New emission regulations in Europe are set to tighten in 2024, placing significant financial pressure on car manufacturers.
Manufacturers Face Challenges
The updated Clean Air For Europe (CAFE) standards will reduce the allowable carbon dioxide emissions for new cars to 93.6 grams per kilometer, down from the current average of 116 grams.
Companies that exceed these limits will face fines of €95 (approximately $100) for each gram over the threshold, and this cost will likely be passed on to consumers, according to Moto.
The regulations require each automaker to meet specific emissions targets established by the European Commission, based on the average weight of the vehicles they sell.
Brands that focus on low-emission hybrids and electric vehicles will find it easier to comply. However, manufacturers like Volkswagen and Ford are facing significant challenges in meeting these new standards.
Industry Leaders Call for Reevaluation
In 2021, automakers collectively paid €550 million in fines for non-compliance, and it is expected that 2024 will see similar financial repercussions. Only a few manufacturers, such as China's Geely and Toyota, have met their emissions targets in the first half of the year.
Industry leaders, including Oliver Blume of Volkswagen and Oliver Zipse of BMW, have called for a reevaluation of these stringent regulations due to declining demand for electric vehicles.
Experts predict that the costs incurred by manufacturers will lead to price increases for consumers, potentially raising vehicle prices by as much as $5,500. This price hike may drive away budget-conscious buyers, while luxury brands may not see significant drops in demand.
As the EU prepares for even stricter emissions standards by 2030, the current regulations could inadvertently lead to a prolonged reliance on combustion engine vehicles, especially if the infrastructure for electric cars does not keep pace with demand.
