Renault CEO Luca de Meo said today that automakers collectively may need to pay ~€15B in fines if they miss 2025 emissions targets, as they’ve failed to ramp up efficient vehicle production in line with EU guidance – even as consumer EV demand continues to rise in Europe.
At issue are Europe’s 2025 CO2 targets, and a penalty calculated based on fleet average CO2 emissions per automaker.
By 2025, automakers are supposed sell vehicles with average emissions of 93.6g/km or lower. If an automaker fails to meet this legal target, which was established in 2017, it may have to pay a fine of €95 per gram of CO2 per car.
The potential fines vary by automaker, with some automakers close to meeting the targets and some far away. Multiple automakers have already met the targets, namely Tesla and Volvo, who are well under the requirements. And some are close to meeting them due to high EV or hybrid mix, like Kia, Hyundai and Stellantis. These companies risk a fine of a few hundred euros per car if their fleet emissions remain at 2023 levels.
Worst off are Ford and Volkswagen, which have a longer way to go before meeting 2025 targets. These companies could risk fines of €2,000+ per car, given their current levels of noncompliance.
de Meo tries to avoid blame for fines industry knew were coming
Today, Luca de Meo, who is CEO of Renault and also head of the European Automobile Manufacturers Association (ACEA), said to Inter radio in France that fines could total €15 billion if fleet emissions remain at today’s level, or that automakers would need to give up the production of 2.5 million polluting vehicles in order to come into compliance.
de Meo said “the speed of the electric ramp-up is half of what we would need to achieve the objectives that would allow us not to pay fines,” notably using the words “the electric ramp-up” instead of “our electric ramp-up” in order to suggest blame could come from external factors instead of from the industry itself.
de Meo went on to beg for “flexibility,” saying “setting deadlines and fines without being able to make that more flexible is very, very dangerous.”
Notably, these targets were established in 2017, which is more than enough time for automakers to know what they need to do, and were already subject to interim evaluation in 2023.
The average car development cycle is about 7 years long from start to finish, so even if automakers waited until after the 2017 regulation was adopted (which would have been folly, since both climate change and the necessity of the EV transition have been obvious since well before then), they still had plenty of time to bring new models to market that would be ready today.
de Meo isn’t the only automaker head who has repeatedly called for 11th-hour flexibility on targets they knew about 8 years ahead of time. BMW CEO Oliver Zipse has also called for a review of the targets.
But the ACEA, which de Meo is also the head of, says the 2025 targets should remain unchanged, saying “any change to this would not leave enough time to adapt due to vehicle development and production cycles.”
And Transport & Environment, in an April 2024 analysis, showed that these targets are still reachable, just that automakers have put in little effort to reach them yet.
In previous years, automakers made the same complaints that new targets would be hard to reach and that they risked fines, begging for leniency instead of just putting in the work needed to meet them. Then, miraculously, when the time came for regulations to go into place, their fleet emissions dropped precipitously from their previous plateau to meet the new targets. It’s almost like the effort was possible all along. I wonder if the same is true here…
Electrek’s Take
To be clear: I have absolutely zero sympathy for any automaker who was given years of notice that they would be fined for poisoning the world’s climate, and yet continued to do so and are now asking for lenience. You broke the law, the law is a good law (which could be better), you had plenty of time to get ready for it, and you failed to do so.
One attempted argument from the automakers is that “demand has cooled” for EVs and that it’s not the automakers’ fault, but this is incorrect. EV sales continue to go up, not down (+11% year-over-year in Q2 2024), which means demand continues to rise, not shrink, in spite of the many incorrect headlines stating otherwise. Hybrid sales are also up in the EU (+21% in Q2), which also helps increase fleet efficiency, though not as much as EV sales do. Meanwhile, gas car sales actually are slowing (-2% in 2Q).
One reason this rising EV sales tide hasn’t lifted European automakers’ boats as much as it might have is because many of those EV sales are taken up by upstart automakers, whether it be in the form of Tesla which has Europe’s best-selling vehicle, or Chinese brands which are exporting affordable EVs into Europe after that country’s auto industry actually committed to building cleaner, more futuristic vehicles rather than waffling and begging regulators to protect them while they pollute just a little bit more please. Indeed, the two brands that got busy exceeding targets instead of whining are listed in this paragraph – Tesla, and Volvo (owned by Geely, a Chinese firm).
Also, all the above Q2 sales growth numbers could (and should) be higher in magnitude, if it weren’t for automakers’ intransigence. These numbers are your responsibility to move, not anyone else’s.
Customers will buy the products they’re shown – it’s your job to create demand (after all, you’ve spent the last century trying to reorganize all of society around more and more wasteful, oversized vehicles in the first place), it’s your job to build the products, and it’s your job to scale them to affordable prices.
You have known this was your job for many years now, if not decades. And you didn’t do it.
And it’s not an impossible job either. Not only has Tesla already met the targets (despite its CEO losing his way on climate change), but so has Volvo (despite its recent misguided EV backtrack) – showing that both a new(ish) startup and a company with an established, decades-old gas car business can both exceed these targets, and do so by a longshot.
So, everyone else that’s complaining is simply doing a subpar job of it. These automakers have failed to cross a bar that is demonstrably crossable, and will be penalized for it if they don’t clean up their act immediately, just as they should. They continue to build and advertise cars that poison the world, that destroy nature, that threaten and will lead to mass displacement of vast swaths of the human population, and so on, and they absolutely should have to pay for it – and frankly should feel relieved that they’re not being made to pay more.
If they don’t want to pay the price they’ve brought upon themselves, they’re welcome to stop building, advertising, and lobbying in favor of cars that poison the world anytime. Nobody’s making them spend the tens of billions they spend advertising gas cars to Europeans every year.
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