Crucial new car emissions standards are being finalised that could be either a big help or an equally big hindrance to the roll-out of electric cars across Europe and the UK.
What are likely to be the last generation of automotive emissions standards – dubbed Euro 7 – are set to come into force across the European Union in July 2025.
Now that might not sound like the most interesting opening to a feature you’ve ever read, but it’s quite important. The new rules will potentially make the cars you buy more costly, perhaps accelerating the switch to electrification – or, if you believe the car makers, delaying it.
Electric car ownership is on the up. About 10 million new EVs were sold globally in 2022, and that’s predicted to grow another 35% to more than 14 million in 2023. The world’s best selling car so far in 2023 is the electric Tesla Model Y.
In the UK, we expect to see more than 330,000 new EVs registered in 2023, with sales currently running about 30% up year-to-date compared to last year. But growth is not happening as fast as it needs to in order to hit the goverment’s 2030 deadline for banning petrol and diesel cars, and car companies are currently trying to choose between continuing to invest in petrol cars or pushing faster on the switch to EVs.
Why is post-Brexit UK worred about EU emissions rules?
While Britain is now no longer part of the EU bloc, the UK remains aligned with our European neighbours on most automotive regulations (as do other non-EU European countries). That includes emissions standards. For all the rhetoric about a bonfire of EU rules, neither the UK government nor the car companies want to see different standards being applied on opposite sides of the English Channel.
It’s an obvious position because, apart from the environmental considerations, car manufacturers would not go to the expense of producing different specifications of models to suit different rules for the UK. It’s already a considerable expense for them to produce cars in right-hand drive for the 10% of the planet that drives on our side of the road, so forcing them to build cars to different rule sets would simply cause most of them to leave altogether.
So, for the forseeable future, the UK will remain in lockstep with the EU on almost all new car regulations.
What are the Euro emission rules about?
‘Euro’ regulations mandate maximum levels for certain tailpipe emissions for new cars. When you were last buying a car, you may have seen some reference in the advertisement to it being “fully Euro 6 compliant” (or Euro 5, or Euro 4, depending on how long ago it was…) without really knowing what that meant.
European emissions regulations date back to 1970, but a milestone moment came in 1992 when the first ‘Euro 1’ directives for passenger cars were issued. These were initially aimed to reduce carbon monoxide (CO) levels and marked the start of European cars being fitted with catalytic converters.
Over the years, the emissions directives have steadily got more and more stringent, and have tackled different components of exhaust pollution. The goal, obviously, is to minimise the levels of various toxic pollutants coming out of vehicle exhaust pipes.
The current standard is called Euro 6, which was introduced in 2014. It has been updated a few times since, most notably from September 2017 from when manufacturers were compelled to introduce so-called ‘real world’ testing of vehicle emissions, not just in a laboratory. It’s still not properly ‘real world’, but it’s at least better than the previous tests that were fantastically optimistic.
There are different standards for petrol and diesel cars, due to the different ways they operate – CO requirements for diesels are lower, for example, but they are allowed higher levels of nitrogen dioxide and nitric oxide (NOX). There are separate standards again for light commercial vehicles (vans and pick-ups) and motorcycles. Heavy vehicles (like trucks and buses) have run a different system again up until now, differeniated by using roman numerals – the current standard for them is Euro VI.
No new car can be sold in the EU or UK unless it meets the current standards, and these days they do significantly affect you as a driver. The increasing number of Ultra Low Emission Zones (ULEZs) springing up in cities across the country usually take Euro 6 regulations as their dividing line between free entry and paying a charge. And if you’re a company car driver, you can pay more tax if your vehicle doesn’t meet all aspects of the latest Euro 6 standards.
What will Euro 7 look like?
In November 2022, the European Commission (EC) released its proposed Euro 7 regulations. Assuming they get the approval of the European Parliament, they will become law in July 2025 for any manufacturer making more than 10,000 cars a year. Smaller companies will have until 2030 to comply.
Euro 7 will sees a host of major changes topped by the bringing of all motor vehicles – cars, vans, motorcycles, buses and lorries – under one set of rules. There will also be no longer be any distinction between petrol and diesel cars – diesels, for example, will have to meet the same lower NOX levels applied to petrol cars.
For the first time, the proposed regulations will also include particulates generated by tyre and brake wear, which are not currently measured. All of the standards will apply over a wider range of driving conditions and for longer in a vehicle’s life – cars and vans will have to meet them for at least ten years after they are first registered, double what they have to achieve currently.
Even electric vehicles will not escape Euro 7. As well as the tyre and brake wear regulations, their batteries will be monitored for how long they hold their charge throughout the vehicle’s life, in the hope of giving consumers more confidence in buying a used EV.
Sounds good. What’s the problem?
All this comes against a background of major pressure on car manufacturers to phase out fossil-fuel vehicles altogether over the next decade. UK government plans will see no new purely petrol and diesel cars allowed to be sold from 2030 and plug-in hybrids will be banned from 2035, which effectively means the only option left will be battery-powered electric vehicles.
In Europe, all new cars sold by 2035 will have to emit zero CO2. In an additionally confusing sub-text, some car companies are working on engines burning synthetic fuels, which are CO2-neutral but currently very expensive. These have secured an exemption from the proposed new rules.
So at the same time as effectively forcing car manufacturers and consumers to switch over to electric vehicles – at a cost of many billions of pounds – the EU rule-makers are forcing car companies to simultaneously invest more piles of money to make their petrol and diesel vehicles meet the new Euro 7 regulations.
Having spent said piles of money to make their cars compliant with Euro 7, the car companies will only be able to sell these cars for no more than a decade – with a considerable wind-down expected over that time as petrol and diesel are phased out around the world. And this, of course, comes on top of the massive hammer blow the car industry took from the Covid-19 pandemic, which is still causing problems for manufacturers.
The car companies will have to recoup the extra costs somewhere, which in simple terms will be aded to the selling price of each vehicle.
How much will Euro 7 cost?
The European Commission says that the average cost per vehicle of meeting the new regulations will be around £260, but car makers have a different view. The European Automobile Manufacturers Association, which is basically the lobby group for European car companies, claims Euro 7 will add an average of €2,000 to new car prices.
The car companies claim that meeting the rules will cause them serious hardship. According to Carlos Tavares, CEO of the giant Stellantis group that owns some 16 brands including Vauxhall, Peugeot, Citroën and Fiat, the investment needed for Euro 7 will slow any shift to EVs.
“We don’t need Euro 7 as it will be drawing resources we should be spending on electrification,” he said. “Why use scarce resources for something for a short period of time? It is counter-productive.”
Similar views have come from across the industry, Ford saying in a statement; “We should not be diverting resources to yesterday’s technology but investing in zero-emissions instead.” And according to Volvo’s head of governmental affairs, Mattias Johansson, the proposed start date leaves “no reasonable lead time” to make engine changes.
The car makers also say that meeting the rules will force them to cut back their model ranges, and that the cars most affected will be the smallest models bought by those on the tightest budgets. Volkswagen’s boss, Thomas Schäfer, has claimed that Euro 7 might force it to drop the Polo supermini.
Obviously the car manufacturers’ positions are self-serving – they’ve never been in favour of any of the previous six Euro emissions standards, so you wouldn’t expect them to start now. They will also certainly have been anticipating Euro 7 for several years (even if they don’t admit it), so the ‘no time to prepare’ excuse doesn’t really wash. And car makers are already cutting back their fossil-fuel models as part of their switch to EVs – Volkswagen is developing an ID.1 electric small car that is likely to eventually replace the Polo anyway, so it’s just a question of how soon the petrol model is phased out.
Will the EU derail its own agenda?
The EC is unrepentant. While all new cars will be zero-emission by 2035, it argues that even by 2050 more than 20% of cars and vans, and half of the heavier vehicles on Europe’s roads, will still be emitting pollutants from their tailpipes as fossil-fuel cars will still form a large part of the used market.
Even EVs produce pollution – dust particles from brakes and micro plastics from tyres – so the EU is resolute that the Euro 7 rules are needed to reduce all these emissions.
While hardship claims by car manufacturers might be treated with understandable scepticism, the EU is facing opposition from within its own ranks. Eight European nations, including the major car manufacturing countries of France and Italy, have signed a letter calling for the rules for tighter exhaust emissions in the Euro 7 plans to be scrapped, dubbing them over-ambitious and unrealistic.
So what’s the path forward?
Car manufacturers are currently at a bit of a fork in the road. Do they spend their money developing electric cars or make one last development push on petrol cars?
Double down on EVs
One pathway means committing fully to EVs, leaving little to no money for ensuring their petrol cars achieve Euro 7 compliance. That, in turn, is likely to mean that they have to cease production on non-compliant petrol models in two years’ time.
In fact, we’re already seeing car companies making decisions to cut petrol cars. Most notably, Ford is about to end production on the Fiesta – the UK’s best-selling car of the last 50 years – and has already killed off the Mondeo. The S-Max and Galaxy are likely to cease production soon, and the Focus will die in 2025. All of these decisions will have been taken with at least one eye on expected costs for Euro 7 compliance, combined with ever-decreasing sales volumes, making it essentially impossible to turn a profit on these cars.
As for diesel? Well, it’s basically dead in the water as far as new family cars are concerned. Here in the UK, diesel’s share of the new car market is down to about 7% and continuing to fall (down from more than 50% pre-Dieselgate in 2015). And most of those remaining diesel cars are mostly lumbering SUVs that don’t yet have electrified alternatives. After 2025, diesel’s market share is likely to be negligible with very few choices available for buyers.
Speaking of Dieselgate, Volkswagen was one of the first European car companies to really go all-in on electric car development, investing countless billions to develop a range of new electric models. It’s also collaborating with fellow industry titan Ford on some new electric models to help share costs.
We have also recently seen Toyota, one of the automotive global superpowers, commit eye-watering sums of money to try and catch up in the electric car arena. Having long tried to promote the idea of hydrogen fuel cells instead of batteries for powering new cars, the company has finally acknowledged that it’s not going to happen any time soon and is now on a massive battery-powered spending spree. It expects to launch more than 25 new electric cars before 2030 across both the Toyota and Lexus brands.
Prioritise petrol for the short term
Alternatively, car companies can spend a chunk of money to get their petrol engines ready for Euro 7, which means deferring investment in new electric cars. Essentially, they’ll be hoping to take avantage of the relatively slow uptake of EVs in many markets to sell as many petrol cars as they can over the next few years while their rivals abandon the fossil-fuel market.
We’re likely to see some budget brands adopting this approach, since they already prioritise lower price points. Dacia is a logical one, given that it already uses as many components from parent company Renault as possible to keep prices down.
Performance car brands like Porsche and Ferrari will obviously continue to sell petrol cars for as long as they can, although they will build up EV models alongside their traditional petrol-powered models. The electric Taycan is Porsche’s best-selling model, while Ferrari will reveal its first electric supercar in 2025.
For larger car companies, the risk in sticking with petrol is that they will fall behind in the race for EV adoption. This is especially acute for European brands, which are already behind the leading brands from China (like BYD) and Korea (Hyundai and Kia). If they fall further behind now, they risk being wiped out entirely in a few years’ time. Smaller, independent car companies like Honda and Mazda are looking particularly vulnerable in this regard.
Try to keep a foot in both camps
For large groups, like Volkswagen Group or Stellantis, we’re likely to see a splitting of resources to try and keep a foot in each camp.
Volkswagen Group has recently put its Skoda brand in charge of all future fossil-fuel engine development. So any petrol-powered Audis, VWs and SEATs – and even some Porsche SUVs – are likely to have Skoda-developed engines after 2025. Meanwhile, Audi and VW are forging ahead with new generations of electric models that will then be shared across the other brands in the family. Volkswagen is also collaborating with Ford on both electric and fossil-fuel commercial vehicles, as not even these enormous conglomorates can afford to do it all on their own.
Most of the major car companies will have to commit to at least some petrol models post-2025, as none are yet ready to go completely electric by then. However, there will almost certainly be fewer choices for car buyers in any given segment, at any given price point, than we enjoy today.
One last fly in the ointment?
There’s one more factor that may swing decisions at some car companies. In an attempt to force a more rapid adoption of electric cars, the UK government is planning to introduce a new zero-emission vehicle mandate on car manufacturers. This will force a mininum percentage of EVs for most car brands from as soon as 2024, with the percentages getting progressively higher all the way to 2030.
That means that if car companies don’t have enough electric models on offer, they’ll have to cut back on the number of fossil-fuel cars they sell to meet the govrnment’s EV mandate. While the UK itself is only one market and might not sway emormous multi-national car manufactuers on its own, other governments are apparently looking at similar mandates.
A combination of Euro 7 investment and tough EV mandates could be a decisive blow for a number of fossil-fuel models, forcing car companies to bin off many of their petrol cars sooner than planned.
Increasingly, the future for the car-buying consumer looks to be a choice between more expensive combustion-engined cars or even more expensive EVs, with governments pushing consumers towards electric cars while persistently watering down aid packages to help them do so.
Car buyers face a confusing future with only one aspect looking certain – whether you choose electric or combustion, the cost of buying your next new car is only going to go up…
Additional reporting by Stuart Masson.
