EV sluggishness threatens industry with millions of dollars in fines

The European consensus on sustainable mobility is crumbling. Italy, France and the Czech Republic raised concerns this week, adding to Germany’s dissatisfaction with current European emissions reduction standards in the auto sector.

We remind you that by 2035, cars with internal combustion engines will no longer be sold in Europe. And from next year, the automotive industry is required to reduce pollutant emissions by 15% (compared to 2021 levels). To achieve this goal, it would be enough for every fourth car sold on the Old Continent to be electric (in one of its variants – plug-in, hybrid, etc.).

However, these cars will not start. Its sales have fallen 6% over the past year. Its market share in Europe, which reached almost 15% of the total, has fallen to 13%, according to the latest official data. Problem: If they don’t comply, European manufacturers will have to pay fines from 2026. This is provided for by unrealistic European regulations approved even before the pandemic, in 2019. An alternative to introducing an emissions quota, which is not feasible, would be to stop producing two million cars a year in Europe.

Electric companies are selling less than expected and the sector could be forced to pay $13 billion.

This is where the cracks appear. Italy, France, Germany are in revolt. The Georgia Meloni government is committed to protecting its brands. Rome, backed by the Czech Republic (which has a powerful aftermarket sector), wants the rest of the public bloc to recognize a “wider range” of mobility solutions beyond electric and hydrogen cars, which will take time to tempt consumers, and this week they prepared document.

Czech Transport Minister Marin Kupka argues that if car companies have to pay sanctions, they will have less money to increase investment in electric vehicles and sustainable mobility. Moratoriums, flexibility of deadlines and assistance are being considered as proposals. French Finance Minister Antoine Armand believes that “European manufacturers who advocate electrification should not have to pay fines.”

ACEA, the Association of European Manufacturers, estimates that sanctions against companies could amount to around 13 billion euros. “These emissions standards do not reflect the economic and geopolitical changes of recent years,” they argue. “This is a shot in the foot for European industry. We hurt ourselves. We are not ready for the energy transition in such a time frame,” complains an engineer who works in Rome for American firms in the automotive sector.

Manufacturers must cut emissions by 15% starting next year, which is difficult

Consultancy Transport and Environment predicts that the share of electric vehicles in Europe could reach 22% within a year, but this would mean doubling current levels. And there are doubts in the industry that this can be achieved.

In a market that remains reluctant to accept electric vehicles, European manufacturers are also suffering from competition from abroad. A weakness that affects in particular German companies, which for years have invested a lot of money in electrification without the expected economic return.

“Tesla and Chinese brands such as BYD, Chery, Geely, Li-Auto, Nio, Xiaomi and XPeng are working closely with China’s tech giants such as Huawei, Baidu and Tencent to take automobiles to the next level. In China there is a digital infrastructure for these models, while in Germany they are trying to plug the holes but are increasingly stymied by a huge price disadvantage. German brands are melting like snow in the sun,” warns German Ferdinand Dudenhöffer from the Center for Automotive Research.

Spain did not join European partners in criticizing the current rules

In Brussels, the EU maintains its position. European People’s Party candidate Apostolos Tsitsikostas, the incoming transport chief, said the way forward was to support the industry rather than weaken targets. At a recent hearing, he promised a plan to help the European auto sector transition to electric mobility. But no details were provided.

Spain, in top 10 The world of car-producing countries has not formally joined the criticism of the current rules by European partners. Carlos Tavares, CEO of Stellantis, is also against easing the rules because he believes it will increase costs for a sector forced to invest in both internal combustion engines and electric motors.

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