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The European People's Party (EPP) is intensifying its efforts to
challenge the EU's impending ban on new internal combustion engine
(ICE) vehicle sales, set to take effect in 2035, as well as 2025
emissions targets.
This initiative reflects growing concerns within the automotive
industry about the feasibility of a rapid transition to electric
vehicles and the associated regulatory burdens that could
jeopardize European original equipment manufacturers' (OEMs')
competitiveness.
What is the European People's Party?
The EPP, the largest political group in the European Parliament,
is a coalition of various center-right political parties originally
formed in 1976 as a platform for Christian democratic groups. Over
the years, it has evolved into a broader coalition that includes
business-friendly liberal conservatives and other center-right
factions. This diverse composition has enabled the EPP to become a
formidable force within the European Parliament, advocating for
policies that balance economic growth with environmental
sustainability.
EPP proposes flexible ICE-ban
alternatives
Last week, Reuters published details of a draft EPP position
paper outlining its stance on the future of the European automotive
sector. The paper argues for the reversal of the legislation that
bans the sale of ICE light vehicles starting in 2035, proposing
instead that the law should allow sales of ICE vehicles powered by
biofuels and alternative fuels.
Additionally, the EPP advocates for including plug-in hybrid
vehicles in the regulatory framework, suggesting that these
vehicles can ease the transition to electrification for both
consumers and OEMs.
Such a policy shift would recognize the complexities of
transitioning to a zero-emission vehicle market. EPP's position
acknowledges the need for a balanced and pragmatic approach that
takes into account OEMs' technological capabilities, consumer
preferences and existing infrastructure.
EPP takes on 2025 EU emissions targets
However, the more pressing issue highlighted in EPP's position
paper is the new fleet-average emissions target of 94g/km, set to
take effect in 2025. OEMs exceeding this limit could face fines
that, according to Luca de Meo, CEO of Renault and current
president of the European Automobile Manufacturers' Association
(ACEA), could total up to €15 billion.
De Meo has emphasized that these fines could add to the already
high research and development (R&D) costs that manufacturers
incur when developing zero-emission technologies.
De Meo's concerns point to a broader issue: the lack of adequate
market conditions to support such a rapid transition. He argues
that without the necessary infrastructure, stable incentive schemes
and competitive energy pricing, the automotive industry may
struggle to meet the EU's ambitious targets.
Political goals vs. industry realities
The EPP's efforts to challenge the ICE ban signal growing
political momentum to reconsider the EU's automotive policies, even
though the European Parliament only approved the ban in February
2023.
The EPP's proposal to postpone the 2025 emissions target until
2027 may offer OEMs some immediate relief. But enacting this delay
poses significant legislative challenges, especially with the new
regulations just three weeks away from taking effect.
EU Commissioner for Climate Action Wopke Hoekstra has expressed
confidence in the current climate rules, asserting that they
provide a predictable investment environment. And many companies
say they are on track to meet the established targets. However, the
EPP's pushback against the ICE ban and its call for regulatory
changes indicate a significant divide between political goals and
industry realities.
Automotive industry views on CO2 reduction targets differ
Industry views about the 2025 CO2 standard differ widely. For
example, the CEO of BMW Group, Oliver Zipse, told Automotive News
Europe this week that he sees no reason for a delay: “We have known
the targets for 2025 since 2019. We have aligned our model policy
accordingly and further increased the efficiency of the
powertrains. CO2 reduction is not just about electromobility.”
Separately, one reason for Carlos Tavares' recent ousting as
Stellantis CEO appears to be disagreements over electrification
strategy and the new CO2 standard, especially with the company's
dealers. Tavares had opposed ACEA's call for short-term relief from
the targets—even going as far as removing Stellantis from the
industry body in 2023 to pursue an independent lobbying
strategy.
Almost as soon as Stellantis announced Tavares' departure, it
opted to rejoin the body, and the company's dealer group supports
the ACEA proposal to back a delay. In addition, the ACEA's incoming
president, Mercedes-Benz Group CEO Ola Källenius, has pledged to
continue the group's lobbying efforts to relieve OEM's legislative
burden.
Gradual transition key to balancing objectives
The EPP's challenge to the ICE ban reflects broader tensions
within the EU about environmental policy and economic viability. As
the automotive industry grapples with the dual pressures of
stringent emissions regulations and the demand for technological
innovation, the EPP's stance highlights the need for a more nuanced
approach to climate legislation.
Although the goal of achieving a zero-emission fleet is
commendable, the existing infrastructure and market conditions may
not yet support such an abrupt shift. The EPP's proposals could
serve as a bridge, allowing for a more gradual transition that
aligns with technological advancements and consumer readiness.
Moreover, the financial implications of the 2025 emissions
targets cannot be overstated. The potential fines for noncompliance
could stifle innovation and investment in green technologies as
OEMs divert resources to meet regulatory demands rather than
develop new solutions. The EPP's push to protect manufacturers from
these penalties could foster a more conducive environment for
R&D, benefiting the industry and the environment in the long
run.
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