Renault says EV slowdown could lead to billions in fines in EU

Automakers could incur as much as 15 billion euros (S$21.6 billion) in fines if they can’t meet the European Union’s ambitious climate goals following a slowdown in electric-vehicle sales, according to Renault chief executive officer Luca de Meo.

“The European industry has already committed around 250 billion euros in investment, so we need to keep the business going. Otherwise, it will be an issue, especially for Renault in France,” he said of the EV market in an interview with France Inter radio on Saturday.

De Meo called on the European Commission to have “a bit of flexibility” regarding upcoming targets of EV sales and charging station installations. The EU is planning to phase out sales of new combustion engine-powered vehicles by 2035.

The CEO’s comments come as Europe’s auto industry faces a steep downturn, with Volkswagen considering factory closures in Germany for the first time in its 87-year history. France’s CGT labour union said this week that Renault is considering new job cuts in the country in the next three years, including in engineering.

“For 25 years, the European car industry has had 30 per cent of overcapacity,” de Meo said. “Thankfully, it is not the case for Renault.”

The company is running at 90 per cent of its production capacity after slimming down in recent years, according to the CEO. It has also shifted many of its French plants to the higher-end EV market to keep them running.

The speed of EV production is currently half of what the industry needs to avoid planned EU fines, de Meo said. He added that various factors are affecting demand, including prices, EV infrastructure and uncertainty around subsidies.

At current levels of EV sales, automakers would have to give up production of 2.5 million combustion-engine vehicles, or face the fines in the EU, according to de Meo. BLOOMBERG