The European Union's target to reduce CO2 emissions from Europe's new-car fleet to a 95 gram per km average by 2020-2021 must be keeping car company executives awake because it will tough to achieve. But Opel CEO Michael Lohscheller probably can sleep a little easier.
PSA Group will be providing Opel with enough turn-key electrification technology to enable Opel to reach its emissions reduction goals, even as meeting the target gets tougher now that new cars sold in Europe undergo tests under the so-called Worldwide Harmonized Light Vehicles Test Procedure (WLTP) before being approved for sale instead of the more relaxed New European Driving Cycle (NEDC) tests.
Lohscheller admitted during the presentation of his PACE turnaround plan for Opel on Thursday that the automaker would have faced "dramatic" consequences if PSA had not become its "white knight" to save it from the possibility of EU fines for missing its target.
"When we started to work on this (PACE) plan in early August, we quickly came to the conclusion that Opel was not ready to reach CO2 targets set by the EU for 2020-21 and the potential consequences for Opel would have been dramatic," he said.
How dramatic? Last year Opel's average CO2 emissions for the new cars it sold in the EU were 122.4g/km, ranking it No. 14th, 20g/km higher than the best performer, the Peugeot brand with 101.9 g/km and also considerably more than the 117.8 g/km market average, according to JATO Dynamics data.
The WLTP's laboratory tests, combined with a new hurdle, the real driving emissions (RDE) test that measures pollutant emissions on the road for the first time, are raising emissions-test results by 6 percent to 16 percent, meaning that automakers will have to work harder to reduce CO2 emissions, which the EU wants lowered to tackle climate change. So, Opel did have a big problem.
Starting 2019, automakers will be fined 95 euros per year for every gram over their target. Opel, which sold just under 1 million cars in the EU last year, in 2019 could have faced fines in the region of 90 million-euros without PSA technology. This would have been a huge blow for Opel, which is in dire financial straits. The automaker lost $19 billion from 1997 to 2016 and is bleeding cash. On Thursday, PSA CEO Carlos Tavares said Opel's financial health had worsened as the PACE plan was being drawn up. "The situation gets worse by the day," he said.
Luckily for Lohscheller and employees at Opel and its UK sister brand Vauxhall the worst-case scenario is unlikely. Using PSA technology, Opel will launch a full-electric variant of the new Corsa subcompact in 2019, followed a year later by a plug-in hybrid version of the PSA-based Grandland X compact crossover. Two other PSA-based electrified models will follow by 2020, so Opel can now be confident it will achieve its CO2 target, rather than be given the kiss of death.