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The European Automobile Manufacturers' Association (ACEA) has issued a warning about the potential loss of thousands of jobs due to looming fines for violating climate regulations, according to an internal document seen by the German news agency on Saturday, October 14, 2024. The association’s statement highlights that the automotive industry is currently not in a position to comply with the tightening of European climate rules. As a result, the industry could face penalties amounting to billions of euros.
This warning to the European Union comes at a time when manufacturers are realizing they may not be able to meet the EU's climate targets in many cases, which could lead to high fines for the already struggling European car industry. To avoid these penalties, the industry may have no choice but to significantly cut production, threatening millions of jobs across the European Union.
Fleet Limits -Rules
Specifically, the regulations refer to what is known as "fleet limits," which cap the carbon dioxide (CO2) emissions of vehicles. This average must not be exceeded by all registered vehicles in the EU in a given year. Currently, the value stands at 115.1 grams of CO2 per kilometer driven, as measured by the so-called WLTP test. This value is set to drop to 94 grams in 2025 and 49.5 grams in 2030. Car manufacturers are fined if their fleet’s emissions exceed these limits. To keep emissions within these boundaries, carmakers are required to sell a certain number of electric and low-emission vehicles.
In response to an inquiry, the European Automobile Manufacturers' Association acknowledged awareness of the internal document but emphasized that it is not an official statement from the industry body. The German news agency confirmed the authenticity of the document, noting that it is circulating within the European automotive industry. Bloomberg had previously reported on the warning contained in the internal document.
Berlin Rejects Automakers Demands
Meanwhile, the German government has rejected demands from the automotive industry to ease CO2 targets for the sector next year. A spokesperson for the German Ministry of the Environment told a German newspaper that car companies had only closed the gap in target values in the year of the target itself, not before the specified deadline. The spokesperson added that the vast majority of manufacturers had largely succeeded in achieving this, despite past gaps sometimes being larger than they are now. Sources from the ministry stated: "We are confident that the German automotive sector will once again demonstrate its reliability and technological efficiency and meet the target values."
Volkswagen's Chairman of the Board, Hans Dieter Pötsch, had called on the European Union to ease CO2 emissions targets for automakers' fleets. Pötsch said, "We now know that demand for electric cars in Europe is far lower than expected. Electric mobility will prevail, but it will take more time. Therefore, CO2 targets for 2025, 2030, and 2035 must be adjusted and aligned with reality."
This comes against the backdrop of the EU’s phased plan to reduce CO2 emissions from new cars. Stricter reduction targets for all new vehicles are set to take effect starting in 2025. According to the sector, automakers can only meet these more stringent limits by increasing the number of electric vehicles they sell. If they fail to meet the target, they will face the risk of substantial fines.