Just as in 2020, a number of myths are circulating about the car industry's supposedly 'unreachable' CO2 targets.
You know you are getting old when you live to see history repeating itself.
Back in early 2020, Europe’s automotive industry was trying to dismantle the 2020 clean car standard, claiming the Covid-19 pandemic made it impossible to comply. Regulators resisted, battery electric car (EV) sales broke all records in 2020/21, and Europe, for a moment, was even selling more plug-in cars than China.
But the EU clean car targets won’t tighten again until 2025. So, carmakers have been prioritising SUV-driven profits over introducing new affordable EVs in recent years. This, coupled with abrupt changes to EV incentives in some countries, means the market has been stagnating. The only difference now is that Chinese players have seen an opportunity and entered the market: one can often spot a BYD Atto3 or an MG4 on European roads.
Now the 2025 target is around the corner and the European automotive industry is once again calling for delays. This time their pitch has entered the realm of the absurd: they want the crisis clause in the EU treaties to be triggered to postpone their target two years.
Unlike Covid-19 or the Ukraine war, leaving compliance to the last minute is hardly a crisis. If anything, it is the usual five-year pattern of EU carmakers.
Just as in 2020, a number of myths are circulating around the Brussels bubble and media.
The first one is that compliance requires unreachable electric car sales, or paying billions in fines. Yes, ramping up EVs is the best strategy to remain competitive. But the 2025 target is not an EV sales mandate. Proposed back in 2017, it is a fleet-average CO2 reduction goal with ample compliance pathways.
Beyond battery electric cars, selling plug-in and traditional hybrids is one option. Another is to reduce the emissions of conventional models, e.g. by selling fewer large SUVs. The regulation also includes numerous flexibilities: e.g. bonuses are given for selling higher shares of EVs or for “eco innovations”, such as efficient air conditioning. Ultimately, pooling - or joining forces via EV credits - with those selling more electric cars can help carmakers which are further away.
The second major myth is that Europeans are not willing to buy EVs. The reality is they are not willing to pay the price that European carmakers are currently asking. The average EV price in Europe has increased by a third since 2021 while halving in China. This seems incomprehensible: battery minerals prices have plunged and battery cells are sold at massive discounts.
A closer look at carmaker plans shows that they are in fact planning affordable models from 2025 onwards to coincide with the new targets. That means that judging compliance - or calculating fines - based on today’s EV sales is irrelevant because most models haven’t rolled off production lines yet. These include Renault’s R5, Citroën’s eC3 and VW’s ID2.
In short, many options to comply with the not-so-strict 2025 targets are available. If regulators baulk under the pressure and weaken the targets, European drivers risk missing out on the more affordable models.
But there is no denying that Europe’s automakers and the supply chain are struggling. VW is planning to close German factories for the first time in decades. Umicore is scaling down its battery recycling investments, and Northvolt is reviewing its battery gigafactory plans. Staying firm on the 2025 target might help, as it will boost EV sales.
It will not be enough though. A bigger response from European policy-makers is necessary.
Chinese car and battery makers are not taking the place of Europeans because of the car CO2 regulation, but because they are at least a decade ahead on technology and scale. The new EV tariffs will hasten their plans to produce locally but will not deter their ascent.
What Europe lacks is a comprehensive green automotive plan and a consistent vision. Having the lowest battery tariff globally makes no sense on the continent that has poured dozens of billions into homegrown battery makers. The lack of coordinated national EV incentives, the absence of European financial support for battery manufacturing and other clean tech, not to mention the openly anti-EV stance of some governments, all send mixed signals and delay progress.
This is the current crisis if there is one. Europe should unconditionally accelerate the EV ramp-up by staying the course on its 2025-2035 car goals, requiring large fleets to electrify faster and making sure grids don’t delay the charging roll-out. Clean local manufacturing needs to be rewarded, if not required.
Now is not the time to wobble over the 2025 target. It’s the time to think bigger and act faster.
This article was first published by EurActiv
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