Tough new emissions controls could see car manufacturers hit with mega-fines next year amid disappointing sales of electric vehicles.
Fines relating to the sales of new cars begin on Jan 1 in accordance with EU emissions standards and are set to deliver another blow to the beleaguered sector.
In 2020 manufacturers will have to meet controls on CO2 emissions averaging 95g per km on all new cars they sell. According to the EU, this works out at fuel consumption of about 4.1 litres per 100km of petrol and 3.6 litres per 100km of diesel.
Missing the target will mean a penalty of €95 (£81) per car for each gram per km by which firms miss the target.
The slow uptake of zero-emission electric vehicles – which let manufacturers speed up cuts in average emissions – looks set to push the target out of reach.
Ratings agency Moody’s calculates 12 of the biggest-selling motor manufacturers in Europe are in line for fines totalling €2.4bn (£2.1bn) as a result of failing to meet new emissions controls.
Analysts at the ratings agency said: “This year will be critical as we still see most manufacturers having to launch a large number of new models and incentivise customers to purchase electrified vehicles in order to avoid penalties. So, we would still see a similar sort of gap that the companies have to close, in the face of significant delivery risk.”
This could mean car manufacturers offering electric vehicles at heavily discounted prices in an attempt to sell enough to reduce fleet emissions. Any such move would most likely knock profits in the already under-pressure industry. Electric cars are already seen as low to zero-margin products for many makers, due to the cost of developing and manufacturing new technology.
There is anecdotal evidence of deliveries of electric cars sold in 2019 being held back by firms until 2020 to boost their environmental performance. The car industry insisted this week that deliveries of electric vehicles were taking around the same length of time as those of petrol cars, despite reports of delays.
Problems have been further exacerbated by the decline in sales of diesel cars – which have lower CO2 emissions than petrol – as suspicion around the fuel lingers in the wake of the VW emissions scandal.
In the UK, diesel now makes up just a quarter of the market, down from more than half prior to “dieselgate”.
Although gaining in popularity, all-electric battery cars comprised just 1.5pc of car British car sales this year.
Motorists’ changing tastes could also have an effect, with declining sales of smaller cars that are less polluting, while gas-guzzling SUVs continue to grow their market share.
These factors mean that in 2018, average emissions for new cars sold in the UK were 124.5g per km, a rise of the 2.9pc on the previous year and the second consecutive increase, having fallen consistently since 2000. Figures due to be released in the next few days are expected to show a further rise.
New methods of testing vehicles emissions brought in following the VW scandal are also expected to drive up emissions. The system, known as WLTP, is more accurate than the previous lab-based regime, resulting in results closer to real world conditions.