The failure of the fuel economy of European carmakers could cost more than $ 16 billion



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(AP Photo / Mark Humphrey)

European automakers face fines of more than $ 16 billion in 2021 if they fail to comply with stricter rules on fuel economy, according to a report by IHS Markit.

Hopes are fading to see an upsurge in electric car purchases will save the industry, said business information provider IHS Markit in his report. The struggle of the European industry to comply with the regulations has been made more difficult by the disappearance of the popular diesel and the new rules that require manufacturers to claim more honestly a fuel economy.

EU According to the rules, average European fleets must reach fuel consumption of about 57.4 miles per US gallon by 2021. Manufacturers who do not reach this figure incur high fines .

The report did not point to any particular manufacturer, indicating that 25 manufacturers are currently on track to achieve these goals, out of a total of 52.

But the data released today by Citi Equity Research indicate Fiat Chrysler Automobiles (FCA) is in the worst situation and must improve its average fuel efficiency by nearly 6% by 2021. Daimler is best placed, requiring only a 3% improvement. BMW, Renault and the PSA group are getting closer to this figure. VW requires an improvement of more than 4%. The FCA is also lagging behind as it recorded the smallest improvement between 2012 and 2016.

The race to meet these stricter regulations would always be difficult and expensive, but until recently, diesel technology was going to pave the way. But now that diesels have become pariahs in Germany and France, especially for health reasons, the way to energy efficiency has become much more difficult.

The quest for energy efficiency presents another obstacle to overcome. The European Union has new rules that prevent vehicle manufacturers from using inflated fuel consumption data generated with the help of computers and recreating conditions. ideal. The new rules emphasize that energy efficiency claims must be much more closely linked to road performance, which will reduce the current claims of European car manufacturers by around 30%. fuel economy. This also has significant personal tax implications, as corporate car taxes are assessed based on fuel consumption.

Last week, JATO Dynamics released a report highlighting the problems faced by manufacturers.

"This (the stricter rules) comes at a time when the carbon footprint of Europe is likely to increase further. First of all, there is a significant shift from diesel to gasoline in the EU. Member States, whose registrations for the first half of 2018 show that gasoline vehicles have increased their market share by 7 percentage points to 57% of the market. In contrast, diesel engines experienced a sharp decline, with their market share falling 9 percentage points to 37% – the lowest share of diesel vehicles this century, "said JATO Dynamics.

JATO describes itself as a world leader in automotive intelligence.

Electric vehicles were supposed to help fill the efficiency gap, but the public still hesitates to buy them.

"Finally, and perhaps even more, although alternative fuel vehicles (primarily battery-powered electric vehicles, plug-in hybrids and regular hybrids) are up 30% in volume over last year, registrations still represent only 6% of the market ", explains JATO Dynamics. I said.

In fact, the industry is moving back in the direction of energy efficiency. According to JATO, average fuel efficiency could get worse if CO2 emissions rise to 130 grams per kilometer (G / km), or about 42 miles per gallon in 2019, compared to 118 g / km current.

IHS Markit estimates that by 2021, European industry will still reach an average of about 44.4 mpg, not the 57.4 m / m required, which will generate fines of more than 14 billion euros (more than 16 billion dollars).

In 2021, IHS Market declared only a "seismic shift" towards battery-powered and plug-in hybrids will allow the industry to comply with regulations, & nbsp; but that seems unlikely, according to Vijay Subramanian, an analyst at IHS.

"Seismic change is essential because it is too late for car manufacturers to add energy-efficient technologies to their existing engines and vehicles in order to reach the targets set for 2020 and 2021. This option is currently quite narrow, the timing being The only remaining option is therefore a serious consideration for electrification strategies such as BEV and PHEV on existing and new vehicle nameplates, however this is also limited in Europe due to an infrastructure ( loading) that is not as mature as expected, "said Subramanian, in an e-mail answering questions.

In the report, Subramanian estimates the cost per vehicle in case of non-compliance.

"If they are not able to meet the compliance targets in time, IHS Markit predicts that average fines for non-conformists could reach 624 euros ($ 722) per vehicle by the end of 2020 , with a further increase of 190 euros (220 dollars) in 2021. depending on the move to WLTP, "said Subramanian.

WLTP refers to the new real world rules that will come into effect next month.

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European automakers face fines of more than $ 16 billion in 2021 if they fail to comply with stricter rules on fuel economy, according to a report by IHS Markit.

Hopes are fading to see an upsurge in electric car purchases will save the industry, said business information provider IHS Markit in his report. The struggle of the European industry to comply with the regulations has been made more difficult by the disappearance of the popular diesel and the new rules that require manufacturers to claim more honestly a fuel economy.

EU According to the rules, average European fleets must reach fuel consumption of about 57.4 miles per US gallon by 2021. Manufacturers who do not reach this figure incur high fines .

The report did not point to any particular manufacturer, indicating that 25 manufacturers are currently on track to achieve these goals, out of a total of 52.

But the data released today by Citi Equity Research indicate Fiat Chrysler Automobiles (FCA) is in the worst situation and must improve its average fuel efficiency by nearly 6% by 2021. Daimler is best placed, requiring only a 3% improvement. BMW, Renault and the PSA group are getting closer to this figure. VW requires an improvement of more than 4%. The FCA is also lagging behind as it recorded the smallest improvement between 2012 and 2016.

The race to meet these stricter regulations would always be difficult and expensive, but until recently, diesel technology was going to pave the way. But now that diesels have become pariahs in Germany and France, especially for health reasons, the way to energy efficiency has become much more difficult.

The quest for energy efficiency presents another obstacle to overcome. The European Union has new rules that prevent vehicle manufacturers from using inflated fuel consumption data generated with the help of computers and recreating conditions. ideal. The new rules emphasize that energy efficiency claims must be much more closely linked to road performance, which will reduce the current claims of European car manufacturers by around 30%. fuel economy. This also has significant personal tax implications, as corporate car taxes are assessed based on fuel consumption.

Last week, JATO Dynamics released a report highlighting the problems faced by manufacturers.

"This (the stricter rules) comes at a time when the carbon footprint of Europe is likely to increase further. First of all, there is a significant shift from diesel to gasoline in the EU. Member States, whose registrations for the first half of 2018 show that gasoline vehicles have increased their market share by 7 percentage points to 57% of the market. In contrast, diesel engines experienced a sharp decline, with their market share falling 9 percentage points to 37% – the lowest share of diesel vehicles this century, "said JATO Dynamics.

JATO describes itself as a world leader in automotive intelligence.

Electric vehicles were supposed to help fill the efficiency gap, but the public still hesitates to buy them.

"Finally, and perhaps even more, although alternative fuel vehicles (primarily battery-powered electric vehicles, plug-in hybrids and regular hybrids) are up 30% in volume over last year, registrations still represent only 6% of the market ", explains JATO Dynamics. I said.

In fact, the industry is moving back in the direction of energy efficiency. According to JATO, average fuel efficiency could get worse if CO2 emissions rise to 130 grams per kilometer (G / km), or about 42 miles per gallon in 2019, compared to 118 g / km current.

IHS Markit estimates that by 2021, European industry will still reach an average of about 44.4 mpg, not the 57.4 m / m required, which will generate fines of more than 14 billion euros (more than 16 billion dollars).

In 2021, IHS Market declared only a "seismic shift" towards battery-powered and plug-in hybrids will allow the industry to comply with regulations, but that seems unlikely, according to the IHS analyst, Vijay Subramanian.

"Seismic change is essential because it is too late for automakers to add energy-efficient technologies in their existing engines and vehicles to reach the target set for 2020 and 2021. This option is currently quite narrow, because the timing is too short, so the only option left is to seriously consider electrification strategies such as BEV and PHEV on existing and new vehicle identification plates, but this is also limited. in Europe because of infrastructure (loading) that is not as mature as expected, "said Subramanian. , in an email answering questions.

In the report, Subramanian estimates the cost per vehicle in case of non-compliance.

"If they are not able to meet the compliance targets in time, IHS Markit predicts that average fines for non-conformists could reach 624 euros ($ 722) per vehicle by the end of 2020 , with a further increase of 190 euros (220 dollars) in 2021. depending on the move to WLTP, "said Subramanian.

WLTP refers to the new real world rules that will come into effect next month.