European car industry rings alarm bell on CO2 regulations (update)

The European Car Manufacturers Association (ACEA) calls for urgent action regarding the EU’s CO2 emission regulations “as demand for EVs declines”. On the other hand, Stellantis CEO Carlos Tavares again declares that relaxation would be wrong: “My guys are ready to fight.” He gets support from an unexpected side: BMW also says it plans to comply with the regulations for 2025.

“A continuous trend of shrinking market share for battery electric cars in the EU sends an extremely worrying signal to industry and policymakers,” says ACEA. “European auto manufacturers united in ACEA, therefore, call on the EU institutions to come forward with urgent relief measures before new CO2 targets for cars and vans go into effect in 2025.”

EV regress

“The latest EU car registration data, released by ACEA today, once again confirm that the electric car market is on a continual downward trajectory,” ACEA warns.

In August 2024, new EU car registrations saw a sharp decrease (-18.3%) with negative results across the region’s four major markets: double-digit losses were witnessed in Germany (-27.8%), France (-24.3%), and Italy (-13.4%), with the Spanish market declining by 6.5%.

ACEA sees this decline mainly due to the regress of EV sales. “In August 2024, registrations of battery-electric (BEV) cars dropped by 43.9% to 92,627 units (compared to 165,204 the same period last year), with their total market share slipping to 14.4% from 21% a year before,” notices ACEA.

“This was driven by the spectacular drop in the two biggest markets for BEV cars: Germany (-68.8%) and France (-33.1%). From January to August, 902,011 new battery-electric cars were registered, representing 12.6% of the market.”

Nevertheless, all other sorts of driving also declined heavily, except for hybrid cars (HEVs). Hybrid-electric vehicles are the only vehicle type that grew in August, with car registrations rising by 6.6% to 201,552 units. The hybrid-electric market share reached 31.3%, up from 24% in August 2023.

ACEA warns

“We are missing crucial conditions to boost production and adoption of zero-emission vehicles: charging and hydrogen refilling infrastructure, a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a secure supply of raw materials, hydrogen, and batteries. Economic growth, consumer acceptance, and trust in infrastructure have not developed sufficiently either,” warns ACEA.

“This raises the daunting prospect of either multi-billion-euro fines, which could otherwise be invested in the zero-emission transition, or unnecessary production cuts, job losses, and a weakened European supply and value chain at a time when we face fierce competition from other auto-making regions,’ ACEA adds.

Consequently, ACEA wants the new EU Commission to react immediately. “We stand ready to discuss a package of short-term relief for the 2025 CO2 targets for cars and vans, as well as a fast-track, comprehensive, and robust review of the CO2 regulations for both cars and trucks, plus targeted secondary legislation, to get the zero-emission transition firmly on track and secure Europe’s industrial future.”

Dissident voices

Stellantis Group CEO Carlos Tavares is frequently heard in the automotive business. In 2022, he withdrew his group from ACEA membership and now disagrees with the association.

As a result, Stellantis is not calling for a relaxation or delay to the EU’s 2025 CO2 targets. CEO Carlos Tavares says his company has worked hard to cut costs and is ready to compete. “The rules have been known for several years,” he said Tuesday. “My guys are ready for the fight.”

“Now, we are a few months before the race starts, and somebody says, ‘hold on, change the rules’,” Tavares told journalists in Turin last Tuesday. “Even if there is a delay in the standards, the global warming issue is still here.”

Tavares said automakers seeking a delay may fear losing money because EVs’ profit margin is less than on internal-combustion models, and costs are still higher. “Companies are telling you that if they double their BEV sales, not making money with those cars, they will put themselves in trouble,” he said.

Tavares now has unexpected support. The German premium carmaker BMW has reacted and is “confident that it can achieve the stricter 2025 European CO2 emission standards, as it has always exceeded such requirements in recent years.”

It’s a remarkable statement from a company that is still a member of ACEA and whose CEO has been the association’s former president (now succeeded by Renault CEO Luca de Meo).

BMW has also emphasized that the company stands by the goal of consistently reducing CO2 in the transport sector and has prepared itself. However, BMW also insists that the European Union critically and comprehensively review its CO2 fleet legislation, especially the new gasoline and diesel car ban in 2035.

BMW has never gone so far as some of its competitors to commit itself to one energy source (battery electric) for its vehicles and set a time goal. Instead, it follows a ‘multi-path’ strategy, where hydrogen, for example, can also play a role.

The Bavarians have also always declared that they will produce the cars their customers want. So, if these customers still want to buy certain ICE cars after 2035, BMW must have the opportunity to sell them.

Is the future rosier than thought?

The 2025 CO2 target for Europe’s new car fleet will be at least 15% below the current regulations, meaning that automakers may have to double their sales of zero-emission battery-electric cars to avoid paying fines.

However, the EV market has flattened this year after reaching about 14% in Europe in 2023, mainly because some governments have reduced once-generous EV incentives, and the consumer is hesitating and turning toward hybrid vehicles.

However, a specialized NGO like Transport & Environment (T&E) sees no reason to be pessimistic and has been collecting data to study the evolution of EV sales and the arrival of affordable EV cars. T&E predicts that the EV market will grow significantly in 2025 and says different scenarios could reach the targets set by the EU.