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EU Commissioner of Internal Market, Industry, Entrepreneurship and SMEs Elzbieta Bienkowska speaks at the EU headquarters in Brussels on May 28, 2018.

JOHN THYS/Getty Images

European Union consumers may do as much as regulators to propel the the region’s car sector into the electricity-powered age foreseen by Tesla Inc., according to the EU’s industrial-policy chief.

European Industry Commissioner Elzbieta Bienkowska said the EU has had a “breakthrough moment” since Germany-based Volkswagen admitted in 2015 that it fitted diesel engines with software to cheat U.S. checks on smog-causing discharges of nitrogen oxides. This deeply affected “the emotions in society toward emissions and cleaner cars,” she said.

“Diesel cars are finished,” Bienkowska said in a May 24 interview in her ninth floor Brussels office. “I think in several years, they will completely disappear. This is the technology of the past.”

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The auto-emissions scandal may help the EU gear up for a technological revolution in road transport. Europe is seeking to retain leadership in the global market for passenger cars in the face of competition from the United States, where Tesla is based, and China, which accounts for about half of electric-vehicle sales.

VW’s cheating, which the U.S. uncovered and led Germany to order an EU-wide recall of 8.5 million Volkswagen vehicles, pushed the world’s No. 1 car maker into a crisis and left policy makers in Europe scrambling to patch up regulatory holes that threatened a “clean-diesel” strategy dating to the 1990s. Bienkowska’s services were subsequently notified of possible engine-management irregularities in more diesel cars, including some made by Fiat Chrysler Automobiles.

The issue has been politically thorny in Europe because around half the cars in the region are powered by diesel – which causes more urban pollution than gasoline while having less global-warming impact – and because many member states have struggled to meet clean-air goals meant to reduce human sicknesses and premature deaths.

“People have realized that we will never have completely clean – without NOx – diesel cars,” said Bienkowska, who comes from Poland.

Earlier this month, EU governments backed a revamp of the rules for authorizing car models in the 28-country bloc. The European Commission, the EU’s regulatory arm, won the power to fine auto makers up to €30,000 ($45,130) for each faulty car and order recalls as part of the more centralized market oversight, becoming more like the U.S. Environmental Protection Agency.

Bienkowska said “arrogance” by car makers, coupled with their traditionally close ties to national governments, meant the draft law was initially greeted as if the industry wrongdoing had been insignificant. Gradually, she said, attitudes changed.

“I am really a little bit less frustrated than I was a year ago,” Bienkowska said. “During this denial phase, it was awful.”

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Adding to the optimism is an initiative by the commission and industry to spur the development in Europe of batteries for electric cars, including through financing. European companies seeking to get a foothold in the market include BMW, Daimler, BASF and Vattenfall.

“We want to have the first batteries produced in Europe, but also the whole value chain,” Bienkowska said. “It’s the kind of a project that a single member state cannot afford.”

Individual European companies are doing their part, too.

VW, which aims to sell as many as three million all-electric cars annually by 2025, has awarded €40-billion in contracts to battery producers. The deals take the company to within striking distance of its target to lock down €50-billion in supplies.

European EV sales, now about 1.5 per cent of all new registrations on the continent, will rise to about 5 per cent in 2021 and take off from 2025, according to Bloomberg New Energy Finance.

EU policy to fight climate change may also play a role, albeit in a more nuanced way than China’s approach of imposing quotas. A draft European law to tighten caps on car discharges of carbon dioxide offers incentives for auto makers to shift to electric vehicles.

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In the meantime, Bienkowska must continue to tackle the haziness and headaches of the diesel age. She’s stepping up legal threats against several EU countries, including Germany and Italy, for lax enforcement of the previously agreed European rules meant to ensure car makers heed NOx limits.

Bienkowska is also urging a number of EU countries, particularly in Eastern Europe, to increase recalls of vehicles suspected of failing to meet NOx standards. At present, eight member countries have mandatory recalls in place.

“We have member states like Romania, Slovakia and Poland where the recall rate is extremely low,” she said. “We don’t want those parts of Europe to be full of old diesel cars.”

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