- The European car industry could face fines as high as €15 billion ($15.7 billion) if they fail to meet EV sales goals.
- Several new EVs with a sub-€25,000 price tag will launch in Europe in 2025.
Starting in the new year, the European Union will drastically tighten its regulations on automotive carbon dioxide emissions. Beginning January 1, the EU will enforce a much stricter cap, requiring the average CO2 emissions per kilometer for each new car sold by a manufacturer to not exceed 93.6 grams. This represents a 19% reduction from the current year’s target. According to consultancy firm Dataforce, under the new emissions measurement system, the 2024 target would equate to 116 g/km using the previous system of calculation.
While the regulation doesn’t prescribe specific methods to achieve this reduction, it effectively requires that at least 20% of sales from most major car manufacturers consist of electric vehicles. This marks a notable jump from the current average of 13% of all cars sold in the region, according to data from the industry association ACEA. Manufacturers that fail to meet these targets will face substantial fines.
In a bid to encourage EV sales, many of them have started to hike the prices of their petrol and diesel-powered vehicles, in hopes of cooling demand for ICE vehicles and making their EVs more enticing.
Companies including Stellantis, VW, and Renault have hiked the prices of ICE models by hundreds of euros in recent months. For example, all Peugeot models sold in France – other than its EVs – had prices increased by as much as €500 ($525) last month. These price adjustments may help to fund future discounts for EVs, according to S&P Global auto analyst Denis Schemoul.
Read: Europe Is About To Find Out If EV Sales Can Survive As More Governments Slash Subsidies
This year, just 13% of all vehicles sold across the EU have been electric, and many politicians are pushing the region to relax its targets for 2025. If the sector fails to meet its EV sales obligations, fines could soar as high as €15 billion ($15.7 billion). Many automakers will pool emissions with other brands to avoid fines. For example, Suzuki will pool emissions with Volvo in 2025, removing any threat of hefty penalties.
Lots of new, more affordable EVs are also launching in Europe over the next twelve months. These include the likes of the Hyundai Inster, Fiat Grande Panda, BYD Seagull, Cupra Raval, Renault R5, Skoda Epiq, and VW ID.2. Plenty of other EVs priced below €25,000 (~$26,200) are also in the works, including the next Renault Twingo, Kia EV2, and VW ID.1.
Speaking during the Paris Auto Show in October, the president of the French car lobby PFA Luc Chatel expressed frustration at the unrealistic targets set by Brussels.
“At some point, enough is enough,” he said. “I can’t sell enough electric vehicles and I’m going to be penalized on my thermal vehicles. What do they want me to make, horse-drawn carriages?”
Speaking with Reuters, a source close to one of Europe’s major automakers said simply increasing ICE prices may not generate enough EV sales because of weak market growth in the segment.
