The fear of the Havana effect is raging in the auto industry

A few weeks ago I visited a car dealership. There was a new electric car in the yard that was just being charged. An SUV, and the brand doesn't matter, because neither the design nor the technology set standards. If you like it, you can imagine any established brand and a 4,70 meter long SUV, that's all it takes.

Curiosity then drove me to open the driver's door and sit in the electric car. Again, I found no surprise. Two differently sized displays, a few buttons for operation, which is more the exception. Then a mountain of cheap plastic that didn't quite match the manufacturer's asking price. In my mind's eye I saw the electric car in the €40.000 class. The price tag corrected my error immediately. The customer should pay more than €60.000.

Well, I thought to myself. A product is always worth what you are willing to pay for it. I found the price absurd, I was out. I'm probably not alone with my thoughts. Because the fear of the Havana effect is rampant in the automotive industry.

Havana effect - the fear is spreading
Havana effect - the fear is spreading

The Havana effect is going around

The term Havana effect is relatively new, it exists Havana Syndrome, which has nothing to do with cars. But the term is becoming established. Hidden behind it is the fear of the manufacturers that a certain, not insignificant percentage of the customers could refuse the electric car.

The fear is not unfounded! The prices are running away, and the argument that the €60.000 SUV has a relatively large battery and that all the electronics are simply scarce and expensive could not catch on with the customer. He could start calculating and turn out to be stubborn. He could continue driving his old, long-paid-for combustion engine. In a couple of years, when he's mulling over bills and realizing how much it's saved him, he could be lost to new cars forever.

Just as in Havana the old US road cruisers and the achievements of Soviet automotive engineering are doing their job steadfastly, so it could soon be the case in Europe as well. The number of vehicles in Germany has been growing older for years. Most recently, it was 9,8 years on average, and 5% of the vehicles are even between 20 and 24 years old (source: KBA).

Don't be afraid of Havana. You can have fun even in the oldest Saab - a proof photo.
Don't be afraid of Havana. You can have fun even in the oldest Saab - a proof photo.

Politics exacerbates the effect

On the supply side, the trend is intensifying, because inexpensive compact cars and small cars are now disappearing from manufacturers' offers. Increasingly strict emission regulations, more and more mandatory assistance systems, and the dependence on Asian suppliers and their scarce allocation cause them to retreat to the more profitable high-price segments.

In response, customers are fleeing to used cars, which are increasing in price month after month. But this is possibly just the beginning. It can be particularly exciting to see what will happen when the electric cars sold in numbers in 2022 push back onto the market. Will the classic used car buyer then access it? Or does he refuse? And what will happen when today's electric cars are 10 years old and there are no replacements for defective components? Who will repair ECUs from Chinese manufacturers that are unlikely to have publicly available documentation?

The Havana effect is bad for manufacturers. If the customer refuses, fewer new cars are produced and the entire cycle comes to a standstill. From another perspective, however, he has a certain charm. Once the arithmetic has started, you inevitably come across the sum that you will destroy in a few months with a new car.

In the future, this will be particularly high for an electric car. Because while you can use an old combustion engine for decades, every e-car has its expiry date from the moment it is born. When it rolls into the dealer's yard, it's already old, the processors have had more powerful successors for a long time, the displays are available with better resolution, and the software is two revisions further.

Fortunately, Saab built long-term cars. The 9000 is just one example.
Fortunately, Saab built long-term cars. The 9000 is just one example.

The lost comfort factor

In addition, the industry has lost its comfort factor. For decades, the greats have passed the balls to each other. Innovations came with caution, the hardware was spared, it should age comfortably. The Chinese, whose manufacturers will present 50% of all new electric cars announced worldwide this year, do not know the comfort factor.

Innovations, mostly gadgets that may or may not be useful, are constantly coming out of China. The trendsetters are in Asia, a certain younger clientele with an affinity for technology will love that and adjust their future expectations accordingly. Bad times for the big ones, who think it's enough to stay relaxed and just change the type of drive.

Perhaps the Havana Effect will educate us to be more sustainable and less consuming. It may be that something is being created here that will convey good news for medium-sized companies. For smaller producers who take care of the spare parts for an aging car fleet and can reproduce them, for workshops and service companies, painters and bodybuilders.

Local businesses and faded car brands like Saab could be the winners if Havana moves in - Cuba has always had its special charms.

You might now see your aging Saab with an easy-going, Caribbean charm! Anyway, have a nice Sunday and a good start into the new week! We read each other!

35 thoughts on "The fear of the Havana effect is raging in the auto industry"

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    The German state promotes the purchase of new cars very strongly. These are usually amortized over 2-3 years. It's different in Switzerland, where you have to pay wealth tax for the car for the first two years after buying it. For example, if you buy a car for €50.000, you have to pay several €1000 in taxes as a private person in the first two years. That is the reason why cars are driven for a very long time in Switzerland. In Germany, too, one could change over and give company cars no special depreciation options in the first few years, but also make it possible for company cars to be written off over ten years, for example, and thus used for ten years. From an expression-logical point of view, using a car for longer makes a lot of sense, especially if the car does not consume a lot of fuel.

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      I'd be surprised who you heard this nonsense from? I am Swiss and I have never paid several thousand euros in taxes for a new car?? Only the usual traffic taxes are due for the cubic capacity class and, depending on the canton, they range between 170 and 500 Swiss francs per year.

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        In addition to duty and VAT. 4% automobile tax applies when importing. In addition, the fair value is taxed annually as an asset. That's how it is!

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      It was similar in DK for many years. I don't know the current fiscal policy of the Danes when it comes to cars, but there used to be a luxury tax on new cars and it was immense...

      That's why at that time (1980s) you saw not only inexpensive imports (actually Czech-Slovak Skoda and even East-German Wartburg) but also a hell of a lot of well-maintained classic cars in everyday use. The 1950s in the street scene were completely natural there.
      Also and especially small cars, like the British Morris Minor, which was very popular and ubiquitous as a station wagon in DK. That was well under 800 kg of car, some of which was made of wood (!) ...

      The CO2 backpack of such cars through their production was marginal. Some EVs probably have to run forever (running exclusively on green electricity and never needing new batteries) to take on a Morris Minor. And some even have a smaller trunk than the station wagon, which has also shown its wood very charmingly and openly to the outside ...

      But I'm afraid there's no way back to such simple cars that you could easily realize today with newer engines and the same small CO2 backpack, with half or a third of the fuel consumption and better exhaust emissions. That would then only be 2 clean burned liters per 100 km. Then not a single EV currently available on the market would come close.

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      Such nonsense, no one pays (in Switzerland) any "extra tax" on a new car!

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      in Germany, the depreciation period is currently 6 years.

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    Hello, I think the description of the knowledge that e-vehicles, especially SUVs, are expensive and (still) offer a lot of plastic for the money is quite apt. It is also true that there is not (yet) the right offer for everyone. But the fact that the entire auto industry is afraid that new cars will no longer be bought, especially electric cars, is nonsense.
    The development continues, the portfolio will grow, in the not too distant future it will be completely normal to consider an e-car in your purchase plans.
    Just as it will be normal for old cars to continue to be driven and combustion engines to be bought and driven until the last day.
    And even if something like the Havana effect makes itself felt in parts, then there will also be beneficiaries. And the automotive and supplier industries will also be part of it.

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    I often drive an old Fiat 124 tc from 1974, it's fun, I'll buy one of the last Croma

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      I stay true to my burners. I've only ever given cars in until now when it really wasn't possible anymore. So all my cars had been in service for at least 16 years. And will continue like this. Especially now that there is a shortage of electricity, I will stick with the combustion engine, because I drive when, where and how I want. E-cars are far too dependent on the charging structure and the government's arbitrary use of energy.

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      Hydrogen is already being produced to test combustion engines, so the old, trusty combustion engine is climate-neutral. The DB already runs diesel multiple units with hydrogen that has been adapted for combustion engines and is also significantly more economical. The first trucks are also on the road and being tested. This means that thousands of jobs will be preserved at the same time.

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        The time will come when you can switch your rust-free and fully equipped big ship diesel to electric with the simplest of means. Simple basic batteries and a Tesla drive. Everything else remains old and reliable. That's exactly what will happen.

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    Great article that hits and reinforces my gut feeling on the subject. However, I suspect that politicians will not stand idly by and watch the Havana effect, but will take steps to counteract the effect, analogous to the diesel driving bans or emission classes.

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      Politicians will certainly try to do this, but the scope is limited. There is legal certainty, once a vehicle has been registered it will be difficult to take it off the road en masse. If it were easy, it would have been done a long time ago.

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        Dear Tom, You don't have to pull the vehicle out of circulation. You only have to make its use more difficult/expensive or impossible, e.g. B. Driving ban zones from a pollutant class to be determined in cities and outskirts, "pollutant tax" on fossil fuels, introduction of CO2 accounts for the use of vehicles and much more. I bought a 30-year-old auxiliary brake light for the 901 on ebay yesterday, which has Google account charged with 2kg CO162.

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          CO2 account on ebay of course.

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          The CO2 taxes already exist and they make all types of mobility more expensive and are increased every year.

          The tax intervenes in every area of ​​life, provides a playground for certification companies, and the effects are already visible today.

          Our print shop, a 1-man operation, had to prove its CO2 neutrality for a public client. Of course she can't do that, the certification isn't affordable either, so the job is gone.

          In my area, living space is not rented out because the private landlords do not want to deal with the partial assumption of the CO2 tax on heating costs.

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        That's the situation in Germany. In Spain, expropriation continues mercilessly.
        Legal disputes can only last a short time – at least up to now.

        The Lizi

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    There is a high probability that the Havana Effect will come on a broad front. At the weekend I dealt with the forthcoming emission standards. They will also massively increase the price of any mobility, including purely electric ones. Particulate matter and battery life will become a new issue for electric cars, and then the administration would like to introduce geofencing across the board, but it is not yet clear whether it will be able to assert itself.

    This isn't going to be fun!

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    Not that I am against e-cars, but against the concepts and prices described here.

    I and my wife did a thorough calculation of their convertible, Bj. 2005 bought used in 2010, and have already put money into it for value retention and improvement. Value retention/rear lights from the facelift/taxes/insurance/winter wheels/...everything that needs to go in. Inspired by Tom's unwritten article about the Lynk&Co 01 compared to the subscription (550EUR/mon). We didn't even make half a month.
    The next value-preserving and improving measures are planned...., Havana is alive!

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    The price increases of the last few years are simply absurd and can probably only be argued with the massive profit orientation of the manufacturers. I don't know if it's just me, but lately I've seen a lot of things in car ads other than price.
    If you have old brochures/newspapers, you can find them there; the new, the new so and so; starting at €19 or in All Leasing from €999. You hardly see anything like that nowadays, if you were to name the price right away, it would probably put many people off right from the start.
    Just as an example, in an old Autotouring issue a report about the then new C class W204, with a few amenities it was still just under €30 at the promotional price, now with the W000 it starts at €206. Inflation, increases in the price of raw materials, more standard equipment (whether you need it or not is another question, probably not that much better in an accident either)...and even the A Class sedan starts at just under €51.
    I don't know anyone whose salaries have increased by that much.
    In Austria, the Nova and the recalculation of the car tax for new registrations from 2020, where you are calculated according to Co2 emissions and performance, mean that some new cars, unfortunately also buses often caused by families, have become massively more expensive in terms of operating costs. If you paid €2019 for a 6 T4 658,44 Motion, the annual vehicle tax for a first registration in 2023 is €1.408,32.
    So it makes sense to drive your old car for as long as possible.

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    Great :-)! To the point.
    Share as a copy in the social networks... ;-). Then “the cigar” really goes off…
    I use my Skoda until nothing works anymore.
    Since I drive fewer cars from year to year (because I can... ;-)) and deutl. If I'm on the road more with bicycles, the car will certainly last for some time...
    e-car? No thank you.
    Have a good week everyone!

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    Great report! Gets to the point. Why do you think so many Dacias are sold!? Most of the other vehicles can only be bought used or they are leased... which is also expensive.
    It will be exciting this year for the electric car because of the reduced subsidies and the elimination of the subsidy for the plugin. In the current issue, Autobild carried out a comparison between electric, plug-in and full hybrid. In terms of the costs per kilometer, the electric car no longer makes any sense! Only the full hybrid...easy to use...no charging plug and no fear of range! Politics/EU manages to ruin the car industry!
    I'm staying with my Saab fleet...it's also one of the 5%.

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      I recommend listening to what Mr. Wolfgang Reitzle recently said on the subject of e-cars at the opening of Motorworld in Munich...
      After I am "advanced in age",
      I will definitely always drive a combustion engine as a daily driver, preferably from Sweden, and save a lot of money compared to an electric vehicle.

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        For all those interested and to form an opinion, the link to Dr. Wolfgang Reitzle up YouTube.

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      That was exactly my conclusion when I looked at a Sandero in the Renault/Dacia dealership four or five years ago; just to understand why the brand is selling so well and customers are happy.

      The Sandero has everything you need and even a little bit more; was pleasantly surprised. You can live with bare (but painted) sheet metal, my first car (1986 Toyota Starlet) was like that.

      Control of demand and production by the state through "incentives". The industry could do something else, but it shouldn't. I read something about that somewhere...

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        Unfortunately, the state is relying on increased steering effects in the future, as can be heard more and more often from the management level. That doesn't bode well.

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    The Havana effect (nice word for it) is, so to speak, an inner drive at Saab, but it also exists and has been for a long time. It's no wonder - one can only wonder how the different strands cause the whole sector to get out of hand:

    The policy that relies too one-sidedly on e-cars (against hydrogen, fuel cells and combustion engine advances), but stupidly does not provide the infrastructure and cannot, thanks to a completely failed energy policy. Nevertheless, e-cars, which are not really competitive in the sense of older standards, are subsidized as if there were no tomorrow, so that our tax money ends up in 6-month-old e-cars, which are then sold off en masse in other EU countries. Or stuck in the ridiculous hybrid vehicles, most of which are never really charged - helpless symbolic politics without any effect, but which we all have to pay for. At least that's what you saw.
    Most of the media and young journalists are constantly cheering up the number of registrations for e-cars and want to create a mood, but if you look around you will see that e-cars are not suitable for the masses, and most consumers do not buy them for good reason. And if so, only those who can afford it, or as a company car and who have access to charging facilities. MaW a small minority.
    The residents of the inner cities, who currently have nowhere to charge their car anyway, but who are being deprived of more and more parking spaces as a result of the war on cars. And whose inner-city shops will soon all be gone because people don't like going to the cities anymore. But that is another issue.
    Public transport, which is being deprived of all funding due to the 19-euro ticket madness - how is it supposed to get better instead of worse, how does it all fit together? Here in the country there is not even stagnation, only deterioration, and consequently more cars. Where we live, the number of parked cars has quadrupled in the last 20 years. As soon as someone is 18, one comes along, how else could it be? Mobility is also freedom, and the Greens are wrong when they think that's no longer the case. They point to car-sharing and cargo bikes, and that the younger generation hardly ever buys cars or gets a driver’s license anymore – I maintain that this has always only affected a small urban minority, and is already changing as urban living space is changing can hardly be afforded to the younger ones when they move out from home, and if you are out of the urban public transport network or don't have an S-Bahn line nearby (which is also expensive), you do.... the driver's license. There must be some reason why I see more rather than fewer driving school cars here, and not a single driving school has closed down here. The hype that many media are driving about the e-car or the car-free future is a classic case of published opinion and journalistic bubbles that ignore reality.
    The car manufacturers who build ridiculously huge displays that can drive, where all usability is hidden in the menu - where you can be lucky if someone is still looking at the traffic. One thinks that the passengers are now the most important purchase decision-makers. But even as a driver, I get annoyed when I have to press the display at least twice in the Jaguar to turn on the heated seats. Some of these trials and tribulations have been reversed, thank God.
    The "normal" cars, all of which are no longer produced because you only make money with "premium". See Mercedes, who more or less canceled the A, B, and C class. Back to the roots, when there were basically only the E and S classes. This will hit garages hard and of course that is what will happen, current cars will be driven as long as they reasonably last. And also for price reasons, because there is no exchangeable battery cycle that would be good for charging times and the used e-car market. Because used cars are constantly getting more expensive, and new cars have become so expensive that the previously tolerated loss in value can no longer be accepted. The effect has been there for a long time - in our circle of acquaintances, to stay with this brand, there are various A and B classes, some of which are 10 or more years old, have all the technology you need, which are well maintained, in one case an AT motor was installed instead of buying new, in one case it is a 2012 model which has only 50 TKM and drives like new thanks to annual maintenance and transmission oil flush. Absolutely no one is thinking of selling, no one is looking for something new. All these cars are driven until they can't anymore. One problem is all the electronic assistance systems that have been around for 15 years – but as long as the cars are still driving, I can imagine that their failure would be tolerated. Also works without lane assistant and distance warning. While a number of people from my circle of acquaintances used to stop at some point with the checkbook and inspections and were already thinking about the next purchase, there are currently no intentions to buy anywhere, you don't want to be ripped off. Instead, more is invested in maintaining the old vehicles. What I already practice as a Saab owner is spreading to more and more brands, sometimes born out of necessity.

    And then I can watch several car dealers from here every day, one VW, and several used car dealers. I have never seen an e-car on offer anywhere. This also tells me that the demand in the area has not really arrived. But what I see is that all of these dealers now have vehicles of an age that would never have been on offer there before. Since prices for used cars have risen significantly, but buyers tend to have less rather than more money at their disposal, it is now obviously worthwhile for dealers to put older models on the market and here too the "Havana effect" has been present for at least three years years under construction.

    If you wanted to intentionally sabotage the automotive industry, you would have to do it all like this. Like voluntary suicide. But from a political point of view, we obviously no longer need such an industry.

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    electric car? Out of the question for me, I prefer to invest in sustainability (2x 5%, i.e. 21-year-old and one 15-year-old Saabs, or ride a bike, or bus and train) Maybe hydrogen, but wait and see.

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    Hello
    Thank you for this great report.

    Unfortunately, the drivers in the state and the EU still haven't understood that climate-friendly isn't just what doesn't come out of the back of the car.
    ME, e-mobility is a building block for the mobility of the future.
    I also don't understand why e-cars have to be bigger, heavier, wider.
    I'm not against electric cars.
    On the contrary, we have one ourselves. But for the short trips. But also the luxury of a wall box under the carport.
    We use our Fiat 500e for shopping, trips to the neighboring town, child transport service and as a bad weather alternative to cycling to work (approx. 12km one way)
    But we only "transport" a small 23kWh battery with us. That's enough!
    And that's where the Fiat 500e makes sense for distances of 5 to 25km...
    Greetings from windy Oldenburg
    André T.

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      I like the small Elektrofiat. Slim battery packs make sense for 95% of the application, everything else is a waste of raw materials.

      But even such successful cars as the e500 are now on the brink because (according to Carlos Tavares) it should be 50% cheaper to produce in China and Stellantis sees too little (or no) profit. Perhaps there will be no successor, or it will come from an Asian plant in the future.

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        I think the Fiat 500e looks great!
        In my opinion, the Fiat 500 is completely superfluous as an electric car because it is not a full-fledged car... you always need a second car. Thus, the Fiat is pollution.
        A Toyota Yaris Hybrid can do everything better... long-distance, extremely economical and does not need a charging station, bearable from the purchase, 10-year guarantee up to 160000 km and the typical Japanese reliability.
        Only visually he can not keep up with the Fiat.

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      It's the same with us.
      How many km do you drive alone in a week?
      That's why our decision was to take care of the two Saabs and spare one the winter.
      The 500e does its job really well and is much better in quality than other Fiats because it is built in a different factory and on a different platform. Brilliant as a 3+1.
      It is not heavy and consumes relatively little power. And that at 300 km a week.
      It is charged with us via solar modules on the roof. And it fills up quickly.
      The charging stations that are known in the vicinity are integrated into everyday life.

      The 9-5 station wagon drives for long distances and five people. Hardly anyone can match that in the cost/benefit calculation.
      And you can operate everything intuitively.

      Other owners of 2-ton e-cars then drive something else at the weekend or over a long distance.
      That's my experience without castles in the air.

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    Once again well written and to the point dear Tom!

    And of course I'm very happy that I can contribute to the 4% "old cars" with 5 Saabs, cars that are all still in great shape and drive wonderfully.

    From time to time I enjoy configuring new cars, such as Volvo, Lexus, DS Automobile and recently the new AR Tonale. The prices that come out are really unbelievable, bordering on outrageous. Who can actually pay these prices?

    The other day in the “Spiegel” there was again this table about the earnings in Germany and you could see where you stand with your earnings in the “hierarchy of the rich”. As a single person, you are in the top 2500% of earners with around 10 euros net per month, as a family without children it is around 4400 euros net. Nobody should tell me that with such earnings (or even less) you can afford a car for 40, 50 or 60000 euros. Who the hell buys all these cars? I think there is something terribly wrong with the auto industry. And as Tom has pointed out very vividly, the great awakening could be coming soon. Quasi a thump thump that you can hear from around and that will feel very painful.

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    I think that's great …

    As a child, teenager and young adult I was always fascinated by the old cars in Scandinavia. The then new and in larger numbers than we have Saab and Volvos of course too ...

    What was particularly special, however, was that you saw cars that we never had before or no longer existed. There were of course all the 20 to 30 year old Swedes who, when they were up to date, had not yet been exported to Germany in significant numbers. But there were also old Audi, VW and Mercedes in the condition of new cars, which had already disappeared from our streets. In addition, Britons and Americans and a few French. I once found 2 Citroën Traction Avant in front of a house. One short (2-door in a friendly 2-tone livery) and the other long and black. Could endlessly continue the numerous encounters at every turn with really exciting cars...

    But the point can also be made briefly. I have seen many cars for the first time or only in Scandinavia - from new to rocked. A real festival. Every parking lot at every port and in front of every supermarket a classic car meeting. Quite simply because people in Scandinavia became a throwaway society later than in Germany...

    The Havana effect doesn't scare me.

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    Tom once again published the better word for Sunday!!!
    This morning I followed the sound of a V180 with turbo for 6 km again.. the sound is not available in an electric car, and the speed probably isn't either (consumption).
    I wouldn't be patronized either...
    And two Porsche drivers also looked stupid. I'm keeping this buck as long as it can be repaired! In any case, I'm still a long way from half the price of a Cayenne (equally powerful) and it takes 5 minutes to fill up. Electricity at home will soon cost 55 cents per kWh... well then, good column parking with the heavy batteries...
    Politicians are stupid..(mostly, green is the worst...I just read again recently that the exhaust gases of a modern diesel are cleaner than what is sucked in in big cities...I don't even want to know who screwed up that shit..
    We finally have rare earths in Europe...
    I put my money into good food and travel while I still can. new car ?
    Maybe (65) I don't need it anymore.
    Have a beautiful Sunday
    Andreas

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