Mercedes Boss Wants The EU To Drop Emissions Fines

• Ola Kallenius is asking the EU to drop the fines for automakers who don’t comply with the new emissions regulations.
• Kalleniusis the CEO of Mercedes-Benz and the president of the European Automobile Manufacturers’ Association (ACEA).
• For 2025, automakers’ new models have to emit less than 95 grams of CO2 per kilometer on average. Otherwise, fines will need to be paid.

Electric cars had a rough time last year in Europe. Despite more affordable models being launched, the latest provisional data shows a 6% decline in EV registrations in Europe compared to 2023–in contrast to the uptick in sales in the United States and China.

To make matters worse, starting this year, European automakers will have to pay fines if their fleet-wide average carbon dioxide emissions don’t go down enough to meet the new lower limits. It’s the first in a series of measures known as the European Green Deal, a legislative package designed to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels, and to eliminate net emissions of greenhouse gases completely by 2050.

It’s the same laws pack that effectively bans the sale of new combustion-powered cars from 2035 in the EU–paving the way for an all-electric future on this side of the Atlantic. However, local automakers are not fans of the Green Deal, and neither are the countries where these automakers operate. Now, Ola Kallenius, the CEO of Mercedes-Benz and the president of the European Automobile Manufacturers’ Association (ACEA), has sent an open letter to the European Commission and the European Parliament calling for an end to the upcoming fines.

Kallenius argues that the impending fines for automakers who don’t comply with the updated CO2 emissions limits will hurt the industry and that the money could otherwise be spent on research and development to bring more affordable EVs to the market.

“The automotive industry especially needs to know how to mitigate the risk of significant non-compliance,” Ola Kallenius said. “In a critical phase of the transformation, the risk of paying heavy penalties for CO2 non-compliance would divert necessary funds from R&D and other investments,” he added.

Kallenius also wrote that the issue with EV sales going down last year isn’t necessarily linked to a lack of options–there are plenty of models to choose from. That said, “the European Green Deal must be subject to a reality check and a realignment–to make it less rigid, more flexible and to turn the decarbonization of the automotive industry into a green and profitable business model.” ACEA’s president listed more incentives as a solution to boosting EV sales on the continent, as well as working closely with energy companies, telecom operators and smart grid solution providers.

Above all, Kallenius was adamant that European carmakers still agree with the 2050 decarbonization plan and the shift to zero-emissions transportation and mobility.

“Let me be clear: the EU auto industry remains committed to the EU’s 2050 climate neutrality goal as well as the shift to zero-emission transport and mobility. However, the decarbonization strategy for the automotive sector must create economic growth and competitiveness–not curb it.”

Ola Kallenius, Mercedes-Benz CEO and ACEA president

Transport & Environment, the non-profit organization that lobbied the EU to adopt the new emissions rules, says that the majority of automakers won’t actually have to pay any fines. That’s because car manufacturers always launch the cars that will help them achieve the new targets in the year when the new regulations go into effect–that’s 2025 in this case.

Starting this year, the average fleet-wide CO2 emissions level for passenger vehicles needs to be lower than 95 grams/kilometer (down from 116 g/km), while light commercial vehicles need to be under 147 g/km. That said, the limit is not fixed in stone and varies depending on the average weight of the cars sold in 2025, as well as on the bonuses earned from selling zero- and low-emissions vehicles, which lowers the target for companies that sell a certain number of EVs.

The Volkswagen Golf GTE is a plug-in hybrid hatchback. Volkswagen, along with several other automakers, plans on launching multiple new PHEV models.

For instance, Mercedes-Benz has an estimated fleet-wide CO2 target for passenger cars of 91 g/km, Volvo needs to be under 90 g/km and Stellantis under 97 g/km. Exceeding these limits could lead to fines of 95 euros ($98) per excess carbon dioxide g/km multiplied by the number of vehicles sold.

According to T&E, the EU’s 2025 CO2 target is both achievable and realistic, and carmakers are unlikely to face any penalties this year thanks to a mix of newly released hybrids, plug-in hybrids and EVs that were designed to roll off the assembly lines this year.

Here’s what the NGO had to say:

Even in the worst-case scenario, where carmakers fail to meet their production plans, total penalties are projected to remain below 1 billion euros, with Volkswagen Group accounting for the lion’s share of the total. This projection is based on conservative EV sales estimates from GlobalData with Volkswagen selling around 15% EVs in 2025 and pooling with Tesla [by purchasing credits]. By increasing EV sales to 17%, Volkswagen could completely avoid the penalty (while still pooling) and 22% EV sales would allow it to fully meet its target without pooling.

Transport & Environment

Ever since the European Green Deal was approved, several automakers and countries have opposed it, calling for an end to forced CO2 limits and the banning of combustion cars past 2035. Austria, Bulgaria, Poland, Romania, Slovakia, Czechia and Italy have called on the EU to drop the impending fines. “The current targets for passenger cars, set to be enforced by 2025, risk imposing fines on manufacturers who are unable to meet these stringent requirements due to the slowing uptake of Battery Electric Vehicles,” a joint proposal published on the Austrian parliament website showed last year.

It’s worth noting that EV sales have not slowed down everywhere in Europe, as ACEA’s own numbers show. Just a handful of countries experienced a drop in EV registrations last year, including Germany. Furthermore, analysts at S&P Global mobility are predicting EV sales in Europe will soar over 40% this year compared to 2024.

The European Automobile Manufacturers’ Association represents the major 16 Europe-based carmakers: BMW Group, DAF, Daimler Truck, Ferrari, Ford, Honda, Hyundai, Iveco Group, Jaguar Land Rover, Mercedes-Benz, Nissan, Renault Group, Stellantis, Toyota, Volkswagen Group and Volvo.