Produced by Zhineng Automobile
The EU is at a critical juncture in accelerating the transition to green energy, with stringent carbon dioxide (CO₂) emission standards binding all sectors.
But now the EU automotive industry, which is an important pillar of the EU economy, is under tremendous pressure, especially against the backdrop of slowing demand for electric vehicles. The EU's upcoming tightening of CO₂ emission limits could lead to millions of people losing their jobs.
In particular, Renault Group CEO Luc·a De · Mayo mentioned in an interview that as electric vehicle sales slow, European car companies may suffer fines of up to 15 billion euros for failing to meet climate targets.
Part 1
Background of EU CO₂ restriction policy
Since the political agreement reached between EU member states and the European Parliament in 2022, the automotive industry has been facing increasingly stringent CO₂ emission standards.
These standards will be gradually tightened in three phases: 2025, 2030 and 2035.
By 2035, the EU plans to completely restrict new sales of internal combustion engine vehicles, and European automakers must significantly increase the production of electric vehicles to meet increasingly stringent emission targets.
For every gram of CO₂ emissions exceeded, European car companies pay a fine of 95 euros per registered vehicle. These stringent regulations have prompted many automakers to increase their investment in electric vehicles.
With the recent decline in demand for electric vehicles, many automakers are finding it difficult to meet the targets set by the European Union and fear facing huge fines.
Luca ·De· Mayo, CEO of Renault Group, mentioned in an interview that with the slowdown in electric vehicle sales, EU car companies could suffer fines of up to 15 billion euros for failing to meet climate targets, and for the difficult situation facing the European automotive industry: "European industry has committed to investing about 250 billion euros, so we need to keep the business going, otherwise there will be problems, especially for Renault's business in France." ”
D· Mayo has called on the EU to be more flexible in its goals for the sale of electric vehicles and the construction of charging stations.
Demand for electric vehicles is much lower than expected, leading some European automakers to question the reality of the policy.
Hans ·Dieter · Poch, Chairman of Volkswagen's Supervisory Board, also made it clear at the Vienna Electric Vehicle Days that electric vehicles will indeed dominate in the future, but it will take more time. The targets set by the EU for 2025, 2030 and 2035 do not correspond to current market conditions and need to be adjusted.
The leaked internal lobbying documents reflect the auto industry's great concern about EU policy, if the EU does not adjust the upcoming tightening of CO₂ restrictions, automakers may have to drastically reduce production to avoid huge fines, which will threaten the employment of millions of people in the EU, call for a delay in the implementation of stricter emission standards in 2025, and recommend that the EU delay the introduction of regulations by two years through emergency provisions to prevent mass unemployment from occurring.
The letter does not directly represent the official position of the European Automobile Manufacturers' Association (ACEA), but its content is closely related to discussions within companies such as Volkswagen. Volkswagen and its employees have been supporting the postponement of the implementation of CO2 limits in order to gain more time to adapt to changes in the market.
The Germany government rejected the proposal. A spokesman for the Germany Ministry of the Environment made it clear that car manufacturers have had enough time to prepare for the CO₂ targets announced since 2019, and that the vast majority of car companies have largely achieved them, and that the Germany automotive industry is capable of achieving them, albeit with some gaps.
Part 2
The possibility of policy adjustment and the outlook of the industry
Calls from the automotive industry to postpone CO₂ restrictions reflect concerns about market uncertainty.
With lower-than-expected demand for electric vehicles, European automakers are facing the challenge of market transformation. Environmental groups and policymakers are skeptical of these calls. The environmental group Transport & Environment argues that automakers have had enough time to prepare for these targets, so there is no reason to postpone implementation.
The Association of the Automotive Industry of Germany (VDA), while supporting the earlier review of fleet limits, also acknowledges the importance of the framework conditions required to achieve CO₂ reduction targets.
VDA Chairman Hildegard · Müller noted that the automotive industry is working hard to achieve its goals, but the gap between policy and market reality is still wide. Germany's automotive industry is facing an unprecedented crisis, rooted in failures in economic and innovation policy. She warns that if the status quo is not changed, tens of thousands of jobs and entire factories will be jeopardized.
Berlin and Brussels need to face reality, abandon unrealistic illusions and take concrete actions to support the development of the industry. She also mentioned that although there are many challenges inside and outside the industry, including high costs and excessive regulation, Germany car companies still have strong innovation capabilities and international competitiveness.
The government creates a more favourable investment climate, reduces administrative burdens, promotes digital transformation, and advocates intra-European cooperation rather than competition. The road ahead is difficult, but as an optimist, she is confident that the German automotive industry is capable of overcoming the current difficulties and maintaining its leading position in the global market in the future.
brief summary
The EU's CO₂ limits are a key tool for achieving its climate goals, but the current market environment presents unprecedented challenges for the automotive industry.
Fluctuating demand for electric vehicles, supply chain issues, and lagging technological innovation are putting pressure on manufacturers. The EU needs to find a balance in the process of green transformation, otherwise European car companies will basically face a situation of group annihilation!