Auto makers in Europe eager to boost sales of their electric vehicles have a new strategy: Demanding higher taxes on conventional vehicles that burn gas and diesel fuel.
The top executives at several car and truck makers are calling on European governments to introduce the new taxes on carbon-dioxide emissions from gasoline- and diesel-powered cars and trucks as a way to help their EVs better compete. They say the levies should take the form of highway tolls or higher fuel taxes.
“We need to tax carbon at the pump,” Markus Duesmann, chief executive of Audi AG, said in an interview.
Traditional auto makers face a dilemma. The bulk of their business is still building and selling cars with internal-combustion engines—including family cars, big sport-utility vehicles and sports cars. Raising fuel taxes could hurt sales of those vehicles. But unless EVs can compete on price with conventional cars, it will be hard for auto makers to lure customers to them and recoup the vast investments manufacturers have made in the technology.
One avenue for the tax hikes is through carbon pricing—a dollar price on carbon emissions that sets a base for levies and taxes on emissions—which is one of the tools governments have deployed to fight greenhouse-gas emissions. Higher carbon pricing ultimately leads to higher prices for fossil fuels.