EU emissions rules due to come into force as soon as 2025 are likely to make petrol cars less profitable than electric models, marking a landmark moment for the auto industry, according to one of Volkswagen’s most senior executives.VW, the world’s second-largest automaker, has set out plans to invest €35bn in electric vehicles as governments try to accelerate the transition to less polluting cars.
Thomas Ulbrich, head of development at the VVV brand, said new engine standards, called Euro 7, would pose a “tremendous challenge” for petrol-based vehicles because they would need more expensive technology to ensure they are compliant.
“If you now ask when is the point for [profits] becoming equal to an internal combustion engine, you know that with Euro 7 there are tremendous challenges for the internal combustion engine world,” Ulbrich told the Financial Times.The regulations, which are due to come into effect in about 2025, would require more “technical needs” such as expensive emissions reduction equipment in internal combustion engine cars, he added.
The forecast from Ulbrich is one of the starkest yet from an industry that, with some exceptions, still makes far more money selling traditional petrol engines than electric ones.Peugeot owner Stellantis said last week that while margins on its electric cars were similar to those for petrol models, government subsidies for the former were likely to be unwound in the coming years. Renault said its electric cars had equal margins to some of its current petrol range.
Global carmakers are investing billions of dollars as they race to prepare for the demise of the ICE, as the internal combustion engine is known in the industry.