European automakers face a difficult choice: how to avoid fines for violating carbon standards
24 January 10:56
EU regulations require car manufacturers to reduce CO2 emissions, and those who find it difficult to comply with carbon standards face a choice: pay billions of euros in fines, increase sales of electric vehicles by lowering prices, or buy carbon credits from competitors who are less polluting. This was reported by the Financial Times, according to
Many EU automakers are choosing the “alliance” option,
Those manufacturers who form alliances hope that this will help increase the share of electric vehicles in their sales, and will also allow them to average greenhouse gas emissions in their fleets with other companies.
Tesla reportedly plans to pool loans with companies such as Stellantis, Ford, and Toyota. Subaru and Mazda are also mentioned among those who may join this alliance.
Actually, they know who to team up with. Tesla’s carbon bank has a solid capital. In the first nine months of last year, the American electric vehicle manufacturer has already earned more than $2 billion from the sale of credits to global emissions pooling systems.
Another alliance, using its connection with China’s Geely, is being formed by Mercedes-Benz, along with Volvo, Polestar, and Smart.
As you know, Geely founder Li Shufu owns about 10 percent of Mercedes, and the Chinese company BAIC holds another 10 percent.
Mercedes emphasizes that it continues to “invest billions in electric vehicles, but the pace of industry transformation is determined by market conditions and customers.”
Some hope to increase sales of electric vehicles
BMW, Volkswagen, and Renault have not yet joined the pools and demonstrate their readiness to achieve their goals by expanding sales of electric vehicles.
At the same time, market experts believe that VW and Renault have very few options for alliances other than Chinese manufacturers MG-SAIC and BYD. Renault could also potentially team up with strategic partners Nissan and Mitsubishi.
In the meantime, they are announcing price cuts.
The Renault Dacia brand has reduced the price of its Spring electric car by €2,000 in France and now it will start at €16,900. This was reported by UkrAutoprom.
The new, cheaper Dacia Spring has a smaller 33 kW engine, but retains the same range of 225 km. With this step, Dacia aims to compete with manufacturers such as China’s Leapmotor, which offers the T03 model for €14.9 after a €4 thousand price cut.
Volkswagen has also cut prices, offering its ID3 compact electric car in the French and German markets for less than €30 thousand
According to the publication, European automakers have taken this step to increase the percentage of electric vehicles in their sales and to meet stricter EU standards for 2025 on CO2 emissions.
Why is the EU putting so much pressure on its automakers?
Europe is the continent on earth that is heating up the fastest, and since the 1980s has been estimated to be twice the global average, largely due to its proximity to the Arctic, where the open, dark land amplifies the effect. The Financial Times reminds us of this.
The European Commission has determined that it will fine car manufacturers €95 per car for every gram of CO₂ per km over the 93.6 g limit, based on the average emissions from the company’s car sales in 2025.
Another thing is that when making such a tough decision, European officials did not foresee everything.
Some are already saying that the desire of European automakers to create carbon alliances with the Americans and Chinese will make the European industry less competitive. And competitors will benefit at a time when Brussels has imposed higher tariffs on Chinese electric vehicles to protect the continent’s automakers.
Center-right MEP Jens Gieseke said the EU made a “mistake” by allowing the merger with US and Chinese automakers, as it could benefit European automakers’ competitors.
The European Commission listens to manufacturers and tries to hear
In fact, official Brussels is under pressure from automakers to make emission rules more flexible. As an additional argument, they mention that sales of electric vehicles in Germany and France fell last year after governments canceled subsidies for the purchase of electric vehicles.
The European Commission’s Climate Commissioner, Wopke Gukstra, has already met with representatives of the automotive industry and, according to him, a “strategic dialogue” between officials and the sector is due to begin this month.
Teresa Ribera, the European Commission’s executive vice president, told the Financial Times at the World Economic Forum in Davos that officials are still “shaping” the options for the stimulus program.
German Chancellor Olaf Scholz also announced in Davos that the European Commission is considering a subsidy program he has proposed to support the automotive sector.
According to the European Automobile Manufacturers Association, many EU member states offer incentives for electric vehicles, but the conditions vary greatly, and some member states do not offer purchase subsidies at all.
Car manufacturers are increasingly complaining that paying fines will only hinder their EV investment plans, while buying loans from Chinese EV manufacturers helps Chinese competitors.
One of the challenges for Brussels will be to design a scheme that complies with the rules and does not favor Chinese automakers, whose market share is growing rapidly.
The European Commission’s Executive Vice President, Teresa Ribera, notes that it is important to “ensure that this legislation is applied in a way that facilitates the achievement of what is the main objective” – the gradual phase-out of gasoline and diesel engines.
By the way, last year Lviv region was ahead of Kyiv in terms of the number of electric vehicles. In total, almost 52 thousand electric vehicles joined the Ukrainian fleet in 2024, which is 38% more than in 2023.
