European carmakers are desperately attempting to encouraging the take-up of costly electric vehicles (Image: Getty)
In preparation for tougher starting next year, several car companies have increased prices for models by hundreds of euros in the last two months.
From January 1, the cap on carbon dioxide emissions will require at least 20% of all sales by vehicle companies to be electric.
In November, owner Stellantis raised prices in France of all its Peugeot models by up to €500 (£413) – apart from fully electric ones.
also increased prices on purely petrol models, including adding €300 (£248) to the price of a Clio SCE 65, with prices for hybrid versions remaining unchanged.
While car companies have described the new pricing as an “economic rise” and normal over a car’s lifetime, it is being viewed by analysts as an attempt to reduce demand for petrol cars and make more attractive.
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The tighter rules come amid massive costs of shifting to electric and stiff competition from China. (Image: Getty)
“Carmakers have started with their pricing strategy to steer demand towards battery EVs in order to reach the CO2 targets and avoid potential fines,” Beatrix Keim from the Center for Automotive Research said, according to .
Despite the EU’s requirement for at least 20% of all sales to be electric, currently only 13% of sales are, according to the European Automobile Manufacturers’ Association.
This raises the risk of fines that could reach a staggering €15 billion (£12.4 billion).
The tighter rules come amid massive costs of shifting to electric, as well as the threat of stiff competition from lower-priced Chinese brands.
At the same time, households have been battered by inflation and many countries have withdrawn subsidies for EV purchases.
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Carmakers’ attempts to raise prices could backfire and generate poor sales in both categories. (Image: Getty)
politicians are also facing calls to rethink the targets.
According to Denis Schemoul, auto analyst at S&P Global, rises in petrol car prices could help fund future EV discounts, acting as an “indirect subsidy” for electric car buyers by combustion engine buyers.
However, attempts from carmakers to raise prices could also backfire, as a source close to one manufacturer has warned that increasing the cost of petrol cars while the market growth for EVs remains weak may end up generating poor sales in both categories, according to Reuters.
The source added: “In reality, increasing the price of thermal engine cars means cutting production and all the value chain and suppliers will suffer from this.”