2nd ICAI 2022

International Conference on Automotive Industry 2022

Mladá Boleslav, Czech Republic

Although the global effort of these countries is consistent (to reduce emissions from passenger cars), most countries use different approaches to reach this goal (Krabec, Čižinská, 2020, Neset, Čižinská, 2021). In terms of reducing emissions produced by cars, we can say that it is the European Union who is setting an example for other countries because in European Union the emission standards are relatively stricter than in other parts of the world (ICCT [online], 2021). In the European Union, car manufacturers must comply with very strict emission limits, otherwise they risk being fined for exceeding them. These emission limits have a purpose of reducing the production of harmful substances (mostly nitrogen oxides and carbon oxides and other) by ICE vehicles. In addition, these emission standards get stricter over the time and car manufacturers who sell cars in European Union must adjust to it. The problem is that current emission standards in Europe are already strict as they are but there are even stricter emission standards to come (Euro 7 in 2025) (ACEA [online], 2021). Already current emission limits represent quite a challenge for automakers because due to increasingly stringent emission standards, carmakers are reaching the very limit of the capabilities of internal combustion engines, whose level of efficiency is at most around 35% with current technologies (Prouza, 2015, p. 16). This paper establishes the connection between the stricter emission standards for ICE vehicles in European Union and the value (Krabec, 2007, Krabec, 2014) of biggest car manufacturers in Europe on the stock market by market capitalisation using the financial data from annual reports from the biggest European car manufacturers and from sales statistics and at the same time considering technological advancements made in the last couple of years (see also Krabec, Čižinská, 2015). 2. Problem Formulation and Methodology As the introduction suggested, stricter emission standards represent serious threat to the automotive industry in Europe and especially to those car manufacturers that will be not able to adapt from the technological point of view. To meet stricter emission standards the car manufacturers must invest into alternative means of propulsion (other than ICE only powered cars with which the car manufacturers wonít be able to meet neither current emission limits nor the future emission limits). Unfortunately for the car manufacturers, the main problem with alternative means of propulsion is that these propulsions (such as hybrids, plug-in hybrids or electric) are relatively more expensive to produce than ICE only powered cars (PA Consulting, 2019). To achieve lower emissions, carmakers have had to implement a lot of new technologies to their cars in recent years. These were usually catalytic convertors, particulate filters, selective catalytic reduction, mild-hybrid drives, etc. The adoption of these new technologies meant that the variable costs of each car produced to go up. But this is not the only problem that the car manufacturers have to face with current and coming emission standards. There is one major problem, namely that ICE vehicles are no longer able to meet current (let alone future) emission limits even with all the technologies mentioned above that were implemented in new cars over last couple of years. And as most automakers try to avoid paying fines for exceeding emission limits, they have had to develop alternative propulsions that have lower o better zero local emissions.

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