Mercedes-Benz CEO calls on EU to reconsider EV fines amid slow demand

Mercedes-Benz CEO Ola Kaellenius expressed concerns to the European Commission regarding the current state of electric vehicle (EV) sales within the European Union, according to a Reuters report. 

He argued that the subdued sales figures are a direct result of weak consumer demand, rather than a lack of supply from automakers, Reuters said.

Kaellenius called upon the Commission to acknowledge this reality and reconsider potential fines that may be imposed on the auto sector for not meeting certain EV sales targets. 

He implied that these fines would be unjust, as they would penalize companies for a situation beyond their control.

The CEO's statement highlights a potential disconnect between regulatory expectations and market realities. 

EV demand in Europe lags

While the European Commission is pushing for a rapid transition to EVs, consumer adoption may not be keeping pace due to various factors such as high prices, range anxiety, and inadequate charging infrastructure.

European car manufacturers are currently facing a multitude of challenges. 

Competition with Chinese automakers is increasingly fierce, and the impending tariffs threatened by President-elect Donald Trump pose a significant threat to their business.

In addition to these external pressures, carmakers within the bloc must also contend with stringent EU regulations regarding CO2 emissions. 

Failure to meet these emission limits by 2025 could result in substantial fines, potentially reaching billions of euros. These financial penalties could further cripple an industry already grappling with economic uncertainty and fierce global competition.

According to the Reuters report, Europe’s carmakers face potential fines of 15 billion euros ($15.4 billion) if their fleets do not abide by CO2 emission limits this year. 

EU executive is planning a 'strategic dialogue'

The EU executive is planning a "strategic dialogue" with carmakers, suppliers, and trade unions to support the competitiveness of automotive manufacturing in Europe, which is currently facing job cuts. 

Kaellenius, the new president of the European Automobile Manufacturers' Association (ACEA), has outlined an industry wish list ahead of this dialogue and expects it to begin within weeks. 

He also stated that the EU should seek a "grand bargain" with Trump to avoid a trade war, according to the Reuters report.

The ACEA president called on political leaders to propose new ideas, as the CO2 emissions targets for cars were set with the expectation that demand for EVs would increase, but this has not occurred.

Kaellenius was quoted in the report as saying:

"Any type of relief that protects our investment capability is what we're seeking."

EV sales numbers in EU

The early numbers from ACEA indicate that new car registrations within the EU saw a slight increase of 0.8% last year.

However, the total number of vehicles sold still lagged significantly behind 2019 figures, showing an 18.4% decrease.

ACEA also reported a 5.9% drop in EV sales last year, resulting in a market share of 13.6%, down one percentage point from 2023. 

Based on this, ACEA predicts that the market share will once again fail to reach the required 20% benchmark needed to meet carbon emission targets.

This failure poses the risk of substantial penalties for non-compliance.

Kaellenius also emphasized that the EU should enhance competitiveness by measures such as intensifying the single market and promoting research, while acknowledging the advantages of free trade, according to Reuters.