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Coronavirus & CO2 Rules Create Perfect Storm For European Auto Industry

March 27, 2020
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By Paul Homewood

 

From Forbes:

 

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As the European automotive crisis deepens, with plants closing temporarily and demand likely to fall by up to 20% this year, the industry needs the EU to step in, concede its rules are going to cause irreparable harm to the business and its huge, highly skilled workforce, and either dilute the demands, or delay them for a while.

Instead, the EU is currently working on actually making the rules even more stringent. The industry seems too fearful of offending politicians to plead for some protection against the malign impact of the rules, which demand the equivalent of an average 92 miles per U.S. gallon by 2030.

The European Automobile Manufacturers Association, known by its French acronym ACEA, was asked if it planned to seek protection from the impact of the rules because of the crisis. In response, ACEA issued a statement seeking national government and EU financial support for the industry, which supports about 14 million jobs, unspecified measures to avoid undermining the industry, and a general stimulus to Europe’s economy. The fuel economy rules didn’t even get a mention.

The EU Carbon Dioxide (CO2) regime insists carmakers raise average fuel efficiency from the equivalent of about 57 miles per U.S. gallon in 2020/2021, from 41.9 mpg in 2015, rising again by 15% in 2025, and hitting 92 mpg by 2030. That compares with current U.S. draft legislation calling for a 40.5 mpg fleet average by 2030.

According to a report from investment researcher Jefferies last year, if the auto industry makes no progress in curbing CO2 from 2018 towards meeting the EU’s 2020/21 regulations, it faces fines totalling the equivalent of $36 billion, twice its estimated profits, and could be forced to raise prices up to 10%. Latest data suggests in 2019, the industry went backwards not forwards in production of CO2 thanks to the popularity of SUVs and the demise of diesel.

The industry is also spending vast sums investing in research and development of electric cars, and at the same time withdrawing big profit margin gas guzzling top of the range sedans and SUVs to help beat fuel economy fines, while pushing forward low or non-existent profit margin small cars.

Full story here.

It appears that the European car industry is being hit by a perfect storm. The ludicrous CO2 emission targets were always going to be damaging to the industry, going against customers were demanding.

Added to that is the soon to come phasing out of all conventional engine cars, which will only benefit Asian manufacturers, while costing European companies a fortune in developing EVs.

And now Coronavirus could leave the European car industry on its knees even sooner than expected.

If Europe is serious about its car industry having a long term future, it has no alternative but to ditch its climate targets.

23 Comments
  1. Rob Ritchie permalink
    March 27, 2020 7:20 pm

    The Law of Unintended Consequences will probably cut in.
    With the decline in oil prices the demand for SUVs and large sedans will go up.
    Used vehicles popularity will increase. The older they are the poorer their mileage.
    They will replace the purchase of new vehicles , further damaging the auto industry.

  2. Phillip Bratby permalink
    March 27, 2020 8:02 pm

    The sooner we are out of the EUSSR the better. It has shown itself to be a totally undemocratic, inept and corrupt organisation.

    • Gerry, England permalink
      March 28, 2020 10:03 am

      The UK will be bound by the same rules as it has signed up to global agreements on vehicles. Even if it hadn’t, there would be no advantage for manufacturers in having more versions of vehicles. In the US the communist state of California has increased its efficiency requirements to above the US standard and hope that by the size of their market they can force the manufacturers to comply for all vehicles.

      • Phoenix44 permalink
        March 28, 2020 10:13 am

        But there are advantages – they are cheaper.

  3. David permalink
    March 27, 2020 8:29 pm

    Fully electric cars for many practical reasons will never be the answer. Hybrids are a good idea to reduce city pollution. But I wonder about the feasibility of induction coils under motorway carriageways running the electric motors and simultaneously keeping the battery topped up. Expensive to install but probably low maintenance.

    • March 27, 2020 9:25 pm

      “induction coils under motorway ”
      you could charge your pacemaker up at the same time !

      • Russ Wood permalink
        March 29, 2020 11:47 am

        Yeah, right. Please, people – don’t take that seriously! As the new, unwilling, owner of a cardiac pacemaker, and as a retired computer person, I took the time to RTFM. It says to keep anything that emits radio frequency waves at least 20 centimetres away from the device. So, I can’t carry my cellphone in my shirt pocket any more! I would guess that enormous induction coils to charge the (ugh!) electric cars might come under the DO NOT category!

    • Henning Nielsen permalink
      March 27, 2020 9:28 pm

      There are ca. 280 mill. cars in Europa. And the power will come from? Or maybe we’ll go in for the Fred Flintstone solution:
      http://content.time.com/time/specials/packages/article/0,28804,1843821_1843820_1843808,00.html

  4. JimW permalink
    March 27, 2020 9:38 pm

    Germany committing industrial suicide.

  5. JerryC permalink
    March 27, 2020 10:57 pm

    The idea that Lithium-Ion batteries are a “Green” technology is a huge fraud. Have these geniuses calculated the amount of CO2 emitted in making these things? To say nothing of all the other environmental damage in the Li-Ion battery supply chain and manufacturing process.

    • Rowland P permalink
      March 28, 2020 9:34 am

      The batteries can be made redundant by adopting aluminium/air fuel cells capable of increasing the range of a car up to 1500 miles before quickly and easily replacing the cell. Why is this not being backed? Too much money already invested? See https://www.metalectrique.com

  6. Gamecock permalink
    March 28, 2020 2:03 am

    U.S. politicians crying that drugs are made in China, not U.S.

    U.S. politicians drove them out. U.S. politicians demand they come back here. But U.S. politicians have no intention of undoing any of the crap they laid on manufacturers that caused them to leave in the first place.

    History repeating itself in German car industry. ‘Cept SE U.S. is Germany’s China.

    We have an excellent BMW plant in Greer, SC. Nice Mercedes plant in Alabama. EU/Germany pressure their industry, it will move. Here.

    A global economy means you can’t put fascist control on your businesses. They will simply move elsewhere. In a sense, EU/Germany are decadent, thinking they can do whatever they want to to their businesses and the businesses will just take it.

    We have a nice Sig Sauer factory in New Hampshire. Germany told Sig they couldn’t export pistols. Sig exported the FACTORY.

    • Phoenix44 permalink
      March 28, 2020 10:15 am

      US politicians having been whining about Big Pharma for decades and making the costs of development prohibitive, then whind that theres not much of US industry anymore.

      Typical Leftists, they expect to be able to impose whatever they like and still have people risking their money as investors.

  7. Steve permalink
    March 28, 2020 4:00 am

    Covid19 has brought to light the dependence of the WHO on Chinese money and the politics of its director. He was full of praise from the late Chinese efforts to close down the epidemic, bearing in mind the young doctor who had alerted the authority about it and was silenced, had died. It is true that the measures have worked better than those taken in Europe but, as the letter above shows, the WHO itself played down the pandemic and did not urge the banning of air travel, allowing many of the Chinese workers to return to Italy and travel back and forth to China for their new year.
    The stricter WHO standards for air pollution had the effect of finishing off the diesel car industry in Europe, where it had been developed in order to decrease CO2 very successfully. Although it could have been developed to completely remove NO2 and particulates from tailpipes had been minimised, diesel has been killed and secondhand prices have sunk to almost worthless. The Chinese auto industry has benefited because it has a lead in electric car production and the European industry is now suffering. The WHO needs to be investigated.

    • Steve permalink
      March 28, 2020 4:07 am

      Also, don’t forget that the Chinese own the lithium and cobalt mining in Africa and the rare earth mining in China itself. They have a grip on the materials, which are insufficient anyway to expand electric car production and replace ICE cars.

  8. A Norwich Tory permalink
    March 28, 2020 7:25 am

    Sometimes you’re just too sensible, Paul. 🙂

  9. March 28, 2020 9:48 am

    People in democracies have it in their own power to get rid of governments that insist on imposing stupid ‘green’ policies. If they don’t do so they will only have themselves to blame for the negative outcomes, which may including declining living standards and/or the loss of their own job.

    • Gerry, England permalink
      March 28, 2020 10:07 am

      Really? Explain how that would work in the UK given that Red Labour, Blue Labour, LibDems, SNP and Welsh lot are all sold on global warming.

  10. Harry Passfield permalink
    March 28, 2020 10:12 am

    It’s a disgrace – and a testament to the illiteracy of the protesters – that CO2 is still considered BLACK (see head pic). Where is the Woke generation that is offended by anything and everything when it comes to the demonising of colour?

  11. Phoenix44 permalink
    March 28, 2020 10:17 am

    Difficult to see a new car being near the tip of anybody’s to buy list once the CV panic is over.

  12. Ron Barton permalink
    March 28, 2020 2:07 pm

    There is an excellent article on Covid 19 in the Spectator where Jon Lee, a recently retired professor of pathology, writes about his concerns of Governments following scientific advice-
    “We (governments)have decided on policies of extraordinary magnitude without concrete evidence of excess harm occurring and without proper scrutiny of the science used to justify them”
    The final outcome and analysis of the corona virus pandemic will hopefully result in a massive wake-up call to our Government about following science based on evidence rather than models and a complete rethink of their climate change policy.

    • March 29, 2020 9:58 am

      Unfortunately I do not think that any of our “politicians” ever heard of science and certainly do not know how it works.

  13. Ron Barton permalink
    March 30, 2020 1:33 pm

    It doesn’t help when the MSM, especially the BBC, are not allowing.skeptics of CC to have an equal voice or any influence on public opinion and the Government.

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