Economy, Auto

Automakers Can Face Big Fines for Missing EU Emissions Targets

Automakers Can Face Big Fines for Missing EU Emissions TargetsAutomakers Can Face Big Fines for Missing EU Emissions Targets

Most major automakers are likely to fall short of meeting the European Union’s upcoming carbon dioxide emissions goal, and could face big fines as a result, a consultants’ report said.

PA Consulting ranked automakers according to their progress in meeting the EU’s target to reduce CO2 emissions of new cars sold in Europe to a fleet average of 95 grams per km in 2021 from 118g/km last year, Automotive News Europe reported.

Just three of 11 automakers -- Volvo, Toyota and Renault-Nissan -- are in position to reach that goal, it found. Automakers who fall short will face fines of 95 euro per gram over the limit for each vehicle.

Volkswagen Group, Fiat Chrysler Automobiles, PSA, BMW and Ford are among automakers who could be fined for falling short of their targets.

“Car manufacturers are facing nothing less than the reinvention of their industry,” PA Consulting’s report said, citing increased anti-pollution regulations, disruptive technologies such as autonomous driving, and political pressure following the VW Group diesel-cheating scandal.

In response, carmakers are rolling out plans to increase sales of hybrid and electric vehicles, which are “beginning to have a small impact on sales,” the consultancy said.

Nonetheless, “very few are likely to be able to change the makeup of their fleets fast enough to meet the immediate challenge of the 2021 EU CO2 emission reduction targets, and avoid the significant fines for missing them,” it said.

Companies will do “everything humanly possible to avoid paying the fines,” said Thomas Goettle, the author of the report and lead automotive analyst at PA Consulting.

“The huge issue,” he added, “which you cannot overestimate, is the damage to your brand” by missing the targets in the wake of the VW scandal.

As the 2021 standard approaches, momentum toward reaching it appears to have slowed. The EU reported that last year’s CO2 reduction to 118g/km was the smallest annual gains in a decade, falling 1.4g/km. The EU is seeking to reduce CO2 emissions which are blamed for contributing to climate change. It says cars are responsible for around 12% of total CO2 emissions in Europe.

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