going to intervene at all in technology choices, rather than leaving them to free markets and venture capitalists, then ministers must be bold enough to champion one rather than another — lithium ion, hydrogen cell, vanadium reflux, take your pick — and give it long-term backing. And in the energy field in particular, such choices need to form part of a coherent wider strategy that ensures we really will have enough power from all sources, including nuclear and onshore gas, for the foreseeable future. In that sense, the £1.5 billion by which the Hinkley Point nuclear project is already over budget, and the 15 months by which it is already behind schedule barely a year after construction began, are in every sense more significant than this week’s headline catching package from Clark. He should beware of creating false hopes for a battery-backed renewables sector that can never fully underpin the rest of our -ramshackle and fading energy portfolio.
What with yet another warning from the Bank of England this week about rising consumer debt, and my own prediction that we’re heading for an economic trough within 18 months, this doesn’t feel like a good time to be paying top dollar for -luxury brands. When Jimmy Choo, the maker of super-expensive strappy stilettos, was put up for sale by its German majority shareholder in April at a valuation of £700 million, I revealed that I definitely wouldn’t be a bidder. But it’s being so cautious that makes me a humble columnist rather than a wheeler-dealer billionaire: US fashion brand Michael Kors is buying the shoe company for £896 million ‘after an auction that attracted a host of international bidders’. There must still be plenty of big-money optimists out there.
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