FRANKFURT -- Time is running out for European automakers, which have waited until the last minute to try to meet ambitious EU emissions targets and face billions in fines if they fail to comply.
Automakers will use this week's Frankfurt auto show to reveal the new electric and hybrid models and strategies they hope can slash carbon dioxide emissions within months.
But it is a challenge fraught with danger, as the cost of pushing pricey technology on unconvinced consumers could hammer profits in an industry already suffering a downturn in sales.
"You have cars that cost an extra 10,000 euros to build, fleet-emissions targets requiring a certain sales volume and consumers who may or may not want them," said one PSA executive. "All the ingredients are there for a powerful explosive."
By next year, CO2 emisisons from new cars sold in Europe must be cut to a fleet average of 95 grams per kilometer for 95 percent of cars from the current 120.5-gram average -- a figure that has risen of late as consumers spurn fuel-efficient diesels and embrace SUVs. All new cars in the EU must be compliant in 2021.
Another 37.5 percent cut in CO2 is required between 2021 and 2030 in addition to the 40 percent cut in emissions between 2007 and 2021.
Daimler CEO Ola Kaellenius said cutting average emissions from the Mercedes passenger car fleet to meet the European Union's 2021 target will be a significant challenge.
"We have all the right vehicles on offer to reach those targets. Having said that, we cannot mandate what the customer buys. The 2021 targets are a significant challenge," Kaellenius said on Tuesday at the Frankfurt show.
Customers are still opting to buy Mercedes SUVs, which now amount to around a third of total sales. The trend toward increased sales of SUVs has not changed over the past 25 years, Kaellenius said.
The timing could hardly be worse, with the world's main auto markets in decline and the sector braced for a chaotic British exit from the European Union as well as a protracted U.S-China trade war.
The industry has long since given up pushing for the goals to be relaxed - a political impossibility underlined by a resurgent climate protest movement that has added the Frankfurt show to its target list.
VW's CEO, Herbert Diess, said the regulatory crunch and growing support for green causes proves that his company's 80 billion euros ($88 billion) bet on becoming the world's largest manufacturer of electric cars is right.
"Even Toyota and some other competitors, which were slow to bring EV's, they are now also betting on electric. So we are right," Diess said.
New electric cars wheeled out at the show on Tuesday include PSA Group's Opel Corsa-e mini. VW's ID3 compact made an appearance Monday on the eve of the show. The German automaker is also making hybrid power standard-issue in its bestselling Golf.
The show is also seized upon by activist groups. Greenpeace on Tuesday inflated a 1,400 cubic meter black balloon emblazoned with the word CO2 from the outsize exhaust pipes of a monster truck to protest the car industry's reliance on combustion engines.
Fiat Chrysler, which lacks adequate green technology, has agreed to pay Tesla hundreds of millions of euros to pool emissions scores with its electric cars and escape penalties.