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EU Commission proposes automakers be given 3 years to meet the CO2 target
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EU Commission president, Ursula von der Leyen said they will propose that car makers be given three years to meet the CO2 target instead of the 2025 deadline.
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She said that the CO2 emission targets would remain unchanged.
“Instead of annual compliance, companies will get three years – this is the principle of banking and borrowing; the targets stay the same; they have to fulfil the targets,” says von der Leyen.
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She added that the the Commission “will explore direct support for EU battery producers” whose conditions will be somewhat similar to the Inflation Reduction Act in the US.
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Volkswagen shares gained 4% following the report.
Assessment
Pricing probably made up the largest percentage in the 1.5 billion euros CO2 headwind guided by the management since my estimate for the pooling fee was 582 million euros only. Today’s announcement means that Volkswagen will be able to avoid reducing prices of EVs in order to attract demand and this will probably save it almost 1 billion euros in 2025 (1.5 billion euros less 582 million euros). However, in the next three years, Volkswagen will be faced with another CO2 problem if it doesn’t double the share of its EVs. Doubling the share of BEVs in 2027 will be hard given Volkswagen’s change in strategy to continue producing ICEs for longer. As such, this is probably good news for the short-term only.