EU CEO Källenius advocates for flexible regulations in the EU for a smooth transition
In a recent statement, Ola Källenius, CEO of Mercedes-Benz and the current president of the European Automobile Manufacturers' Association (ACEA), has urged the European Union (EU) to adopt a more pragmatic approach in its climate and industrial policy. With the automotive industry facing economic challenges and the need for fleet renewal, Källenius' recommendations aim to align environmental goals with industrial and economic sustainability within the EU’s climate framework.
Källenius advocates for a technology-open approach in EU policy, suggesting more flexibility and a market-based approach. He supports the EU's move to average the 15% CO₂ emissions reduction target for cars over 2025-2027 rather than imposing a strict annual target. This averaging mechanism provides some breathing room for automakers, allowing them to balance performance over several years instead of facing inflexible yearly caps.
However, Källenius warns that while this regulatory flexibility is helpful, the broader economic environment has deteriorated significantly. Rapid electrification mandates, without taking into account supply chain issues, consumer affordability, and industrial feasibility in the near term, could pose a significant challenge.
Emphasizing the importance of maintaining a competitive European automotive sector, Källenius advocates for smarter EU trade policies that avoid protectionism and promote cooperation—particularly with China, given its integral role in automotive supply chains. He endorses engagement and investment strategies similar to what China used in inviting European automakers, to better manage trade tensions and global industrial interdependencies.
Källenius calls for a balance between environmental ambition and economic realism, so that the EU's green policies do not excessively strain industrial competitiveness or lead to unintended consequences, such as fewer affordable electric vehicles reaching the market or damaging jobs in the sector.
The upcoming strategy dialogue between the EU Commission and the industry should include discussions on fleet renewal and the involvement of other actors. It is crucial for simplifying regulatory requirements to strengthen European competitiveness. Building a competitive European battery value chain will take many years, and securing access to critical raw materials and processing capacities through global partnerships is equally urgent.
Asian companies currently dominate battery technology and production, and over 40 percent of European automotive suppliers are already at risk of profitability. The market penetration of battery-electric cars in Europe is around 15 percent, far behind expectations. The European automotive industry has invested over €250 billion and launched hundreds of new electric vehicle models.
Despite these investments, the current CO₂ regulation for cars and vans, which is heavily based on penalties, hinders economic growth, according to Källenius. The EU should remain open to all technologies that contribute to decarbonization, including electric mobility, hybrids, highly efficient internal combustion engines, and decarbonized fuels.
Europe must stabilize and broaden its supply chains in the meantime. New protectionist trade barriers would further weaken Europe's automotive industry, making investments in green transformation more difficult. The next twelve months are crucial for Europe to adapt to reality and avoid losing its industrial leadership and stagnation.
In conclusion, Källenius' key recommendations emphasize the need for the EU to implement flexible, averaged CO₂ targets for 2025-2027, adapt climate and industrial policies to the current economic realities, promote international cooperation over protectionism, and ensure that the European Green Deal’s ambition is pursued with practical, phased measures that keep the automotive industry competitive and able to innovate. These recommendations aim to align environmental goals with industrial and economic sustainability within the EU’s climate framework.
- Källenius suggests that the EU should adopt a technology-open approach in its climate and industrial policy, promoting flexibility and a market-based approach, particularly in regards to the automotive industry.
- The CEO of Mercedes-Benz, Ola Källenius, advocates for the EU to average the 15% CO₂ emissions reduction target for cars over 2025-2027, providing automakers with some breathing room to balance performance over several years.
- Källenius emphasizes the importance of maintaining a competitive European automotive sector and endorses smarter EU trade policies that avoid protectionism and promote cooperation, especially with China, given its integral role in automotive supply chains.
- To balance environmental ambition with economic realism, Källenius calls for the EU to remain open to all technologies that contribute to decarbonization, including electric mobility, hybrids, and decarbonized fuels, as the current CO₂ regulation for cars and vans, which is heavily based on penalties, hinders economic growth.
