Story: European automakers are grappling with looming challenges.
They face tougher emissions rules that could further hit profits in the struggling industry.
They responded by raising prices for gasoline cars and offering discounts for electric vehicles.
The European Union will significantly reduce the cap on vehicle carbon dioxide emissions from January 1.
This means that at least a fifth of most car companies’ total sales must be electric vehicles to avoid hefty fines.
But data shows that so far this year, only 13% of all cars sold in the region are electric.
The tougher rules come at a time when the industry is already facing overcapacity due to poor sales and competition from China.
Auto giants such as Volkswagen and Stellantis have issued profit warnings in recent months.
One analyst said the companies will need to sell more electric vehicles at a time when consumption is delayed by political and economic uncertainty and falling subsidies for electric vehicles.
Electric vehicles are also more expensive to manufacture than conventional vehicles.
With just weeks to go, European politicians are urging Brussels to reconsider the targets.
But Luca de Meo, president of the European Automobile Manufacturers Association, said automakers were getting to work, eager to avoid fines that could amount to $15.76 billion.
Volkswagen, Stellantis and Renault have increased the prices of their petrol-engined models by hundreds of euros in the past two months.
Analysts believe the move is an effort to curb demand for heavier emission sources and make pricier electric models more attractive.
But a source close to a European carmaker warned the strategy could backfire.
They said raising the price of gasoline cars should help close the gap with more expensive electric vehicles but may not generate enough EV sales due to weak market growth.
Sales in the region are about a fifth lower than before the coronavirus outbreak.
