Ford Stock – Ford Plans for All Passenger Vehicles Sold in Europe To Be Electric by 2030
Welcome to Thomas Insights — every day, we publish the latest news and analysis to keep our readers up to date on what’s happening in industry. Sign up here to get the day’s top stories delivered straight to your inbox.
Ford has announced a commitment to an all-electric future for its passenger vehicles sold in Europe, enabled by a $1 billion investment in a new EV manufacturing center in Cologne, Germany.
The company announced the following timelines for its transformation to “sustainable profitability”:
- 2023: The first all-electric passenger vehicle will roll off the lines in Cologne.
- 2026: 100% of Ford’s passenger vehicle range in Europe will be zero-emissions capable, all-electric, or plug-in hybrid.
- 2030: 100% of Ford’s passenger vehicles sold in Europe will be all-electric and two-thirds of commercial vehicle sales will be all-electric or plug-in hybrid.
Having operated its manufacturing facility in Cologne for 90 years, Ford has dubbed its transformation into the Ford Cologne Electrification Center as “one of the most significant [announcements] made in over a generation.” Ford’s European President, Stuart Rowley, said the decision “underlines our commitment to Europe and a modern future with electric vehicles at the heart of our strategy for growth.”
EU Carbon Penalties and Incentives
Ford’s all-electric investment must be understood against the background of the EU’s mix of CO2 targets, fines, “super-credits”, and consumer incentives.
The EU has adopted ICCT (International Council on Clean Transportation) policy on mandatory carbon targets for car manufacturers that are enforced with heavy financial penalties.
As of 2021, the standards are 95g of CO2 per km for passenger cars, and 147g/km of CO2 for light-commercial vehicles. The heavier a manufacturer’s car fleet, the higher the CO2 emission value allowed by the regulation.
Automakers are fined based on the average emissions of all their cars sold in Europe over a year, with the “excess emission premium” (fine) at about €95 or $116 for each gram of CO2 per km beyond the target. This adds up to thousands of Euros for every car that misses the CO2 target. Volkswagen made news headlines in January for missing its EU target and now faces a fine of over €100 million or $122 million.
The European Commission is reportedly proposing a revised target to reduce vehicle CO2 emissions to 50% below 2021 levels by 2030, further incentivizing the shift to an all-electric future.
While these are hefty penalties, they are softened by the existence of super-credits. Auto manufacturers can offset the emissions of ICE cars with credits gained by selling EVs. Each EV Ford sells in Europe will generate around $26,000 worth of carbon credits for the company.
Meanwhile, consumers are offered generous financial incentives and tax breaks to bring down the price of EVs, although these differ across EU member states.
Volvo, Jaguar, and Bentley have also committed to manufacturing and selling only electric vehicles in Europe by 2030.
Phasing Out New Gasoline And Diesel Vehicle Sales
Although the targets and penalties outlined above will make it increasingly expensive for manufacturers of CO2-emitting vehicles in Europe, the EU as a whole has not yet committed to banning sales of new gas and diesel cars just yet.
But a group of nine member countries led by The Netherlands and Denmark are building political pressure for the EU to set a date to ban sales of new gasoline and diesel cars. Elsewhere, an increasing number of countries have proposed or committed to a 2030 target date for phasing out non-electric cars.
In the U.S., California became the first state to set a timeline for phasing out gas-powered vehicles by 2035. Senators Dianne Feinstein and Alex Padilla recently asked President Biden to follow California’s lead and commit to a phase-out date for the entire nation to help meet Paris Agreement climate targets.
Image Credit: Darren Brode / Shutterstock.com