Consulting Firm Says European Car Makers Face Big Fines

BMW plug-in hybrid

A report from PA Consulting warns that European car makers face the potential of big fines if they fail to meet European Union emissions guidelines. Those rules require each manufacturer to have average emissions of 95 grams of carbon dioxide per kilometer — equivalent to 57.4 mpg — by 2020. Manufacturers risk penalties of $100 for every gram of CO2 above the limit, multiplied by the number of cars they sell in 2020. That puts the potential penalties at more than $100 million for BMW and more than $1.1 billion for Volkswagen,” the report says.

The report goes on to say, “If the German manufacturers are to meet their targets they will need to look at bold measures to increase the number of electric, hybrid and plug-in hybrids (PHEVs) vehicles in their fleets. We calculate that to meet the targets, BMW, Audi and Volkswagen will need 25 percent of their European registrations (sales) to be of cars with alternative engines in 2021,” according to Detroit News. Audi and BMW are already planning to meet that target.

Further complicating the picture are the recent revelations by many car companies that their current estimated fuel economy numbers are inaccurate by as much as 10%, prompting calls from many European regulators to tighten up on fuel economy reporting rules. A 10% discrepancy could mean that a car that is supposed to meet the 2020 standard of 57.4 mpg only actually gets about 52 mpg in real world driving.

The report singles out Jaguar/Land Rover and Hyundai/Kia as two manufacturers in danger of incurring large penalties. General Motors of Europe and Fiat Chrysler are said to be ahead of the emissions targets.  Ford Europe is on track to meet the new regulations, the report says.

Enacting government regulations can force manufacturers to comply, but regulations can’t require people to buy cars they don’t want. The automobile business is hugely important to the economy of many countries, especially Germany. If plug-in and electric cars languish unsold on dealer lots, the economic consequences could be catastrophic. In the US, 1/4 of all jobs are said to be tied directly or indirectly to the automobile business.

Crunch time is right around the corner for car makers, drivers, and the environment.

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.