Automakers risk $16 billion in fines on EU emission breaches

August 6, 2018 19:32 CET

Automakers failing to cut greenhouse gas emissions risk writing a big check to the European Union.

Manufacturers ranging from Renault to Mercedes-Benz maker Daimler are on the hook for total fines in excess of 14 billion euros ($16 billion), should they fail to comply with tighter emission regulation phased in from 2020, an analysis by IHS Markit shows.

Only a “seismic shift” in demand for electrified vehicles would completely remove the forecast excessive emissions, the forecaster said Monday in a report.

Earlier, analysts at Exane BNP Paribas singled out French automakers PSA Group and Renault as most exposed to any payments, with breaches causing such a hit to automaking profits that failing the new rules was “not an option.”

Carmakers have known for years about the coming change in EU policy, yet many are struggling to drive down average fleet emissions of climate-changing carbon dioxide. In 2017, CO2 fleet emissions rose for the first time in years after buyers deserted diesel cars, relatively fuel-efficient, in favor of gasoline vehicles in the wake of Volkswagen Group’s emissions cheating. Consumers also bought more gas guzzling SUVs.

IHS said its forecast indicated an average EU fleet emission level of 122.9 grams of CO2 per kilometer, 8 grams higher than an adjusted target.

Carmakers’ plans to offer all-new electric vehicles such as the Mercedes EQ C crossover, as well as fine-tuning existing engine-technology, is setting many carmakers on course to meet the tough targets, they said.

“As we continue to follow carmaker technology developments and any regulatory adjustments, our forecasts may be adjusted accordingly,” IHS said.

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