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European vehicle sector analysis: new challenges from climate change

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The modern, fossil-fueled automobile was born in Europe in 1886 when German engineer Karl Benz received the first patent for a gasoline-powered car.

Nearly a century and a half later, Europe could be the first place where the gasoline-powered car meets its end. The question for European automakers is whether they will control the market for electric cars – or whether Chinese competitors will be too strong to fend off.

New climate targets, new climate regulations

Several European governments are among the first to set phase-out dates for new sales of passenger cars powered by internal combustion engines: 2040 in France, 2030 in The Netherlands, and 2025 in Norway. But the transition in Europe is accelerating well in advance of any ban: battery-powered and plug-in hybrid cars made up 14% of new passenger car sales in the EU in the first quarter of 2021, with 6% of those being pure electric vehicles. And with the EU soon to tighten its CO2 emission standards for vehicles in the context of the European Green Deal – Volkswagen already faces a fine of over 100 million EUR for its excessive emissions in 2020 – it is clear that the internal combustion engine is running out of road.

 

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