European vehicle manufacturers have expressed concerns over the possibility of high financial penalties or substantial cutbacks in production as the EU’s new carbon emissions regulations prepare to take effect next year, urging Brussels to reconsider the harshness of these rules. The European Automobile Manufacturers’ Association, Acea, issued a request for a prompt reassessment of the emissions standards slated for 2025 and the proposed ban on new fossil fuel cars by 2035. Both are central features of the EU’s climate initiative, the Green Deal, which is aimed at achieving net zero emissions by the middle of the century.
Acea’s executive board, featuring the CEOs of Renault, Nissan, and Toyota, voiced their apprehension facing the challenging reality of either coping with enormous penalties or dealing with unwarranted production slashes, job losses, and a potentially debilitated European supply and value chain structure. Their concerns were voiced following a statement made by Italy’s Prime Minister, Giorgia Meloni, who deemed the EU’s ban on new traditional-engine vehicles by 2035 as potentially disastrous, with its potential to obliterate jobs and dismantle
industrial sectors integral to wealth and job generation. Meloni’s thoughts appear to have resonated, particularly among conservative-leaning politicians rooted in regions known for strong automobile manufacturing, such as Germany and Eastern Europe.
Carmakers have clarified that they are not against transitioning to cleaner automobile solutions. However, they warn that a noticeable decrease in electric vehicle (EV) sales could greatly impact their production. Acea’s recent data, published Thursday, indicates a troubling 44% decrease in new EV registrations within the EU in August compared to the previous year, with their overall market share dropping from 21% to 14% year-on-year. A document put forth by Renault, as reported by the Financial Times, proposes that if the current EV market share persists until 2025, vehicle manufacturers could confront penalties totalling approximately €13 billion due to the introduction of the new regulations.
The report indicates that car manufacturers within the EU must achieve a market penetration of up to 22% to conform with regulations. Nonetheless, their market share remains at less than 15%, which implies they must significantly reduce the production and sale of petrol-run vehicles or expect significant penalties.
Acea’s Director General, Sigrid de Vries, expressed that there is an increasing awareness of the situation’s gravity and the need to act hastily to address it. “The reality is striking home and may have grave consequences by 2025,” she stated.
Ms De Vries highlighted an issue with the EU regulations being that, despite setting emission limits for cars, they lack the provision of incentives for consumers to transition to electric vehicles (EVs).
She criticised the EU approach as structurally flawed, stating that mandates alone cannot form a market. “Incentivisation, both financial and non-financial, is vital,” De Vries elaborated, citing the example of Norway’s reduced parking fees for electric vehicles and privileged access to bus lanes for EV motorists.
Renault’s CEO and Acea’s president, Luca de Meo, regularly advocates for more CO₂ regulation flexibility. This comes as the European auto industry confronts not only a reduced rise in EV sales but a total reduction in vehicle demand.
For instance, Stellantis, the entity behind Jeep, Peugeot, and Fiat, recorded a 30% year-on-year drop in new car registrations in August, with respective reductions of 15% and 14% for Volkswagen and Renault.
The legislation stipulates an all-inclusive 93.6g of Co2/km emission limit for all European cars, contrasting with 108.1g of Co2/km average emissions. These figures are set for 2022, according to the European Environment Agency.
These individual targets need to be upheld across their European car production to satisfy the collective standard.
The European Commission reported that they received Acea’s letter and are due to respond. A review of the combustion engine prohibition is scheduled for 2026. Commission president Ursula von der Leyen voiced her support for the ban in her political guidelines for the upcoming commission, as it gives manufacturers and investors a sense of certainty.