Diesel backlash

EU support for German automakers melts away

Support for diesel is drip, dripping away. Source: dpa

For years, if the German car industry ran into problems, it knew where to turn. EU CO2 emissions targets too high? Get Angela Merkel to put in a call to Brussels. Dieselgate damaging reputations? Nudge European transport ministers to publicly support the industry. European cities banning diesel cars? Lobby the EU to intervene. And if all else failed, hit the politicians where it hurts: the economy.

This was the case in July, when the heads of Europe’s 12 most important automakers gave a carefully choreographed performance warning that a tightening of EU rules on CO2 emissions in an industry reliant on combustion engines would spell doom for thousands of jobs. BMW boss Harald Krüger even went so far as to point out that one worker can produce seven times more electric engines than combustion engines in one year.

The statement astounded their host, EU Climate Commissioner Miguel Cañete. EU officials are accustomed to massive lobbying by the auto industry, but they had never witnessed such a stage-managed, meticulously planned appeal.

“We’ve been encouraged by Berlin to push the transition to electric mobility ”

Senior EU official

Led by the big German players with their high-octane cars, Europe’s auto manufacturers are doing all they can to delay the end of the combustion engine as long as possible. “They’re fighting for every last drop of diesel,“ said one EU official.

This time, however, the lobbying fell on deaf ears: It’s now becoming apparent that Germany’s automakers are running out of clout and allies in Europe.

In fact, support is vaporizing faster than exhaust from a tailpipe: It’s not even clear if the new German government, whenever it is formed, will throw itself into the breach for the country’s most important industry. Behind the scenes, German officials are even urging the EU to get tough on the manufacturers.

“We’ve been encouraged by Berlin to push the transition to electric mobility because the sector might otherwise miss the changeover,” said one senior EU official.

The choreographed lobbying over the summer hasn’t helped the industry. In November, the EU Commission proposed new emissions limits for after 2021, a move that particularly riled the Germans. It wants the sector to reduce its emissions by 30 percent by 2030, which is considerably more ambitious than the 20 percent cut VW, Daimler, BMW et al had proposed.

In addition, Germany faces a complaint before the European Court of Justice because nitrogen limits have been exceeded for years in 28 cities and regions including Berlin, Hamburg and Munich. Unless pollution levels are reduced, the country will be forced to pay fines and impose driving bans for high-polluting cars.

Even if the new government were to come to the rescue of the automakers, it may be too late. While political parties in Berlin haggle over who should form a coalition with Chancellor Angela Merkel’s conservatives, other countries have staked their positions. The Netherlands plans to ban cars with combustion engines from 2030 and France plans to follow suit a decade later at the latest.

French Prime Minister Edouard Philippe has written to the EU Commission complaining that its approach to auto emissions is far too tame. His letter politely but firmly demanded tougher emissions reduction targets going as far as 2040. In a direct attack on the German auto industry, Mr. Philippe also demanded that the bonus for limousines and SUVs, which are primarily manufactured in Germany, should be scrapped.

At present, big and heavy vehicles are favored in the calculation of emissions targets under the so-called “utility parameter” which sets emissions targets according to vehicle weight. A reform would hit Daimler, BMW and VW: the latter has only just started a major rollout of new SUV models. Mr. Philippe argued that the utility parameter had discouraged automakers from developing more efficient, lightweight cars.

Ultimately, German carmakers could transition to electric cars sooner than planned — but they don’t want to. “They’ve all got the plans in the drawer but for cost reasons the automakers are postponing the conversion to electric mobility,” said one senior EU official.

Instead, the proud auto industry is digging its heels in as if it hasn’t grasped yet how fundamentally public sentiment has changed as a result of the diesel and industry collusion scandals. It’s hoping that EU member states, which will decide on the Commission proposal on CO2 reductions, will come to their aid. But German automakers can no longer count on support from France, where automaker Renault is already well on its way to e-mobility. Eight countries that have little or no auto-manufacturing base plan strict targets — they want 40 percent CO2 reductions instead of the proposed 30 percent.

With Ms. Merkel hamstrung and weakened by coalition talks, the carmakers will have a fight on their hands. “The honeymoon of the German automakers is over,” said Claude Turmes of Luxembourg, a member of the European Parliament for the Greens party.

A version of this article originally appeared in the business magazine WirtschaftsWoche. To contact the author: wirtschaft@wiwo.de

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