The European automotive sector is going through tough times, and brands are now preparing to increase the prices of combustion engine models while lowering the prices of electric models, at a time when stricter emission rules threaten to further reduce companies’ profits.
At the heart of the issue are the new emission rules from the European Union, which are set to come into effect on January 1, 2025, and will require automotive brands to achieve at least 20% of their sales in electric models to avoid heavy fines.
However, that goal does not seem easy to achieve, especially since the decline in demand for electric vehicles and strong competition from Chinese brands is causing a significant impact on the profits of these brands.
According to reports from “Reuters”, to try to avoid heavy fines, VW, Stellantis, and the Renault Group have decided to raise the prices of combustion engine models by several hundred euros in the last two months, which analysts say is an attempt to slow down demand for more polluting vehicles and make electric models more attractive to consumers.
However, a source contacted by “Reuters” admits that the strategy may not work out as planned, as the weak growth in the market for electric models may not generate enough sales.
It should be noted that in October, the European Automobile Manufacturers Association (ACEA) revealed that sales of 100% electric vehicles in Europe increased by 2.4% to 124,907 units. However, the cumulative market volume from January to October fell from 14% in 2023 to 13.2% in 2024, with the total market share at 14.4%.
Concerned about the situation, ACEA has already stated that the new emission standards do not take into account “the profound change in the geopolitical and economic climate of recent years, and the inherent inability of the law to adapt to real-world developments further undermines the competitiveness of the sector”.
To find solutions for the European automotive sector, ACEA has already indicated that it is available to work with Brussels for a swift and comprehensive review of the emission regulations set to take effect in 2025.
