The automotive industry is preparing for an ‘annus horribilis’: 2020 is presented with the threat of millionaire fines

The legislation of the European Union (EU) establishes that the set of all the vehicles that each manufacturer registers in Europe in 2020 must emit on average 95 g of _CO2 per kilometer. Which does not mean, as some have a certain folly, that all cars sold from January 1 next year have to emit below that limit. This is an average. Therefore, if a brand has a car that emits, for example, 120 grams, it must have another model that does not exceed 60 grams to be able to compensate.

However, the mechanism is much more complex, because it is about adjusting to the reality of each and every one of the cars sold by each brand. That is, a manufacturer can have in its product portfolio many cars that emit below 95 g / _CO2 and few above and, however, the models with more emissions are the preferred of their buyers. Well, Brussels is going to add the emission of each car that has sold that brand.

Fines can be multimillion-dollar. The formula to be applied is (Excess emissions × 95 EUR) × number of vehicles registered for the first time. To understand each other. Imagine that a brand has not achieved the average of 95 g / _CO2, suppose it has remained at 96 grams because the cars that have sold the most are the most powerful gasoline and has not managed to get its buyers to have opted for electric or hybrid with lower emissions.

95 euros per car per gram

Well, it has an excess of 1 gram of emissions and, let’s keep assuming that, to round it off, it has sold a million cars in total in Europe in 2020. That is, it has an excess of 1,000,0000 million grams and must pay for each one 95 euros. That is, it will have to face a fine of 95 million euros for each gram that exceeds 95 grams. In 2018 it is estimated that the average of the cars sold in Spain was placed at 118 grams. The jump the big one.

Manufacturers are therefore working against the clock, and there are those who say they will comply without problems and others who recognize that they will have a difficult time. We will see how each one ends. To begin with, there are already many voices within the industry that speak openly that the price of cars will have to rise in order to cope with the fines that are coming. It is estimated that the average increase could be 2.6% in the face of fines that are estimated to reach 30,000 million euros for the sector as a whole throughout Europe.

Half of the profit

This amount represents almost 18% of the combined gross operating result (Ebitda) and almost half (45%) of its combined net profit recorded last year (67,000 million euros), according to an analysis by Solunion of the latest data from one of its shareholders (Euler Hermes) on the automotive sector. Everything remains to be seen.

It is understood that from the sector 2020 is considered as the annus horribilis of the sector in Europe and that it is working piecemeal to adapt to what will be its new reality. But the fall of diesel and the rise of gasoline, which emit more CO₂, has caused that in Spain the average emissions of CO₂ of the newly registered cars in the first half of 2019 increased by 1.7% compared to the same period of the previous year to reach 118g/km, after having also experienced increases in the last two years. In 2017 it was placed at 116 g/km.

Reduce power

With the aim of decreasing the _CO2 that vehicles currently emit, brands are reducing the size of engines to spend less fuel and are installing turbochargers so as not to jeopardize their performance. Currently, almost 70 percent of new vehicles sold in Europe come equipped with a turbocharger, and according to the latest studies, the production of vehicles with this technology will be 62.5 million units in 2022 when manufacturers are already applying the new EU legislation.

However, the reduction in engine size means that they have to operate in more demanding situations, such as in extreme temperatures and with high pressures, at which times when compact engines with turbochargers are prone to serious engine problems.

Motor oils

Low-viscosity engine oil side solutions emerge here to protect engines. A turbocharger rotates at more than 150,000 revolutions per minute and can reach up to 1,000 degrees, for which these fuels contribute to keeping the engine cool, but also lubricates the turbocharger bearings, which are prone to clogging and can cause damage.

In addition, the low viscosity and lower friction formulation saves up to 3% more fuel and reduces CO emissions₂ to 70kg per year, calculating an average annual distance of 14,500km per year, or what is the same, the amount that would be generated when preparing 7,000 cups of coffee.

Source: The Economist