PSA Says GM Misled Them; Wants $700M Refund for Opel Deal
Reuters is reporting that PSA Group now wants GM to refund nearly half, or about $700 million of the $1.353 billion it paid to the U.S. Automaker last July for the acquisition of Opel and Vauxhall. The report comes with claims that GM failed to disclose just how badly Opel and Vauxhall would miss hitting emissions targets set by the European Union for 2021 and beyond. PSA, which includes brands like Peugeot and Citroen, says it was misled and is owed this refund as the acquisition of brands that fall so far from 2021 emissions targets will cause it to incur significantly more fines than previously expected. GM claims that it provided “substantial information” and that “PSA undertook a robust due diligence process” that included “their employees, many experts, and lawyers.”
Want to know more? Keep reading to learn about the change to EU emissions rules in 2021 and what kind of fines PSA is looking at over the Opel and Vauxhall Acquisition.
2021 European Emissions Targets
By the year 2021 Europe will require all automakers to reduce their CO2 emissions to an average of just 95 grams per kilometer across their lineup
By the year 2021 Europe will require all automakers to reduce their CO2 emissions to an average of just 95 grams per kilometer across their lineup. This is a huge drop from the current goal of 130 grams per kilometer and the exact reason why automakers like Volkswagen, for instance, are pushing to have so many EVs on the road by the early 2020s. Because it’s an average system, having two cars at 130 grams per kilometer and 2 all-electric cars at zero, will bring your average down to 32.5 grams per kilometer average across the range, well within targets. Of course, major automakers have a lot more models, but that’s the basic jest of it. And, this is important to know because right now, prior to the acquisition of Opel and Vauxhall, PSA was going to miss its target by just 3.7 grams come 2021. The fine for that overage (an average of 98.7 grams per kilometer,) would have come in at €95 per vehicle. That’s not too bad. But, add Opel and Vauxhall into the mix, and PSA could be looking at fines totaling close to €1 billion!
There’s even more to this somewhat sketchy deal, too.
Prior to the acquisition of Opel and Vauxhall, PSA was going to miss its target by just 3.7 grams come 2021
See, because of this, PSA has been putting in overtime to combat the emissions problem with its newly acquired brands and has decided to move its existing drivetrains and platforms into the Opel and Vauxhall models three years earlier than planned. This will help, but it’s still not enough. Even with rebadged Chevy Bolt, which goes by the name “Ampera-E,” PSA is still in a jam because it loses about €10,000 per model due to it being an imported vehicle. On top of that, PSA was going with GM’s estimation of 20,000 Ampera-E units sold annually, which turned out to be an overestimation, to say the least. Because of this, PSA has had to stop sales in Norway altogether and has even increased pricing in other parts of Europe to recover some of the loses. More importantly, the lack of models sold will cut increase the average of CO2 emissions across the group of companies as it’s fewer zero-emissions vehicles being sold.
As of now, there’s no telling what is going to happen, but PSA thinks it was misled, GM says it’s been reporting the brands would have significant problems for years and supplied substantial information. Add that to the fact that GM hadn’t invested much of anything into Opel to develop hybrid or electric technology and PSA could have a difficult time proving its case. Either way, you might want to grab yourself a few drinks and watch the drama unfold. Let the court battle begin…
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