Are Emission Standards Stifling Car Manufacturers?

Frits Pieper
10 October 2019

Europe must switch to electric driving en masse to meet CO targets2-emission. For European car manufacturers, it is now five to twelve. If they do not reduce the carbon dioxide emitted by their cars in time, they can expect hefty fines from the EU. 

The electrification of the European car fleet is a major challenge for car manufacturers. In a sector where sales are already stagnating, profits are coming under pressure because electric cars are still much more expensive to produce than fuel cars and it is questionable whether consumers are willing to pay that price. 

Average emissions count

The EU wants to reduce greenhouse gas emissions by 2030 percent by 40 compared to the base year of 1990. To achieve this ambitious target, new cars will only be allowed to emit 2021 grams of carbon dioxide per kilometer from 95. This is the average of all cars sold by a manufacturer within the EU. 

Interesting detail: in the Netherlands, average emissions have actually increased since 2015, after years of decline, partly due to the restriction of tax benefits for fuel-efficient cars and declining sales of hybrid vehicles and fuel-efficient diesels.

Hybrid and electric the new standard

The automotive industry has long advocated a relaxation of the measures, but given the increased attention to climate issues, this is politically practically impossible. In order to meet the emission targets, more and more brands are coming out with fully electric cars. Hybrid is becoming the new standard for various popular models. For example, the Volkswagen Golf will soon only be available as a plug-in hybrid and Renault is coming out with hybrid versions of its Clio and Captur.

Sham construction?

However, there are also car manufacturers that are lagging behind, having invested too late in green technologies. One of them is Fiat Chrysler Automobiles (FCA), which is now pulling off an accounting trick by paying Tesla millions to merge their two fleets on paper. Because Tesla only makes zero-emission cars, this reduces the average emissions and FCA avoids fines. 

Profits under pressure

With 2021 in sight, the European car market will soon be flooded with hybrid models and electric vehicles. This will help avoid hefty fines, but that does not mean that the annual figures of car manufacturers will benefit. As a manufacturer, you can produce hybrid and electric cars, but that does not mean that they will be eagerly bought. In fact, the green revolution is being forced down the throat of the consumer and it is questionable whether they will swallow it. Car manufacturers are seeing their profit margins shrink, because the consumer is not prepared to pay the extra price for green(er) cars alone. It is expected that many car manufacturers will see their profits fall as a result. 

This could potentially have a counterproductive effect on the EU’s emission targets. After all, less profit means less money left to invest in innovative technologies. Not to mention the jobs that could disappear. Corporate social responsibility is about finding a balance between social, environmental and business interests. This balance is hard to find here.


What do you think? Are the nitrogen standards imposed by the EU on car manufacturers too strict? Or should the emission targets be met at all costs? Let us know in a comment!

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