A court in Germany ruled Tuesday that cities can impose bans on diesel cars, causing the country’s auto industry to look ahead to billions in coss to replace or upgrade diesel vehicles.
The Federal Administrative Court in Leipzig overturned a lower court’s decision and decided that local authorities have the right to ban older, dirtier diesel cars from their streets after the environmental group Deutsche Umwelthilfe (DUH) sued German cities Stuttgart and Duesseldorf in an effort to force the municipalities to take action on the smog caused by toxic nitrogen oxides and other polluting particles emitted by diesel engines.
The ruling was applauded by environmental groups, but the decision leaves many drivers unsure of regulations moving forward and puts pressure on the country’s automakers, which were responsible for about 30% of Europe’s cars and more than 19% of total global vehicle production in 2015.
Diesel cars have been a contentious point in the country since it was revealed in 2015 that Volkswagen cheated to pass emissions tests for their diesel engines. Investor confidence in the industry has been on the decline and German car maker growth lagged behind the pace of Europe as a whole last year.
This court decision is also seen as a blow to Chancellor Angela Merkel’s government, which is tied closely to the auto industry and lobbied against this outcome.
Drivers of older diesel models that do not adhere to the Euro-6 standards “can no longer be certain of being allowed to drive at any time, 365 days a year,” according to analysis from EY. Only 2.7 million of the 15 million diesel cars in Germany have Euro-6 technology.
Taking these cars off the road would help to reduce the amount of poisonous gases in many urban centers, which have been linked to heart problems, respiratory illnesses, and thousands of premature deaths per year. The court’s residing judge Andreas Korbmacher weighed these health concerns against the auto industry’s fears, saying “certain losses will have to be accepted.”
The decision does not impose a ban on diesel vehicles immediately, and the judge did warn that any ban should “exercise proportionality,” removing vehicles gradually. Still, analysts at Barclays predict the share of diesel cars in overall vehicle production in Europe, which was 52% in 2015, could be cut nearly in half by 2025.
Germany’s major auto companies hold an outsized influence over the economy, steering about 15% of the country’s GDP fluctuations.
Cities in other countries have also proposed bans on diesel vehicles in order to combat air pollution, including Paris, Madrid, Mexico City, and Athens, which plan to ban diesel cars by 2025. The United Kingdom and France plan to ban sales of all fully-gasoline and diesel vehicles by 2040.