Automakers Sound Alarm: EU's Emission Rules Risk Billions in Fines and Production Cuts

On September 19, the European Automobile Manufacturers Association (ACEA) highlighted growing concerns among automakers over the EU's forthcoming stringent carbon emission standards. Set to take effect next year, these regulations could result in penalties worth billions of euros, posing a threat of significant production cuts.

According to ACEA, August saw an 18.3% decline in new car sales in the EU, marking the lowest level in three years. Major markets such as Germany, France, and Italy experienced double-digit decreases. Electric vehicle sales also plummeted, with pure electric vehicles dropping by 43.9% year-on-year, marking the fourth consecutive month of decline, while plug-in hybrid registrations fell by 22.3%.

ACEA stated that the decline in registrations corroborates a continuous downward trend in the electric vehicle market. The organization is urging the EU to urgently review the emissions rules set for 2025 and the proposed 2035 ban on new internal combustion engine vehicles.

The ACEA board warned that automakers face the dilemma of either paying huge fines or resorting to unwanted production cuts, layoffs, and a weakening of the European supply chain. This sentiment echoes concerns raised by Italian Prime Minister Giorgia Meloni, who criticized the 2035 ban as potentially "self-destructive" to the industry.

The automotive industry leaders have argued that while they support the transition to cleaner vehicles, the stark decline in electric vehicle sales poses a significant challenge to their production capacities. A draft document from Renault suggested that if the market share for electric vehicles remains unchanged by 2025, automakers could face cumulative fines of up to 13 billion euros due to the new rules.

ACEA's Director General, Sigrid de Vries, noted a growing consensus on addressing the issue's severity. She pointed out that the EU's current approach sets emission thresholds without providing adequate incentives for electric vehicle purchases, labeling this as a structural flaw.

De Vries emphasized the importance of incentives, both financial and non-financial, citing Norway's measures such as reduced parking fees and bus lane access for electric vehicles as effective strategies. The European Commission acknowledged receipt of ACEA's letter and stated it would respond in due course.