New ACEA boss Källenius outlines three priorities

In a letter to EU leaders, the newly appointed European Automobile Manufacturers’ Association (ACEA) President, Ola Källenius (also CEO of Mercedes-Benz), outlines the automotive sector priorities to ensure future competitiveness and drive decarbonization.

The Mercedes boss came to the Brussels Motor Show to clarify his views on the matter and explain the challenges the European car industry will face in 2025 and the future.

Three critical priorities

In this letter, which was published today and addressed to EU leaders, the President of the European Automobile Manufacturers’ Association (ACEA), Ola Källenius, outlines three critical priorities.

First, a realistic pathway to decarbonizing the automotive industry, one that is market-driven and not penalty-driven, should be followed. “We have to find a solution to the disproportionate compliance costs with the 2025 CO2 target for cars and vans,” he said.

“Secondly, we have to implement the recommendations of the Draghi report: create a regulatory framework that enhances the competitiveness of European industries. Finally, we must promote new approaches to creating mutually beneficial trade relations worldwide so that the EU can continue benefiting from free and fair trade.”

“The European Green Deal must be subject to a reality check and a realignment to make it less rigid and more flexible and to turn the decarbonization of the automotive industry into a green and profitable business model,” stated Källenius. “Let me be clear: the EU auto industry remains committed to the EU’s 2050 climate neutrality goal as well as the shift to zero-emission transport and mobility,” he added.

According to the ACEA boss, the industry’s most urgent action now is for the EU to find a solution for easing the compliance burden for cars and vans on the 2025 CO2 target.

“Political action today could not be more critical, as the latest provisional figures indicate an almost 6% decline in new electric car registrations in 2024. Market share is also on a descent, declining by 1% to 13.6%, far from the sharp increase needed to meet stringent CO2 targets in the coming years,” ACEA clarifies.

Källenius is reiterating the point of view of his predecessor at ACEA, Renault boss Luca de Meo, while other CEOs, like the now ousted Carlos Tavares (former Stellantis CEO), claimed that the manufacturers that can’t comply with the EU CO2 regulations didn’t do their homework. He was recently joined in this reasoning by BMW Group CEO Oliver Zipse.

The environmental NGO Transport & Environment (T&E) claims in a detailed report that the car industry can comply with the 2025 CO2 targets if it wants to. They say that postponing regulations or the fines that go with them is the easiest path to follow but the most dangerous one in the long run. The EU car industry threatens to lag behind even more compared to the Chinese and other competition.

Avoid possible trade war with the US

Kallenius also stipulated that the European Union should seek a “grand bargain” with the US to avoid a trade war regarding the potential of new tariffs imposed by the incoming Trump administration.

President-elect Donald Trump’s vow to impose 25% tariffs on cars and parts made in Mexico and Canada and new levies on China has rattled European automakers.

“European auto companies support the creation of prosperity, employment, and growth in the US” and are “an integral part of the US economy,” Kallenius said in Brussels yesterday. The US is the top destination for European auto exporters, with a value of about $40 billion annually, according to ACEA and other experts. In comparison, US to EU auto imports are worth about $9 billion.

European manufacturers like BMW, Mercedes, Volkswagen, and Volvo all have major assembly plants in the US with significant export businesses. When asked how ACEA would respond to the Trump administration’s threat of new tariffs, Kallenius said that ACEA calls on the EU to “have a long, hard think about what a grander bargain could look like.”

“We need to have some negotiating flexibility and maybe cast some things aside and look at the grander picture here,” he reflected. “The Trump administration has suggested it is willing to enter into talks on tariffs, and I ask the EU to think that through and see what the Americans might want and see if there’s a solution space.”

“The only alternative is an escalating tariff war, Kâllenius concluded, “in which the EU and automotive industry have much to lose. I don’t think that’s an attractive scenario.”

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