Forget the global trade war, declining sales or even Brexit – the sternest challenge facing Europe’s car industry comes from the exhaust pipes of its vehicles. Strict new carbon dioxide emissions targets will be phased in next year across the EU, with the threat of punitive fines for those who fail to comply. Yet the industry, broadly, is not ready. “It’s going to be a hell of a job,” Carlos Tavares, the chief executive of Peugeot owner PSA, said last month. “But we are going to meet them, whatever it takes.” Under the rules, carmakers must cut their average fleet emissions to less than 95 grams per kilometer of CO2 by 2021.
They face a €95 fine for every gram of CO2 that exceeds the target – multiplied by the number of cars sold that year. “We are talking about a potential C3obn penalty for the industry,” Volkswagen chief executive Herbert Diess warned investors at the company’s annual capital markets day. Yet emissions are heading the wrong way.