On September 25, 2024, workers were producing pure electric vehicles at the Volkswagen (Anhui) factory in Hefei, China.
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Europe’s top car giants appear increasingly worried about the prospect of huge fines, especially as demand for electric vehicles falls ahead of the next tightening of carbon emissions regulations.
Car manufacturers operating in Europe face Tougher emissions targets Starting next year, the average carbon dioxide emissions cap for new car sales in the EU will drop to 93.6 grams of carbon dioxide per kilometer (g/km), a 15% reduction from the 2021 baseline of 110.1 g/km.
Exceeding the limits – which were agreed in 2019 as part of the 27-nation bloc’s ambition to become climate neutral by 2050 – could result in hefty fines.
Rico Luman, senior sector economist for transport and logistics at ING, said European carmakers had every reason to be worried about the scale of the financial penalties.
“The fine is actually huge,” Luhmann told CNBC via video conference. “If you do the math… based on their production volume, the fine could easily be in the millions of dollars.”
Renault CEO Luca de Meo said last month that if electric car sales remain at current levels, the European auto industry may have to pay 15 billion euros ($16.5 billion) in fines or abandon the production of more than 2.5 million vehicles. . Reuters reportsciting an interview with French Radio.
The European Automobile Manufacturers Association (ACEA) said the industry lacked “key conditions” to support the zero-emissions transition and “concerns are growing about meeting the 2025 CO2 reduction targets for cars and vans”.
Automobile lobby group representing BMW, Ferrari, Renault, Volkswagen and other car companies VolvoThe warning said that the EU’s current rules “do not take into account the profound changes in the geopolitical and economic climate in recent years”.
ACEA said in a statement released on September 19: “European car manufacturers are therefore united in ACEA and call on EU institutions to take urgent relief measures before the new CO2 emission targets for cars and vans come into force in 2025.”
Tim McPhie, spokesman for the European Commission, the EU’s executive agency explain In a press conference late last month, the industry still had 15 months to meet the new targets, adding that it was “too early” to speculate on the size of potential fines.
“The way we design these policies is to give industry time to adapt, the entire economic ecosystem time to adapt, but of course, we are sensitive to the challenges we face,” McPhee said on September 24.
‘A massive struggle’
Europe’s top carmakers are responding The road to full electrification faces a host of challenges, including a lack of affordable models, a slower-than-expected rollout of charging stations and the potential impact of European tariffs on Chinese-made electric vehicles.
Crisis-hit Volkswagen and several other carmakers, including Ford and Mercedes-Benz Group, have announced plans to delay previous targets to phase out sales of internal combustion engine (ICE) cars in Europe.
“Manufacturers are mainly focusing on traditional hybrids and internal combustion engine vehicles because they are more profitable,” ING’s Luhmann said.
“In the long term, they need to compete with new players and restructure their organizations through transformation, but in the short term, it’s not that profitable,” he continued. “So, it’s been a huge struggle.”
EnBW electric vehicle charging station near Weissenfels, Germany.
Sean Gallup | Getty Images News | Getty Images
european education association explain The EU’s battery electric market share has fallen to 12.6% this year, down from 13.9% in 2023, while EU car sales remain about 18% below pre-pandemic levels in 2019.
Xavier Demeulenaere, deputy director of sustainable transportation at S&P Global Action, said all European original equipment manufacturers (OEMs) have a “strong incentive” to increase their sales of electric vehicles to reduce average fleet emissions and comply with regulatory targets.
“We expect electrification to slow down in 2024 due to worsening economic conditions in Europe and the removal or reduction of subsidies in some countries, which will be challenging for most OEMs as this will bring Come to the question of demand.
“But if demand does not exist, pooling remains one of the main mechanisms to again mitigate potential financial penalties expected in 2025,” he added.
Bonding is a process whereby carmakers join together to be treated as one entity when calculating performance against CO2 emissions targets.
crisis? What crisis?
Not everyone is convinced that the sales challenges facing the European auto industry constitute an industry-wide crisis.
Transport and Environment Campaign Group explain An analysis released on Wednesday said the current situation should be viewed as a “transitional phase” as manufacturers adapt to new regulations and changing market dynamics for electric vehicles.
A production line at the Renault factory in Slovenia, Europe.
Bloomberg | Bloomberg | Getty Images
Transport & Environment analysts said the European auto industry has been planning carbon dioxide emissions targets for next year since 2019, and manufacturers can avoid paying huge fines by selling more hybrids and more fuel-efficient cars.
They added: “Carmakers also benefit from regulatory flexibility to further (artificially) lower their CO2 emissions, as well as the option to share emissions with other carmakers.”
“Profitable European carmakers may need to sell fewer large, polluting SUVs, but that’s the goal of car CO2 emissions regulations.”
Road transport is major contributors Passenger cars and light commercial vehicles account for nearly 15% of EU transport CO2 emissions.
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