Campaign To Weaken EU’s CO2 Rules For EVs Spurs Opposition

Campaign To Weaken EU’s CO2 Rules For EVs Spurs Opposition.

“This is cynical and absurd”

It was no surprise when high-profile green lobby group Transport & Environment attacked the growing clamor from auto manufacturers to water down the European Union’s aggressive policy to force its citizens into electric vehicles.

But support from Stellantis came out of the blue. 

Various significant automakers, including Volkswagen and Renault, and the European Automobile Manufacturers Association (ACEA), had warned of the catastrophic impact of the rules, which next year demand a big cut in carbon dioxide emissions which could cost companies failing to meet them up to a total of €15 billion ($16.6 billion) in fines.

But Stellantis, the multi-brand giant including Citroen, Fiat, Peugeot, Opel, Vauxhall, Alfa Romeo, Jeep, Dodge, Chrysler, and Maserati, declared it was happy to keep the rules, according to Automotive News Europe. CEO Carlos Tavares has been a high-profile critic of the EU’s push to end the sale of new internal combustion vehicles by 2035. He declared that it made no sense for politicians to decide technology winners. That should be down to engineers.

Stellantis withdrew from ACEA in 2022.   

Tavares, in an interview with Agence-France Presse, said because the industry had known about the rules for a long time, there was no excuse for saying it was unprepared. His words echoed those of T&E.

“This is cynical and absurd. Carmakers made over €130 billion in profits in the last two years and had years to prepare for the target. Now they want the EU to declare a state of emergency so they can continue selling dirty cars and making large profits. This is not a war or a pandemic, but a self-serving stunt,” said T&E’’s Julia Poliscanova in a statement.

Pressure builds
Pressure has been building to persuade the EU to mitigate its rules.

Renault CEO and ACEA president Luca de Meo said the auto industry could face fines of €15 billion if EV sales remain at current levels. Volkswagen chairman Hans Dieter Poetsch wanted the EU to give the auto industry more time to meet the CO2 targets. 

According to ACEA, sales of EVs in the EU in July fell 10.8% to 103,000, with market share slipping to 12.1% from 13.5% a year before. From January to July, 815,000 new EVs were sold for a 12.5% market share. Italy wanted the CO2 emissions review scheduled for 2026 brought forward to next year, when a big hurdle needs to be met.   ACEA reportedly wants a 2-year delay in 2025’s tightened CO2 target.

Meanwhile, the EU’s rules imply sales of EVs in Western Europe must at least more than quadruple by 2030 from 2024’s around 2 million to reach the interim close to 80% target. Sales have stalled and aren’t expected to accelerate for perhaps two years. Currently, the 2030 target looks impossible. The target would require current niche sales to suddenly balloon into a mass market, boosted by cheap EVs which don’t exist yet, and which don’t seem imminent.

Professor Ferdinand Dudenhoeffer, director of Germany’s Center for Automotive Research, said European demand for EVs has been harmed by German policy. 

Germany unexpectedly removed consumer subsidies, undermining the market, only to suddenly decide to reinstate them. 

Dudenhoeffer doesn’t want to dilute the rules but make them a little more user-friendly.  

“Yes, it is true that the rules have been known for a long time. But Germany, as the most important market, has destroyed the EV through its politics. The industry is feeling this and people have relied on German politics. So Berlin is largely to blame for the fact that we are now in this difficult situation,” Dudenhoeffer said in an email exchange

Set payment deadline
“My suggestion. Leave the regulations and fines, but set a payment deadline of 10 years, also with the reason that bonuses will be distributed in the following years. So anyone who stays under regulation over the next 10 years will get a credit or have it “offset” against their penalty payment.”

“We want a regulation that encourages people to go into EVs and not a regulation that destroys our industry,” Dudenhoeffer said. 

Benjamin Kibies, Senior Automotive Analyst at Germany’s Dataforce, said if the EU changes its rules now, it wouldn’t be fair on many companies who have already made sure they comply.

But EV market conditions have changed. Finance has become more expensive, and Chinese competition looks formidable.

“On the other hand, circumstances did change over the last 5 years. Under the impression of high inflation and interest rates, fewer buyers can afford the extra costs. And the technological advantage of Chinese (manufacturers) is becoming even larger. When strict targets force European (manufacturers) to form emission pools with foreign ones, the European car industry will sponsor the market entry of their competitors,” Kibies said in an email exchange. 

Kibies said stretching out the compliance demanded for 2025 over some years would make sense. 

T&E said EU lawmakers must reject the demands of automakers to invoke a crisis clause to delay the 2025 car CO2 targets by two years. 

“Manufacturers can comply by increasing sales of battery electric and hybrid vehicles next year. EV sales will be boosted by seven new models priced below €25,000 arriving still this year and in 2025,” T&E said.

Demand plateaus
That’s easy to say. But EV demand has plateaued in Europe as all the early adopters have adopted, and the corporate market looks sated. The next step depends on the emergence of a mass market where sales depend on individual buyers parting with their own money. That is much more demanding and requires huge price cuts, an end to range anxiety with improved (solid state) technology, and the emergence of a consumer-friendly charging network. 

The charging network must be as quick and convenient as the ICE system. That basic requirement doesn’t even look close.