Daimler loses complicated, costly refrigerant battle
Daimler’s profit warning, its second this year, brought back an old issue many might have forgotten: its brief but fascinating crusade against a refrigerant five years ago. Part of the reason for reducing its earnings guidance was related to this complicated case.
Due to the EU’s Mobile Air Conditioning Directive that took effect in early 2013, automakers were forbidden to use R134a refrigerant in all-new vehicles because it had a global warming potential roughly 1,300 times worse than CO2.
The entire industry agreed to switch to the only known and available alternative capable of meeting the MAC Directive, a fluorine gas called R1234yf. Its production was controlled by partners Honeywell and DuPont.
Although R1234yf has no global warming potential, it has a major drawback – it is flammable and produces an acidic gas upon combustion. The risks were studied and found to be acceptably low – until Daimler at one point sounded the alarm only months before the directive took effect.
Due to its reputation for safety, other German automakers -- most notably Volkswagen -- began to voice their concerns as well especially after a well-known German consumer magazine branded R1234yf the “killer refrigerant”.
The rest of the industry was furious at Daimler, since the only other option was complicated CO2-based systems that were much more expensive and needed further development. At the time, suspicions existed that Daimler simply wanted to cut costs. It forgot to grandfather the use of much cheaper R134a into its compact family by homologating them early like Volkswagen did.
In the end Daimler broke EU rules for roughly six months, selling about 130,000 mainly compact cars illegally with the old refrigerant before the German type approval authorities granted the automaker a retroactive change in their homologation.
Apart from a short but headline-worthy spat with France over the use of R134a, which briefly halted registrations of the vehicles, the issue faded away.
That all changed Oct. 8 when the ECJ ruled that Germany had violated the directive by allowing Daimler to sell those 130,000 cars.
Now Daimler says it can no longer rule out the possibility it will have to recall the vehicles and must book provisions to cover the unplanned costs.
You can reach Christiaan Hetzner at firstname.lastname@example.org.