Markets
10/09/2019

European Car Makers Under Pressure Deadline For Tighter Emission Norms Draws Near




For car makers of Europe, time to meet the ambitious EU emissions targets is running out fast because they have waited till the last minute. The outcome of now meeting the emission targets for Europe would mean facing billions in fines for breaching of environmental norms.
 
Car makers such as the PSA Group and Volkswagen hope to launch and unveil new electric models as well as strategies at the Frankfurt auto show this week, which they hope would result in dramatic cut down on carbon dioxide emissions in just a few months.
 
However the challenge to meet the stringent emission deadlines is a tough one because companies stand to lose out on profit margins as they have to try and convince customers to purchase costly technologies used in electric vehicles. This adds on to the industry because it is already facing demand side challenges and because of a downturn.
 
“You have cars that cost an extra 10,000 euros to build, fleet-emissions targets requiring a certain sales volume and consumers who may or may not want them,” one PSA executive was quoted saying in a report. “All the ingredients are there for a powerful explosive,” the executive added.
 
According to the new carbon emission plans of the European Union, the cut off mark for CO2 emissions for 95% of cars would be at 95 grams per kilometer by next year compared to the current number of 120.5g average. In rennet times, this number has risen because of the trend among consumers to choose high performance SUVs over fuel-efficient diesel models. By 2021, all new cars in the EU have to be complaint to the new emission norms.
 
The emission target of the region also entails reduction of another 37.5% cut in carbon dioxide fume is to be achieved between 2021 and 2030 over and above the 40% drop in emissions between 2007 and 2021.
 
This has put the European car makers in a tight spot because there is a decline in the main auto markets of the world while the industry is also bracing for a hard Brexit – exit of the United Kingdom from the European Union. And the trade war between the two largest economies of the world – United States and China, has impacted the entire global economy including the global auto industry.

The industry has come given up on any hopes to convince the polity of Europe to relax the emission norms long back because of a protracted movement to better protect the climate and against climate change.
 
The tightening of the environment regulations and the increasing awareness among consumers about the environment justified the 80 billion euros ($88 billion) investment that Volkswagen made on increasing production capacity to become the largest electric car manufacturer of the world, said the company’s chief executive, Herbert Diess.
 
“Even Toyota and some other competitors, which were slow to bring EV’s, they are now also betting on electric. So we are right,” Diess said.
 
(Source:www.reuters.com)

Christopher J. Mitchell
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