Faced with lower than expected electric sales, manufacturers want to push back CO2 standards to avoid large fines.
Faced with falling sales of electric cars and new regulatory constraints, several manufacturers are asking the European Union to revise downwards the application of future CO emissions standards2.
The cause is the CAFE (Corporate Average Fuel Economy) regulation, which imposes strict emission thresholds under penalty of heavy fines that can amount to several billion euros.
Imminent tightening of standards
The CAFE standard, in place for several years, requires manufacturers to respect an annual average of CO emissions2 per vehicle sold. From January 2025, This average must be lowered to 93.6 grams of CO2 per kilometera threshold that is difficult to reach for many thermal models. For example, a thermal Renault Clio currently emits 120 g/km, while the hybrid version emits 95 g/km.
Until now, the majority of manufacturers have complied with this standard thanks to the increase in sales of electric cars and the improvement in the efficiency of thermal and hybrid vehicles. However, since the end of 2023, Electric vehicle sales momentum has slowed. These now represent 12.5% of new car sales in Europe, a figure lower than expected.
Several factors explain this decline. In Germany, for example, the removal of purchase bonuses has reduced consumers’ incentive to switch to electric. In addition, entry-level models are arriving late to the market, and buyers are still concerned about range limitations and the development of charging networks.
To comply with the CAFE standard, manufacturers are being pushed to sell fewer combustion engine cars, while having to lower the price of their electric models to encourage sales. The risk is considerable: in the event of non-compliance with the 2025 targets, fines could reach up to 13 billion euros for the entire sector.
Risks to jobs
The president of Renault and of the ACEA (European Automobile Manufacturers’ Association), Luca de Meo, recently asked the European Union to activate an exceptional procedure to postpone the entry into force of the new rules by two years. “We need to be given some flexibility”Luca de Meo had pleaded at the beginning of September, warning against rigid deadlines and fines without room for adaptation for the industry.
The Renault group is currently seeing its share of battery-powered vehicles stagnate and is banking on the new Renault 5 to reverse the trend. As for Volkswagen, Europe’s leading manufacturer, it is accumulating difficulties with its electric models, forcing the company to announce a drastic savings plan.
According to the same document sent to Brussels, Manufacturers should reduce their production of thermal vehicles by more than two million units to avoid fineswhich would represent the closure of eight factories in Europewith the corresponding job losses.
In addition, some brands could resort to buying emission credits from less polluting manufacturers. Groups such as Tesla or Volvo, which already comply with the future standards, could thus sell credits to struggling manufacturers, such as Volkswagen or Ford, which are around 28 g/km behind.
Subsidies to revive the market?
Manufacturers are also calling for increased subsidies for the purchase of electric vehicles. These subsidies have contributed to the market taking off in the past, and their elimination or reduction, as in Germany, slows down the transition.
Despite the pressure, some manufacturers such as Stellantis are opposed to any relaxation of the rules.
Its CEO, Carlos Tavares, recently said the group would be able to meet its 2025 targets without buying carbon credits. “Changing the rules now would be surreal”he said, stressing that all stakeholders had known the requirements for a long time.
Source: www.autoplus.fr
