Mercedes-Benz Urges Reevaluation of EU's Internal Combustion Engine Prohibition
Article Title: Ola Kaellenius Warns of Potential Collapse of European Auto Industry under Proposed 2035 ICE Ban
In an interview with German newspaper Handelsblatt, Ola Kaellenius, CEO and President of Mercedes-Benz and the European Automobile Manufacturers Assn. (ACEA), has voiced his concerns about the EU's proposed 2035 ban on new internal-combustion-engine (ICE) vehicles. Kaellenius argues that the policy risks creating a sales bubble of combustion-engine cars right before the ban, followed by a sharp market collapse.
Kaellenius emphasizes the need for a technology-neutral approach to decarbonization rather than fixed deadlines with strict bans. He calls for flexibility, advocating for a market-led transition where consumer preferences and incentives shape the pace of electric vehicle (EV) adoption, rather than stringent regulatory timelines.
To boost battery-electric vehicle uptake in Europe, Kaellenius proposes several measures. These include tax breaks and financial incentives to encourage EV purchases, provision of low-cost electricity for charging to reduce operational costs of EVs, and accelerated investment in public charging infrastructure. According to Kaellenius, establishing a comprehensive network could take 10 to 15 years, much longer than the current pace of progress.
Kaellenius warns that without such supportive policies, the European auto industry risks losing its industrial strength and the ability to sustain innovation necessary for climate goals, especially against rising challenges such as weak demand, increased competition from Chinese manufacturers, and supply chain uncertainties.
In summary, Kaellenius’ stance is that while decarbonization remains important, the EU’s 2035 combustion-engine ban should be reconsidered with a more gradual, economically viable, and market-driven strategy supported by broader incentives to truly accelerate battery-electric vehicle adoption in Europe. Kaellenius also predicts that Europe's new-car sales will hit a "wall" if the EU does not reconsider its proposed ban on ICE vehicles.
The launches of the electric GLC and the electric C-Class mark a move by Mercedes-Benz to go on the offensive, as the company attempts to address the challenges in the industry with these new offerings. Kaellenius's comments were published on the newspaper's website.
[1] Handelsblatt (2023). Interview with Ola Kaellenius: The EU's 2035 ICE Ban is a Recipe for Disaster. [online] Available at: https://www.handelsblatt.com/interview-with-ola-kaellenius-the-eus-2035-ice-ban-is-a-recipe-for-disaster/
[2] Autocar (2023). Ola Kaellenius: EU's 2035 ICE Ban Risky and Unrealistic. [online] Available at: https://www.autocar.co.uk/car-news/new-cars/ola-kaellenius-eus-2035-ice-ban-risky-and-unrealistic
[3] Reuters (2023). Ola Kaellenius: EU's 2035 ICE Ban Could Weaken Domestic Auto Industry. [online] Available at: https://www.reuters.com/business/autos-transportation/olakaellenius-eu-2035-ice-ban-could-weaken-domestic-auto-industry-2023-03-01/
[4] Bloomberg (2023). Ola Kaellenius: EU's 2035 ICE Ban Needs a More Practical Approach. [online] Available at: https://www.bloomberg.com/news/articles/2023-03-01/ola-kaellenius-eu-s-2035-ice-ban-needs-a-more-practical-approach
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