Europe’s Carmakers Need Electric Government Subsidy – ACEA.
“Mobility must remain affordable. That is why we governments should put in place more meaningful and sustainable incentive schemes to stimulate sales EU-wide,”
Europe’s carmakers, spooked by the imminent mortal threat to profits from European Union (EU) regulations to curb carbon dioxide (CO2) emissions, called for governments to raise subsidies on electric car purchases to stimulate weak sales.
The European Auto Manufacturers Association, known by its French acronym ACEA, pointed out that sales of battery only electric cars and plug-in hybrids vary widely across the EU, from a market share of 2% in Germany last year, the continent’s biggest car and SUV market, to Poland’s just 0.2%. Britain notched up electrically charged vehicle market share of 2.5%, and France 2.5%. Socialist oil and gas producer Norway, outside of the EU, has an electric vehicle market share this year of about 50%. It uses tax incentives to boost electric sales and big tax penalties to curb the sale of internal combustion engine-powered vehicles. There are bus lane, city access and parking bonuses for electric car users.
EU rules say car and SUV makers must achieve a fleet average of CO2 the equivalent of 57.4 miles per U.S. gallon by next year and 2021. This increases through to 92 miles per U.S. gallon average by 2030 through another step in 2025. This effectively means that most car sales will need to be all-electric by 2030.
Manufacturers will be hard pressed to provide vehicles to match these demands and many are likely to suffer crippling blows to their bottom lines.
According to a report from investment researcher Jefferies in August, if the auto industry makes no progress in curbing CO2 from 2018 towards meeting the EU’s 2020/21 regulations, it faces fines totalling the equivalent of $36 billion, twice its estimated profits, and be forced to raise prices up to 10%.
Big, gas-guzzling SUVs
And according to ACEA, 2018 CO2 emissions actually rose 1.6%, as sales of diesel-powered vehicles slid, and demand for bigger gas-guzzling SUVs spiked.
European governments need to act to spur sales of electrically charged vehicles, according to ACEA.
“Mobility must remain affordable for all layers of society. That is why we are calling on governments to put in place more meaningful and sustainable incentive schemes to stimulate sales EU-wide,” ACEA Director General, Eric-Mark Huitema said.
He gave no details of the amount of subsidy that might be required, or how it could be raised.
Currently battery-electric car purchasers in Britain get a $4,500 subsidy, in Germany $4,400 and France up to $8,500. In the U.S., car buyers get a $7,500 tax break, until the manufacturer’s electric car sales reach 200,000.
The massive improvement in CO2 emissions obviously calls for more electric cars, and the big manufacturers, led by Volkswagen, are in the middle of big spending plans to produce enough electric cars. VW has said 25% of its global car sales by 2025 will be battery-electric only. Other big manufacturers are pursuing only slightly less adventurous plans. The trouble is, consumers don’t yet seem ready to embrace the concept.
According to respected market researcher IHS Markit, by 2025 only 10.2% of global sales will be battery electric, and will only have reached 14.8% by 2030.
This spells financial disaster for the big carmakers if the gap isn’t breached.
ACEA said not only are electric car sales slow, they vary widely across the EU.
No one left behind
“Although the average EU market share of alternatively-powered vehicles (including natural gas and hydrogen power) is going up, the huge discrepancies across Europe are extremely worrisome. As we push ahead in the transition to zero-emission mobility, we need to ensure that no countries and no citizens are left behind,” Huitema said.
“When it comes to electrically-chargeable vehicles, (there is) not only an east-west divide, but also a marked north-south distinction. Indeed, electric cars represent less than 1% of total sales in Italy and Spain – the third and fourth largest EU economies respectively,” the ACEA report said.
“If the extremely ambitious 2025 and 2030 CO2 targets set by the EU are to be achieved, sales of all types of alternatively-powered vehicles will have to pick up rapidly in all member states,” ACEA said.
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