New cars are getting more expensive. Here’s why

What does the new regulation bring?

After lengthy negotiations, the representatives of the European Parliament and the member states reached a temporary agreement which stipulates that new cars, trucks and motorcycles in the future must contain a significant proportion of recycled plastic. According to the agreement, manufacturers will have ten years to reach the goal of at least 25 percent recycled plastic in every new vehicle. As a transitional step, within six years of the entry into force of the regulation, that share must be at least 15 percent.

In addition, the regulation stipulates that at least 20 percent of that recycled plastic must come from the so-called “closed loop”, which means that it must be obtained by recycling old, discarded vehicles. This is to ensure that the automotive sector recycles its own waste and reduces reliance on plastic waste from other industries.

– This interim agreement marks an important step towards a circular economy for the European automotive sector – said the Danish Minister of the Environment Magnus Heunicke, whose country presided over the Council of the EU.

According to his words, a strong framework was agreed which “closes the loopholes in the system, ensures that valuable materials remain within the EU economic system and suppresses the export of highly polluting vehicles to third countries”. It is important to note that these rules will be part of a regulation, not a directive, which means that they will be applied equally and directly in all member states, without the need to be transposed into national legislation.

Why will cars become more expensive?

Although at first glance it appears to be an exclusively environmental measure, the new regulation also has economic consequences. The key reason for the expected price increase lies in a simple fact: recycled plastic that meets the strict quality and safety standards of the automotive industry is currently more expensive than new plastic. The process of collecting old vehicles, disassembling them, sorting materials, cleaning and final processing of plastic into granules suitable for new production is complex and expensive. All these costs are included in the final price of the recycled material.

Car manufacturers, faced with the obligation to use more expensive raw materials, will most likely pass this cost on to customers through higher vehicle retail prices.

An additional cost for the industry is also the principle of “extended producer responsibility” (EPR), which is significantly strengthened by this regulation. This means that manufacturers will bear financial and organizational responsibility for the entire lifetime of their vehicles, including the costs of collection and processing when they become waste.

Wider scope and machinery of export rules

The new rules will not only apply to passenger cars and light commercial vehicles. The scope of the regulation was extended to heavy trucks, buses, motorcycles and even vehicles for special purposes.

One of the key goals is to put an end to the problem of “disappearing vehicles”. According to the Council’s data, every year around 3.5 million vehicles that are illegally exported, dismantled or disposed of disappear from European roads without a trace.

In order to prevent this, a strict ban on the export of used vehicles that are no longer technically correct and safe to drive is introduced, which will come into force five years after the adoption of the decree.

A compromise between industry and green ambitions

The path to the final agreement was marked by pressure from the automobile industry, which warned of the challenges and costs of adaptation. In its initial proposal, the European Commission sought much faster implementation, requiring a goal of 25 percent recycled plastic within just six years. However, member states and the European Parliament fought for a longer transition period, giving the industry more time to adjust. This outcome did not satisfy environmental associations.

“This deal is a textbook example of political caving in under industry pressure,” said Fynn Hauschke of the environmental group EEB.

Although the agreement still has to go through the formal adoption procedure in the European Parliament and the Council, the direction is clear. The European automotive industry, which accounts for about ten percent of the total consumption of plastic in the EU, is moving towards a more sustainable future.

But for drivers across Europe, that future will, by all accounts, come at a slightly higher price.