Europe is experiencing a decisive moment for its automotive industry. With the clock ticking down 2035the year in which the end of combustion engines is planned, manufacturers face a race against time: either reduce their emissions or pay multimillion-dollar penalties. Faced with this dilemma, even the staunchest rivals have begun to ally to survive.
Read also: What every Latino should know before driving in New York
European environmental regulations are becoming stricter, and the cost of failing to comply can be devastating.
You can read: Tesla regains the global sales throne with this model
According to the ACEA (European Passenger Car Manufacturers Association), the accumulated fines could reach $15 billion dollars if manufacturers fail to reduce their CO₂ emissions to the required levels. For this reason, brands are resorting to unprecedented financial strategies and technical alliances.
Brussels softens, but does not forgive
At the beginning of this year, the European Commission decided to temporarily relax emissions targets. Manufacturers will have until 2027 to meet the levels planned for 2025. The fine, however, remains high: $100 for each gram of CO₂ that exceeds the limit of 93.6 grams per kilometer.
Although the additional margin offers some respite, the economic risk remains enormous. The brands, aware of this, have opted for a pragmatic solution: buy emissions rights from those that have already exceeded the standards.
This system, similar to carbon credit trading, allows less “green” manufacturers to offset their excess emissions through agreements with more efficient companies. The result is a network of unexpected partnerships, where former rivals now collaborate to avoid sanctions from Brussels.
Tesla, the great provider of “clean air”
In this emissions game, Tesla has become the most powerful player. Because all of its vehicles are electric, the company accumulates a large amount of emissions credits that it then sells to other manufacturers.
The Stellantis group, which brings together 15 brands (including Peugeot, Fiat, Opel and Jeep)has been one of the main buyers. Brands such as Toyota, Ford, Subaru, Mazda, Honda and Suzuki have also turned to Tesla.
For Tesla, this system represents additional income of hundreds of millions of dollars annually. And for its temporary partners, it is a way to save time while they develop their own range of electric or hybrid vehicles.
New partners in the industry: Nissan, BYD and more
What a few years ago seemed unthinkable is today a reality. nissanone of the pioneers in electric mobility with its Leaf model, has decided to partner with BYDthe Chinese giant that leads the global production of electric cars and batteries.
Another unexpected alliance is that of KGM (former SsangYong)which signed an agreement with XPenganother rapidly growing Chinese brand.
These associations reflect a clear trend: cooperation between European and Asian manufacturers to adapt to the regulatory demands of the continent.
For its part, Mercedes-Benz has sealed an alliance with Volvo, a union that has even more nuances if you look at the corporate map. Volvo belongs to the Geely conglomerate, which also controls brands such as Polestar, Lynk & Co and Smartin addition to being the second largest shareholder of Mercedes, only behind the BAIC group. A relationship so intertwined that it already borders on interdependence.
Volkswagen and Renault, those that still resist alone
Meanwhile, giants like Volkswagen and Renault claim to be able to comply with the rules without the need for alliances. Both groups have invested billions in their own electricity platforms, and for now, they maintain independence in the race for decarbonization.
However, analysts believe that even they could be forced to look for partners if emissions reduction targets are tightened in the coming years.
Despite the adjustments and negotiations, the trend is clear: the electric car continues to gain ground. In 2024, electric vehicles accounted for 12% of new registrations in Europe. By the end of this year, they are expected to reach 15%, and by 2027 they could reach 24% of the total.
If the pace continues, by 2030 around 40% of the European vehicle fleet will be completely electric.
Continue reading:
Chevrolet bets heavily on affordable electric cars
Turning off the car in traffic: Myth or reality?
A gem: Ford launches the most Californian Mustang Mach-E GT