In most sectors, a single road bump is enough to send stocks skidding. The European car industry, however, is in the middle of a pile-up of jolts, including sluggish domestic demand, faltering electric vehicle sales, fierce competition from Chinese automakers, enduring overcapacity and plummeting profits. On top of all of this, it also faces the possibility of having to pay billions of euros in fines for carbon dioxide emissions.
The scale of the potential charges is dizzying. The EU requires carmakers to cut the CO₂ emitted by the average of the vehicles they sell — measured in grammes per kilometre — by 15 per cent by 2025. For the industry as a whole, that works out to a target of 95g/km.
The trouble is, that is far lower than the average car sold in Europe, which emitted 107g/km in 2023 according to the International Council on Clean Transportation. On these numbers, EU carmakers would face an average excess of 12g/km on each of the roughly 11mn vehicles they sell. Fined at €95 each, that is a total charge of €12.5bn.