A Critical Juncture for Europe's Automotive Future
Mercedes Chief Sounds Alarm on EU's 2035 Engine Ban
Just weeks after expressing serious concerns about the direction of Europe's car industry, the CEO of Mercedes-Benz, Ola Källenius, has intensified his call for the European Union to reconsider its 2035 prohibition on new internal combustion engine (ICE) vehicle sales. He previously warned in a German newspaper that the EU was on a collision course, potentially leading to the industry's \"collapse\" without a vital \"reality check.\"
Automotive Leadership's Unified Plea for Policy Revision
In his capacity as the President of the European Automobile Manufacturers' Association (ACEA), Källenius penned an open letter to European Commission President Ursula von der Leyen. The letter asserts that the global landscape has significantly transformed since the ban was initially conceived, rendering its premise outdated. Joined by Matthias Zink, President of the European Association of Automotive Suppliers (CLEPA), Källenius criticized the stringent CO2 targets for cars and vans, stating that achieving zero emissions by 2035 is no longer a viable or realistic objective.
A Glimmer of Hope: Upcoming Dialogue and Potential Policy Shift
Despite the challenges, Källenius perceives an opportunity for the EU to alter its course in the near future. He anticipates a crucial Strategic Dialogue on September 12, where discussions could potentially lead to a re-evaluation or postponement of the ban. While ACEA members remain steadfast in their commitment to achieving carbon neutrality by 2050, they contend that phasing out combustion engines by 2035 is premature and detrimental.
Divergent Industry Perspectives on the Path to Electrification
The automotive sector is not entirely unified on this matter. For example, Kia's European head, Marc Hedrich, conveyed to Automotive News that rescinding the ban would be financially detrimental for his company. He noted Kia's substantial investment in electric vehicle development, suggesting that a slowdown in EV adoption to preserve gasoline models would negatively impact profitability. Although Kia is not an ACEA member, its parent company, Hyundai, is part of the association's 16-member roster.
Navigating Tightening Emissions Standards and Regulatory Pressures
Earlier this year, the EU reaffirmed its 2035 ban while providing some flexibility by allowing automakers to average CO2 emissions over the 2025-2027 period, rather than imposing strict annual limits. Nevertheless, new targets for 2025-2029 mandate a 15 percent reduction compared to 2021-2024 levels, requiring fleets to average 93.6 g/km. Beyond 2030, the target drops further to 49.5 g/km, culminating in a zero g/km mandate from 2035, effectively compelling carmakers to exclusively sell electric vehicles if the ban remains in effect. These increasingly stringent regulations are creating significant operational challenges across the industry. Stellantis, an ACEA member, reported that regulatory compliance alone consumes a quarter of its engineering resources, yielding no added value.
Global Ramifications of Europe's Automotive Policy
The ultimate decision regarding the 2035 ban will ripple far beyond the EU's 27 member states, influencing global product strategies. Forcing automakers to abandon ICE sales in such a vital market could undermine economies of scale, potentially rendering certain gasoline-powered models economically unfeasible and leading to their complete discontinuation.