A record number of electric cars and models with a plug-in hybrid drive line were presented last year. The automotive industry is greener than ever and with this it gives the impression that it is meeting high market demand. However, the manufacturers need electrification to be able to comply with the tightened European CO2 rules this year.

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European rules dictate that cars cannot emit an unlimited amount of CO2. Since 2015, the average fleet emissions of new cars sold in the EU per manufacturer must not exceed 135 grams of CO2 per kilometer. As of January 1 of this year, that limit has been reduced to just 95 grams per kilometer.

If the manufacturer comes to the top, then this company is facing a sky-high fine. This amount of fines can be so high that it is even interesting for some manufacturers to then sell electric cars at a loss in order to lower the average.

Smaller brands are spared a little

The limit of 95 grams per kilometer only applies to the major car manufacturers. For brands with limited sales in the EU, exceptions are made depending on the sales volume.

Car builders with a number of registrations between 10,000 and 300,000 cars per year (such as Jaguar Land Rover or Suzuki) had to show their good will until last year (2019, when the limit for the large volume brands was still 135 grams) by making sure ensure that their fleet average was 25 percent lower than that of 2007.

The EU average in 2007 was 158 grams per kilometer. From this year (2020), CO2 emissions must be reduced by 45 percent of the 2007 average. It should be noted that there was no limit in 2007. The point is that they show a reduction of 45 percent.

More exclusive car brands can propose their own reduction target

Manufacturers with between one thousand and ten thousand registrations per year can propose their own reduction target, which must then be approved by the European Commission on the basis of a number of criteria.

This concerns brands such as Aston Martin, but also Bentley and Ferrari, who in this case act independently of their respective parent companies Volkswagen and Fiat.

Brands that register fewer than a thousand cars each year (for example the Dutch Donkervoort) are exempt from a specific emission limit, unless the manufacturer has voluntarily committed to a reduction target.

A brand like Donkervoort is exempt from a specific emission limit (Photo: Donkervoort)

Fines are rising quickly

To begin with, 2020 is a transition year. Not all cars that a manufacturer sells in the EU this year count. Only the 95 percent of the sales volume with the lowest emissions need to be taken into account to fall below 95 grams. Only from next year will it be the full 100 percent of sales.

Exceeding the limit goes pretty well in the papers. A fine of 95 euros must be paid for every gram too much. To be more precise: 95 euros times the number of cars sold in the EU in the relevant year.

This quickly yields numbers that make it clear in one go why many brands have come up with electric cars in a short time and why a great many new electric models will follow in the near future.

Manufacturers such as BMW, Ford and Mercedes sell around one million cars a year in the EU. Every gram of CO2 above the limit means a fine of around 95 million euros for these companies for the year in question. Or what about the Volkswagen Group, which annually accounts for around 3.5 million cars in the EU.

Volkswagen sells many cars in the EU, which means that the risk of fines is high if things are not in order. (Photo: Volkswagen)

Fully electric car counts for two

The average reduction to below 130 grams was still reasonable to do with conventional technology. Here and there a hybrid in the range was enough; if it had really been necessary, we would have known a Volkswagen ID.3 or an Opel Corsa-e much earlier.

However, falling below 95 grams is different. Now everything that can weigh the average is really taken advantage of. Certainly for sports car manufacturers, a limit of an average of 95 grams of CO2 per kilometer seems an insurmountable barrier. In practice that is not too bad.

Take Porsche for example. That is part of the Volkswagen Group and can therefore ride along on the average of the entire group. With a small Up, a Panamera is brought into balance. Moreover, it does not prevent Porsche from coming up with plug-in hybrids (PHEV) and battery-electric cars (BEV) itself.

Cars that emit less than 50 grams per kilometer (and these are the BEVs and many PHEVs) enjoy a super credit. That is lucrative. This year a car that is under 50 grams can be counted twice, next year it counts for 1.67 and in 2022 still for 1.33 cars sold. This is to stimulate the development of BEVs and PHEVs.

Although Porsche can ride along with the average of the VW Group, it has a fully electric car. (Photo: Porsche)

Fiat Chrysler pays Tesla

Incidentally, there is a super credit limit, because it may reduce the fleet average of the manufacturer in question by no more than 7.5 grams per kilometer. So you drive an electric car not only for a better world, but also for the manufacturer's fleet average.

In addition, the rules offer the possibility of acquiring other brands outside of your own company. This is called pooling. The first and as yet the only one that uses this is Fiat Chrysler Automobiles (with subsidiary brands such as Dodge and Jeep). Up to 2023 an amount of approximately 1.8 billion euros will be involved.

The American-Italian combination itself does not yet have BEVs in the European program, but is able to use Tesla's super credit by pulling up within the pooling rules together with Tesla (which does not sell combustion engine cars). For example, every Tesla sold in the EU depresses the Fiat Chrysler average.

The Tesla of CEO Elon Musk receives hundreds of millions of euros from Fiat Chrysler every year. (Photo: Reuters)

The full story was in AutoWeek number 2