Mercedes-Benz CEO calls for EU emissions fines to be dropped

17 January 2025

Ola Kallenius, CEO of Mercedes-Benz and president of the European Automobile Manufacturers' Association (ACEA), has urged the European Union to reconsider the fines imposed on automakers who fail to meet the new CO2 emissions standards. Källenius argues that these penalties will slow the industry's progress in developing and producing more affordable electric vehicles.

The EU's 2025 regulations require new car models to emit less than 95 grams of CO2 per kilometer on average. Failure to comply will result in substantial fines for automakers. This comes at a time when EV sales in Europe experienced a 6% decline in 2024, a stark contrast to the growth observed in the United States and China.

Källenius emphasized the need for flexibility within the European Green Deal, a set of initiatives aimed at achieving climate neutrality by 2050. He believes that the current regulations are too rigid and that the focus should be on creating a sustainable and profitable business model for the automotive industry.

"The automotive industry especially needs to know how to mitigate the risk of significant non-compliance," Källenius stated. "In a critical phase of the transformation, the risk of paying heavy penalties for CO2 non-compliance would divert necessary funds from R&D and other investments."

In response to Kallenius's plea, Transport & Environment (T&E), a non-profit organization that played a key role in advocating for the new emissions rules, asserts that most automakers will not incur any fines. T&E highlights that car manufacturers strategically launch models that comply with new targets in the year of their implementation.

The organization projects that even in a worst-case scenario, total penalties would remain below $1 billion, with the Volkswagen Group bearing the brunt of these costs. T&E suggests that Volkswagen could avoid penalties altogether by increasing its EV sales and using pooling arrangements with other manufacturers like Tesla.

Despite the assurances from T&E, opposition to the European Green Deal persists among several automakers and countries. Austria, Bulgaria, Poland, Romania, Slovakia, Czechia, and Italy have called for the EU to drop the impending fines, citing concerns about the impact on manufacturers struggling to meet the stringent requirements due to the slowdown in EV adoption.

The decline in EV sales has not been uniform across Europe. ACEA data reveals that only a few countries, including Germany, saw a drop in EV registrations in 2024. Analysts at S&P Global Mobility predict a significant surge in EV sales in Europe in 2025, exceeding 40% compared to the previous year.

Via