STORY: European automakers are working hard to deal with a looming challenge.
They face tougher emissions rules which could further hit profits across the struggling sector.
They’ve reacted by raising prices of petrol cars and preparing discounts on electric vehicles.
The European Union will dramatically lower its cap on automotive carbon dioxide emissions from January 1.
It means at least one-fifth of all sales by most car companies must be EVs to avoid heavy fines.
But data has shown that so far this year only 13% of all vehicles sold in the region have been electric.
The tighter rules come as the sector is already dealing with excess capacity due to underwhelming sales and Chinese competition.
It has led to profit warnings from majors like Volkswagen, Stellantis and others in recent months.
One analyst has said the companies will need to sell more EVs at a time when consumption is being put off by political and economic uncertainties, and falling EV subsidies.
EVs also cost more to make than traditional vehicles.
With just weeks to go, Europe’s politicians have urged Brussels to rethink the targets.
But European Automobile Manufacturers’ Association chairman Luca de Meo says carmakers are getting to work – eager to avoid fines that could reach $15.76 billion.
VW, Stellantis and Renault have raised the prices of petrol engine models by several hundred euros in the last two months.
Analysts see this as an attempt to curb demand for heavier emitters and make pricier electric models appealing.
But a source close to one European automaker warned the strategy could backfire.
They said raising petrol car prices should help close the gap with more expensive EVs, but may not generate enough EV sales due to weak market growth.
Sales in the region are around a fifth lower than pre-COVID.