Top Automakers Facing $16Bn in Climate Fines

Up to 13 carmakers brands are facing a total of $16Bn in fines for missing European CO₂ targets.

That’s the assessment of industry analyst PA Consulting whose annual forecast of manufacturers’ performance against mandatory European Union emissions targets suggests they are falling short. It says emissions have increased across the board, mainly owing to consumer preference for less efficient SUVs, strong demand for high-powered and heavier cars, a perceived lack of low-emission options in dealers showrooms and shifting preference for gasoline to more climate friendly diesel engines following the Volkswagen cheat-device ‘dieselgate’ scandal.

Even more alarming is that some automakers will see fines large enough to impact on their profitability and reputation. VW itself could be fined as much as $5Bn because of high volume sales across Europe. At the same time, previous top performers such as Renault-Nissan-Mitsubishi, Volvo and Jaguar Land Rover are now predicted to also miss their targets. Even Toyota, the market leader in hybrid vehicles and assessed as the best CO₂ performer, is forecast to miss its target. JLR would face the biggest impact from fines based on EBIT at $103M representing 400% of its 2018 profit.

The study ranks each manufacturer by their CO₂ performance forecast for 2021 with the PSA Group seen as the main improver overtaking Renault-Nissan-Mitsubishi to take second spot. Volvo, VW, Daimler and BMW are further from their target than last year while JLR still has the highest CO₂ emissions and is now in danger of missing its specific target.

To reach target, suggests the study, automakers must sell more than 2.5M extra BEVs, a 1,280% increase by 2021. Production capacity constraints make this almost impossible. For example, VW’s new production lines for the ID3 have a capacity to produce just 100,000 units in 2020.

From a country perspective, the report reveals all except Norway and the Netherlands saw a worsening in their overall figures. Norway, which offers large financial EV incentives, has reduced emissions from 83.7g CO₂/km in 2017 to 72.4g CO₂/km in 2018 and sales of electric vehicles accounted for 31.2% of new car sales. The Netherlands was the second-best performer with emissions of 106g CO₂/km and sales of fully electric vehicles making up 6% of the total. The UK saw a decline in emissions performance from 120.8 CO₂/km to 125.1 CO₂/km but an increase in electric vehicles sales to 0.7% of all new registrations. Germany also saw an increase in emissions from 126.2g CO₂/km to 129.1g CO₂/km alongside a slight increase in electric vehicle sales, from 0.7% to 1.1%.

Michael Schweikl, automotive expert at PA Consulting, said: “Carmakers are running out of time to improve performance quickly enough to avoid fines. Marketing, sales and pricing strategies that increase the take-up of low-emissions vehicles will be essential in getting manufacturers closer to the targets.”


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