On April 10, 2024, the European environmental NGO T&E reported a 28% reduction in CO2 emissions from new cars in the European Union since 2019 due to automobile CO2 regulations. Emissions must be reduced by 15% by 2025 compared to 2021.
T&E estimated the gap between the 2023 emissions and the 2025 target for automobile manufacturers. Their analysis shows Volvo has already met the 2025 target based on its 2023 sales volume. Next, Kia and Stellantis are expected to meet the 2025 target with a gap of less than 5gCO2/km. However, Volkswagen and Ford are at the bottom with the most significant gaps, 22g/km and 24g/km, respectively.
Despite falling short of their 2018-2019 targets, all automobile manufacturers met their 2020/21 targets. It was pointed out that it’s difficult to predict a manufacturer’s ability to meet future targets based solely on progress over the past two years. However, it’s clear that manufacturers have known about the 2025 target since 2017 and have prepared and adjusted strategies to comply by 2025.
Automobile manufacturers can utilize various strategies and flexibilities to meet their targets. These include increasing sales of battery electric vehicles, improving the efficiency of internal combustion engines, and pooling emissions across multiple manufacturers. They can also adjust pricing and dealer incentives to regulate sales or plan for new models and variant availability in anticipation of needing to sell more EVs.
Many car companies currently prioritize larger and more expensive vehicles. These heavier cars are more profitable but emit more pollution. As a result, a shortage of affordable electric car models is delaying sales, which could cause a significant gap in meeting the 2025 target. It was emphasized that now is the time for OEMs to launch affordable electric cars and adjust prices to provide incentives for the cleanest vehicles.
If automobile manufacturers don’t improve sales of internal combustion engines compared to 2023, they will need to sell 24% BEVs in 2025. In addition to introducing new battery electric vehicles, they can sell more hybrids or reduce the size of the most polluting models. In this case, the average BEV sales share could be reduced to 18% to meet the 2025 target.
They can also choose to pool sales, as Honda, Jaguar Land Rover, and Tesla did in 2022.
From this perspective, the 2025 target, proposed in 2017 and limited to -15%, is easy because it was not changed in the 2023 review for a higher 2030 target under the EU Green Deal. Considering the global competition to dominate the electric car market, T&E warned that easing policies to encourage European OEMs to invest in electric cars would go against Europe’s industrial and sovereign interests.
Suppose the EU decides to weaken regulations or exempt fines. In that case, there’s a risk of undermining trust in the EU’s climate agenda and rules, and the ambitions of global car manufacturers would sway European car manufacturers. European car manufacturers should show that they are committed to the transition to electric cars and are intensifying efforts to comply and do the right thing for the climate and the EU economy rather than questioning the rules.
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