Renault Warns EU CO2 Emissions Targets Hurting Domestic Automakers

French automaker Renault warns pooling of vehicle C02 emissions credits is “weakening” European automakers struggling to meet ever-tightening government targets.

While it confirms to the Reuters news agency that it is on target to comply with the European Union’s latest emissions targets, the automaker says the collective purchasing of emissions credits from battery-electric-vehicle manufacturers is undermining legacy automakers’ profitability.

The EU significantly lowered its CO2 targets for automakers at the beginning of this year to force them to achieve at least a fifth of their overall volume sales as BEVs or else face heavy fines.

So, several companies with fewer BEVs in their lineup can “pool” their emissions with electric market leaders by buying credits. However, this diverts vital funds from R&D of their own BEV products in the long term just to avoid penalties amounting to millions of euros in the short term.

EU filings this week show manufacturers, including Stellantis, Mercedes-Benz and Toyota, are planning to buy carbon credits from BEV producers including Tesla and Polestar.

Renault says it's too early in the year to gauge whether it would also need to pool emissions by buying credits but is urging the EU to urgently act to ease the targets to avoid damaging the domestic auto industry.

In a company statement, Renault says: “Without a clear position from the European Commission, the manufacturers are forced to take counterproductive decisions such as purchasing credits from competitors, potential production cuts, etc. This leads to the weakening of the European industry.”

These comments sit with those shared with WardsAuto by Renault CEO Luca de Meo speaking at the Paris Motor Show 2024, where he stressed the need for Europe to formulate an industrial strategy to compete with the Chinese BEV makers who could also benefit from legacy automakers having to buy credits to avoid penalties.

He told us: “The real question for me is whether we are able to reorganize ourselves, potentially differently, from the Chinese because we live in a different capitalistic system to be able to long term compete with them in, say, five or 10 years. That is the real question, not the tariffs. We need to develop a Europe-wide strategy to make this a possibility for the future.”