European carmakers have said they face the prospect of “multibillion-euro” fines or significant production cuts when new European Union carbon emissions standards come into force next year, adding to pressure on Brussels to water down the rules.
Acea, the European car industry body, on Thursday called for an “urgent review” of emissions rules to be applied in 2025 and of a ban on new internal combustion engine cars in 2035. Both are core elements of the EU’s Green Deal climate law that aims to push the bloc to net zero emissions by 2050.
The Acea board, which includes the chief executives of Renault, Nissan and Toyota, said carmakers faced the “daunting prospect of either multibillion-euro fines ... or unnecessary production cuts, job losses, and a weakened European supply and value chain”.
The warning comes a day after Italian prime minister Giorgia Meloni called the EU’s ban on new internal combustion engines from 2035 a “self-destructive” policy, warning that it could result in “destroying thousands of jobs, or dismantling entire industrial segments that produce wealth and employment”.
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Her comments have been echoed by politicians across the bloc but particularly by centre-right and right-wing lawmakers in big car manufacturing hubs of Germany and eastern Europe.
Carmakers have said that they do not want to stall the transition to cleaner vehicles but a significant slowdown in sales of electric vehicles has big implications for their output.
New registrations of electric vehicles in the EU dropped 44 per cent in August compared with a year earlier with their total market share falling from 21 per cent to 14 per cent year on year, according to Acea figures published on Thursday.
A paper drafted by Renault, seen by the Financial Times, suggested that if the current market share of EVs remained the same in 2025, car and van manufacturers could face penalties of up to €13 billion as a result of the new rules.
According to the paper, the EU carmakers need to have a market share of about 20 to 22 per cent to comply with the regulations, but that share has stagnated at less than 15 per cent, meaning they need to significantly cut production and sales of petrol vehicles or face large fines.
“You see really momentum building that there is recognition there is something the matter and it needs to be addressed sooner rather than later,” Sigrid de Vries, Acea’s director general, said.
“We see reality hitting very hard now and in 2025 that may have serious implications.”
Ms De Vries said that one of the big issues with the EU rules was that they had set thresholds for vehicle emissions but not provided incentives for customers to buy electric vehicles (EVs) instead.
“There is a structural failure in the fabric of the EU approach. Mandates do not make a market,” she said.
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“Incentivisation is very important and that can be in financial and non-financial ways,” she added, pointing to the example of Norway, which has reduced parking fees for electric vehicles and allowed EV drivers to use bus lanes.
Luca de Meo, Renault’s chief executive and president of Acea, has repeatedly called for more flexibility in the CO₂ regulations as the European car industry grapples with not just the slowing growth in EV sales but an overall decline in car demand.
In August, Stellantis, which is behind the Jeep, Peugeot and Fiat brands, suffered a 30 per cent year-on-year decline in new vehicle registrations, while those for Volkswagen and Renault fell 15 per cent and 14 per cent respectively.
The legislation sets an overall emission threshold for all European cars of no more than 93.6g of Co2 per kilometre. That compares with average emissions of 108.1g of Co2 per km in 2022, according to the European Environment Agency.
Manufacturers have individual targets that apply across their car production in Europe in order to meet the fleet-wide standard.
The European Commission said that it had received Acea’s letter and would respond in due course. It is due to review the combustion engine ban in 2026.
In her political guidelines for the next commission due to take office later this year, commission president Ursula von der Leyen backed the ban saying that it “creates predictability for investors and manufacturers”. – Copyright The Financial Times Limited 2024
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