Car firms face €2.4bn in EU emissions fines
Poor sales of all-electric models amid demand for SUVS will see companies exceed pollution targets
Tough new emission controls could see car manufacturers hit financially. Fines relating to the sales of new cars begin on Jan 1 in accordance with European Union emissions standards. In 2020, manufacturers will have to meet controls on CO2 emissions on all the new cars they sell. Moody’s calculates that 12 of the biggest-selling motor manufacturers in Europe are in line for fines totalling €2.4billion (£2.1billion) as a result of failing to meet the new emissions controls.
TOUGH new emissions controls could see car manufacturers hit with megafines next year amid disappointing sales of electric vehicles.
Fines relating to the sales of new cars begin on Jan 1 in accordance with EU emissions standards and are set to deliver another blow to the beleaguered sector. In 2020 manufacturers will have to meet controls on CO2 emissions averaging 95g per km on all new cars they sell. According to the EU, this works out at fuel consumption of about 4.1 litres per 100km of petrol and 3.6 litres per 100km of diesel.
Missing the target will mean a penalty of €95 (£81) per car for each gram per km by which firms miss the target.
The slow uptake of zero-emission electric vehicles – which let manufacturers speed up cuts in average emissions – looks set to push the target out of reach. Moody’s calculates 12 of the biggest-selling motor manufacturers in Europe are in line for fines totalling €2.4bn (£2.1bn) as a result of failing to meet new emissions controls.
Analysts at the ratings agency said: “This year will be critical as we still see most manufacturers having to launch a large number of new models and incentivise customers to purchase electrified vehicles in order to avoid penalties. So we would still see a similar sort of gap that the companies have to close, in the face of significant delivery risk.”
This could mean car manufacturers offering electric vehicles at heavily discounted prices in an attempt to sell enough to reduce fleet emissions. Any such move would likely knock profits in the already under-pressure industry. Electric cars are already seen as low to zero margin products for many makers, due to the cost of developing and manufacturing new technology.
There is anecdotal evidence of deliveries of electric cars sold in 2019 being held back by firms until 2020 to boost their environmental performance.
Although gaining in popularity, allelectric battery cars comprised just 1.5pc of UK car sales in the year to date. The industry has insisted that waiting times for electric vehicles are not deterring buyers.
Trade body the Society of Motor
Manufacturers and Traders (SMMT) said the average wait time for a new plug-in car, ordered from the factory, was “comparable to traditional premium and other vehicles”.
Mike Hawes, SMMT chief executive, said UK buyers can choose from around 50 plug-in models, with about 200 models expected by the end of 2021.
But he warned: “Allocation to national markets including the UK will depend heavily on local market attractiveness, which is influenced by local demand, exchange rates and the potential imposition of tariffs.
“Therefore we need supportive measures and policies, including substantial investment in infrastructure to encourage uptake of plug-in electric vehicles.” Motorists’ changing tastes could also have an effect, with declining sales of smaller cars which are less polluting, while gas-guzzling SUVS continue to grow their market share.
These factors mean that in 2018, the average emission for new cars sold in the UK was 124.5g per km, a rise of 2.9pc on the previous year and the second consecutive increase – the total having fallen consistently since 2000.
New methods of testing vehicle emissions brought in following the VW dieselgate scandal are also expected to drive up emissions.
The system, known as WLTP, is more accurate than the previous labbased regime, resulting in results closer to real-world conditions.