In the interest of reducing carbon emissions to reduce climate change, regulators around the world are forcing carmakers to boost the fuel efficiency of their upcoming products--substantially.

This requires investments in new technologies and production of more efficient models at a more rapid pace than some automakers feel is justified--and in many countries, far faster than the market alone would demand.

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The tension between business and environmental concerns is becoming apparent in Europe, where the auto industry is asking for less-stricter carbon-emission limits.

At a press event during the recent Paris Motor Show, Volkswagen Group CEO Martin Winterkorn said increased costs associated with tighter regulations would be "fatal" to the European auto industry, according to U.K. columnist Neil Winton in The Detroit News.

2015 Volkswagen Passat GTE (European spec)

2015 Volkswagen Passat GTE (European spec)

Regulations enacted by the European Commission require carmakers to achieve fleet-average emissions of 130 grams of carbon dioxide (CO2) per kilometer by next year, and 95 g/km by 2020.

Carmakers reportedly feel they can meet the 2015 deadline, but are concerned about the 2020 goal--let alone talk of an even stricter emissions standard in Europe for 2025.

Winterkorn said each additional gram of CO2 emissions Volkswagen eliminates in its European fleet costs the company 100 million euros (about $127 million), according to Reuters.

This sentiment was echoed by Fiat Chrysler CEO Sergio Marchionne, who claimed the economy was still too weak to support such a massive investment.

Meeting tougher emissions standards will also require more electric cars and plug-in hybrids.

Fiat 500X

Fiat 500X

Carmakers say they are concerned they'll be forced to produce plug-in cars without adequate charging infrastructure in place, let alone customer demand for higher-priced vehicles with limited range (in the case of pure electric cars)--a crucial factor for single-vehicle households in Europe.

Winterkorn believes carmakers need more time to address these issues, claiming the European Commission shouldn't discuss specific emissions standards for the period beyond 2020 until the industry is confident it can meet them.

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That doesn't mean the VW CEO isn't expecting a significant increase in low-emission vehicle sales, though.

Last year, he said Volkswagen would do its part to meet Germany's goal of having 1 million electrified vehicles on its roads by 2020--provided that lightly-electrified conventional hybrids without plugs were included in that total.


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