Marques act ahead of rule change

European carmakers are increasing sticker prices of internal combustion engine (ICE) cars and starting to discount EVs as tougher emissions rules look set to further dent industry profits.

The European Union’s cap on automotive carbon dioxide (CO2) emissions will be lowered from January 1, meaning at least one-fifth of all sales by most car companies must be EVs to avoid heavy fines, reports Reuters.

This will require a substantial shift in market activity as only 13 per cent of all vehicles sold in the region so far this year have been electric, according to the European Automobile Manufacturers' Association (ACEA).

The rule change comes as the industry battles weak sales and growing Chinese competition, which has resulted in a number of carmakers warning profits are likely to drop.

While Europe’s politicians are urging the EU to rethink its targets, marques are already taking action in an effort to avoid fines the ACEA predicts could cost the industry €15 billion (NZ$27.7b).

VW, Stellantis and Renault have increased the prices of petrol-powered models by several hundred euros in recent months. Analysts say this is an attempt to curb demand for higher-emitting vehicles and to make EVs more appealing, reports Reuters.

At the same time, some companies have cut EV prices to encourage their uptake.

Beatrix Keim, of the Center for Automotive Research, explains carmakers are hoping their pricing strategies will push demand towards battery EVs and help them reach the CO2 targets and avoid potential fines.