European Emissions Regulations Could All But Kill Brands Like Mercedes-AMG
Mercedes-AMG may have to scale back its lineup by as much as 75-percent to avoid being gutted with fines come 2021by Robert Moore, on
Notice how automakers are really starting to cram EVs down our throats even though the vast majority of the driving population doesn’t want them? Well, you can’t actually blame the automakers, you can blame the emissions regulations set forth by the government. In Europe, the situation is dire, and fines for not meeting emissions regulations are about to skyrocket in 2021. If the penalties going into effect in 2021 were in effect today, the penalties would climb into the tens of billions of dollars category. That’s why Mercedes and other automakers are scrambling to put EVS on the road – they will reduce their average emissions output.
Unfortunately, no matter how hard automakers try, they just can’t convince people to buy EVs over big, gas-guzzling SUVs. And, because of this, brands like AMG just might have to trim back… A lot. So much so that AMG might be forced to cut its most powerful models and reduce its lineup by as much as 75-percent.
We Don’t Want EVs But, Eventually, That’s All There Will Be
There’s no way this scenario plays out in a positive way if you’re not into the whole idea of EVs. I said earlier that you can blame world governments and their emissions regulations but, at the same time, it’s also people like you and me that are also at blame. See, because a majority of the population doesn’t want EVs and instead go for big, bulky SUVs, the average emissions output for a lot of automakers is actually climbing. In the European market, the population of SUV owners has grown from 20-percent to 35-percent. In expected order, European CO2 levels have also been on the rise since 2017. That’s why the fines in 2021 will be so much harsher than they are now.
We won’t choose to buy low- or zero-emissions vehicles, so regulators are forcing the option on us.
The forced control is already taking place right now. Because the deadline is coming up, automakers are forced to reduce their average emissions output significantly. Mercedes, for example, is trying to reduce its CO2 emissions from 138 grams per km to around 100 per km. Since we’re more interested in buying SUVs and powerful cars with big engines, the automaker can introduce as many EVs as it wants, and it won’t make that much of a difference. That’s where the possibility of AMG’s lineup being reduced by 75-percent comes into play. If the models that produce a lot of emissions aren’t on the market, we can’t buy them. See how that works? This is how it starts.
If Mercedes can’t get its average CO2 levels to drop to its target, then it may be forced to cut out a majority of the AMG lineup, and it could be anything with a V-8 or V-12.
The 75-percent reduction of the AMG lineup, by the way, comes from several retailing executives that spoke on the “condition of anonymity” to The Financial Times.
It’s not just Mercedes that’s in a crunch – it’s happening to other brands too. Even Mazda could be forced to cut out certain versions of its less popular models, like the MX-5 Miata. Ford just introduced its first EV, the Mach-E, but it’s nowhere near coming close to saving the brand from extreme fines from emissions regulators either, but the company is taking a different approach. Instead of cutting its lineup, it’s cramming and retrofitting 48-Volt electric systems and mild-hybrid setups into all of its models to curb CO2 output. It probably won’t work, but that’s pretty much its only option until it can put more EVs on the road.
In the end, governments all over the world are going to put such a premium on CO2 output that only a couple of scenarios can actually play out. One scenario is that Automakers are forced to cut anything with an engine that has more than six-cylinders and isn’t a mild-hybrid. Eventually, this will continue until only four-cylinder hybrids are on the market (EVs still occupying a small space, of course.) Eventually, regulators will make the fines and targets so impossible to hit that automakers will be forced to sell nothing but EVs – this could be as close as ten years down the road, too.
The second scenario is one that will drastically change the market to the point that owning a fuel-burning vehicle – or buying fuel, for that matter – will become a symbol of wealth. Once the fines for emissions go so high and targets so low, any automaker that still makes fuel-burning vehicles will be forced to pass the cost, i.e. tax, onto consumers. Buying anything with an engine in it could become impressively expensive with the taxes and fines required to own one being much higher than the cost of the car itself. Don’t think it can happen? Well, look at the cost of flying – you actually pay more for taxes and surcharges than you do the flight itself. The price of gasoline and diesel? In a lot of markets, the taxes on fuel are already higher than the cost of the fuel itself.
In the second scenario, the cost of fuel would probably skyrocket as well. When the price of gas and owning fuel-burning vehicles goes so high that only the world’s wealthiest will be able to afford it, we’ll have no choice but to buy the EVs that are on the market. When this happens, consider yourself official under control by the government, but hey, they know what’s best, right?
Source: Financial Times