German Auto Makers Seek Easier CO2 Targets Via Extended EV Credits

PARIS – German auto makers are proposing the 2020 carbon-dioxide-emissions limit of 95 g/km be pushed to the equivalent of 105 g/km with some electric vehicle/hybrid bookkeeping.

The VDA, the German car manufacturers group, tells the European Commission that by granting a bigger bonus to auto makers for sales of extremely low-emissions vehicles – so-called super-credits – auto makers would make more of them.

At the same time, the bigger credit would let manufacturers sell more cars with less-efficient internal-combustion engines.

“The German OEMs that are petitioning for these concessions make the kind of large premium models such as SUVs that are both highly profitable for these companies and which will have difficulty meeting the 95 g/km limit by 2020, even when highly advanced future vehicle technologies are applied,” says IHS Automotive analyst Tim Urquhart.

Current European Union rules let auto makers count sales of vehicles with emissions of 50 g/km or less, when calculating their fleet emission average, as 3.5 vehicles this year and next. The bonus will drop to 2.5 in 2014, 1.5 in 2015 and then count as just one more car after that.

The VDA proposes counting the cars as 2.5 units from 2016 through 2023.

If EVs and plug-in hybrids achieve 5% of the market in 2020, the supercredits proposed by the VDA would boost the European fleet CO2 average to 105 g/km, says Franziska Achterberg, EU transport policy adviser at Greenpeace European Union.

The VDA also is asking that Europe scrap the 20,000-unit production limit on vehicles with emissions above 95 g/km that takes effect in 2020. IHS Automotive forecasts that Mercedes will sell 22,000 flagship S-Class units in Europe in 2020, a large sedan that likely would struggle to achieve the stiff standard.

Germany’s native auto makers are not suffering this year like the French, Italian and Americans in Europe.

The Germans are “well-placed,” VDA President Matthias Wissmann said earlier this month. “Global car sales will rise 4% to more than 68 million cars" this year, he said, and the share of German auto makers is about 20%.

“Three out of four cars that are manufactured in Germany go for export," he said at an industry meeting. “The majority of these are premium cars. This is an essential foundation of the success of this industry.”

The VDA proposal would help protect the market position of BMW, Mercedes-Benz and Audi.

“I don’t have a particularly strong opinion on this announcement,” says Jean-Michel Prillieux, an analyst with Inovev in Paris. “I simply know that the Germans, led by Audi, BMW and Mercedes, are not very hot about conceiving, producing and selling electric cars.

“Those three auto makers are well-established on the market for internal-combustion engines, often high-powered, and the extension of their range toward electric cars doesn’t go well with their image, their desires, their current technology or their profitability.”

Environmental groups quickly announced their opposition to the VDA idea.

"The cumulative supercredits proposed by the VDA would increase the target by at least 10 grams,” Achterberg tells Reuters. “They are calculating the target, rather than trying to achieve it."

Urquhart says that if Europe sticks to its current rules, it could hurt the German auto makers compared with competitors in Japan and the U.S., where emissions rules are less stringent.