While European car manufacturers are bracing themselves for a possible trade war held by President Trump, they work to defend another threat from their home grass: the prospect of paying hundreds of millions of dollars to Tesla and Chinese competitors who muscles on their core market.
Under stricter regulations of the European Union that come into effect this year, car manufacturers who sell cars in Europe are confronted with heavy fines if their vehicle production has no heavy goals for reducing CO2 emissions. With the demand for electric cars in Europe and manufacturers that are pressed by competition from China, lobbying car manufacturers, politicians and industrial groups for help.
After an industrial summit in Brussels on Thursday, Ursula von der Leyen, the president of the European Commission, recognized the executive power of the European Union, the challenges that the car industry was confronted with and promised that supervisors “act quickly” to tackle them .
According to the rules, car manufacturers can achieve their goals by increasing the number of zero missing cars that they produce or reduce their output of vehicles with combustion engines.
There is another option: they can buy emission credits by 'pooling' 'pool' with companies that only make electric cars and have an abundance of credits. In a turn of fate, that the European car manufacturers turn to some of their greatest rivals, including Tesla and Gene of China, who owns Volvo cars and has a controlling interest in the electric vehicle maker Polestar.
The strategy to buy emission credits is not new, but it recently has alarms in France and Germany, the home base of the largest car manufacturers in Europe, because it is when the demand for electric cars is softened, which leads to threats of factory closures and the loss From thousands of jobs. Adding worries in Europe is Elon Musk, the Chief Executive of Tesla, who has criticized EU rates on electric vehicles made and accused of interfering in politics in Great Britain and Germany.
“A rigid position that would result in billions transferred to Chinese manufacturers, some of whom have conquered their European market share by unfair commercial practices, or to Tesla, whose CEO Elon Musk openly attacks European rules and values, would be a political error,” the French Minister of European Affairs, Benjamin Haddad, wrote this week in an open letter published in French newspapers.
The EU measures also require that at least a quarter of all new cars are being produced this year, being electric. Most major car manufacturers in Europe, including Mercedes-Benz, Volkswagen and Stellantis, are by no means close to their goals. They produce more electric vehicles than ever before, but they also remain driven cars and trucks through gas to meet customer demands.
When Europe first started sharpening the emission rules in 2021, Stellantis bought from the merger of PSA Group and Fiat Chrysler, from 2019 to 2021 about $ 2 billion in Tesla emission credits.
Yet that is less than the potential penalties. Luca de Meo, Chief Executive of Renault, estimated that paying fines could cost the industry more than $ 15 billion, and Volkswagen said earlier this week in an analyst that they could get fines up to $ 1.6 billion.
According to an analysis of the Swiss bank UBS, the reimbursement from Tesla could be more than $ 1 billion in the context of the pooling schedule. Carbon credits have been a blessing for the Tesla cash flow: the company earned $ 1.79 billion in such a turnover in 2023.
Last year Tesla's income from the sale of emission credits in Europe, the United States and elsewhere more than up to $ 2.8 billion, the company reported.
European companies say that a scrub of rules is a growing disadvantage with the United States, where Mr. Trump has sworn to curb the company regulations and to have rules for car pollution back in his first term. His threats to impose rates can further press European car manufacturers.
The European Auto-Industry, which employs 13 million people in the 27-person block, is particularly vulnerable. Registrations of new electric cars in Europe fell by 6 percent in 2024, compared to the previous year, many of them from Chinese manufacturers, who registered an increase in EV turnover in Europe by 45 percent. Their share in the market is expected to only increase.
European Auto Management claims claim that the projections made when Brussels approved the ambitious carbon-saving project, known as the Green Deal, not in 2020, not praised in disturbances such as supply chain interruptions caused by pandemic limitations and the energy crisis that was processed by the Invasion of Russia van Ukraine.
“The European Groene Deal must be subject to a reality check and a reconciling- to make it less rigid, more flexible and to convert the carbon tube of the car industry into a green and profitable business model,” Ola Kälenius, Mercedes' head – Benz and president of the European Automobile Manufacturers Association wrote in an open letter to European leaders.
Regulators insist that Europe will remain the run -out to reduce emissions by 55 percent by 2030 compared to the 1990 level. By 2035, the production of new gas vehicles in Europe would be banned.
