The german car brand recently launched new cars powered with an hybrid electric motor. This is part of a global investment of more than 2 billion euros including building a  new factory. One could wonder why so many European car brand like Renault and Volkswagen invested so much in electric cars compared to other solutions that could reduce consumption with less investment. As a magazine recently recalled [Note1], one of the main reasons is a legal one !

 

As part of its environmental strategy, the European Union adopted pieces of legislation regarding car gas emissions. According to EU law, car makers pay a  penalty if they produce cars emitting on average more than a defined level of CO2. In the future, car makers producing too much gas emitting cars could even be banned from the EU market. This penalty is quite high for a company like BMW as their cars are big and powerful ones and therefore more likely to produce CO2. They can not, as Peugeot does, compensate with a large number of small and low gas producing cars. The solution found by BMW was therefore to produce electric cars, producing 0 grammes of CO2. Even if they don't sell a lot of these cars, they save a huge amount of money in penalties and this makes their investment really profitable compared to other types of cars. Law therefore drives car makers' whole strategy in Europe!

 

Olivier BEDDELEEM

Associate professor in European Legal Strategy, EDHEC Business school

ESPEME entrepreneurship program director

beddeleemo@gmail.com

 

[Note1] Éric Wattez "2,6 milliards d'euros misés sur l'électrique", Capital, octobre 2013, p. 85 : "Même si BMW n'en vend que quelques milliers, un autre objectif sera rempli : avec la i3, la moyenne des émissions de CO2 de la gamme chute. De quoi satisfaire Bruxelles et continuer à vendre ses gros moteurs encore sacrément gourmands."