While some car makers will easily hit their EU emissions targets, others are in trouble
The enforced need to dramatically reduce the CO2 emissions of cars sold in the European Union and UK this year has led to expensive stumbles from manufacturers including BMW, Ford and Jaguar Land Rover as new electrified technologies faltered at the crucial moment.
The task to reduce average CO2 emitted to the 95g/km required by the EU (although this differs slightly for each brand based on the average vehicle weight) was always going to be massive. The average was 122g/km in 2019, and it had actually risen over the preceding three years as buyers ditched diesel for petrol.
Many companies chose to wait until this year to roll out expensive new plug-in hybrids and electric cars to comply. They may have been costly but, under the rules, any car sold emitting less than 50g/km not only helped to cut average CO2 but also counted as two sales under the supercredit system, which was designed to help car makers over the line in the first year of the new rules.
Ford had pinned its hopes of reaching its specific target on its new 33g/km Kuga Plug-in Hybrid. But then disaster: it had to recall 21,000 examples to replace their battery packs, due to the risk of contaminated cells causing a fire.
BMW i8 on charge (Image: T. Larkum)
To avoid missing its target and paying substantial fines, Ford paid Volvo an undisclosed sum to pool together the two brands’ average CO2 and take advantage of Volvo’s more successful roll-out of plug-in hybrids, which had put the Swedish firm below its target.
The recall and hook-up with Volvo cost Ford an estimated $600 million (£510m) and wiped out all of its third-quarter European profits.
“We were on track for our CO2 target this year until the Kuga PHEV situation,” CEO Jim Farley said on a call with investors earlier this month.
Meanwhile, BMW suffered similar problems and had to recall 26,900 plug-in hybrids, mostly in Europe. So far it’s confident that it will still reach its target and thus avoid fines.
Not so fortunate is Jaguar Land Rover, which has set aside £90m to pay fines after the launch of its key Range Rover Evoque and Land Rover Discovery Sport plug-in hybrid models was delayed due to problems with achieving the promised electric-only range. JLR halted sales while it worked to solve the issue, which it said was exacerbated by the UK’s first lockdown.
Common to the affected plug-in hybrids of all three manufacturers were battery packs supplied by Samsung, although the Korean firm hasn’t commented on the delays and nor have manufacturers apportioned blame.
Other marques have approached the targets in different ways. Fiat Chrysler Automobiles said in a recent earnings call that it had also suffered a financial loss for the third quarter of 2020, partly due to compliance costs – both rolling out new plug-in cars and paying EV maker Tesla to pool its fleet and thus avoid fines.
The Volkswagen Group, meanwhile, had been expected to hit its target this year after launching the Volkswagen ID 3 EV, but it unexpectedly announced in September that it had pooled with MG to take advantage of the Chinese firm’s strong-selling ZS EV.
Read more: AUTOCAR
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