To help the struggling European auto industry, the European Commission announced a revised emissions framework for new vehicles that offers greater flexibility over the next three years. Although the bloc will uphold its 2035 ban on petrol cars, the new policy allows fines for failing to meet CO₂ reduction targets to be postponed until 2027. This change comes in response to lobbying by car manufacturers who have faced significant cost pressures and reduced electric vehicle (EV) sales, with registrations of battery-powered cars falling 1.3% in 2024.
Commission President Ursula von der Leyen explained that while the emission reduction targets remain unchanged new passenger cars and vans must cut their CO₂ emissions by 15% compared to 2021 levels the new approach provides a three-year averaging mechanism. "This gives manufacturers a fair chance to catch up, rewarding early movers who did their homework while offering necessary flexibility to others," she said.
The measure is expected to shield European automakers from the need to rely on overseas carbon credits, which have become a costly workaround due to the additional tariffs and competitive pressures from US and Chinese EV manufacturers. Notably, the proposal also calls for greater local content in battery cells and vehicle components, with support for foreign battery manufacturers contingent on technology and skill sharing with European partners.
Reactions from industry leaders have been mixed. While Volkswagen’s CEO Oliver Blume and Mercedes-Benz boss Ola Källenius welcomed the change as a step toward balancing climate objectives with competitiveness, other manufacturers, including Volvo’s Jim Rowan, warned against delaying the transition to electrification. Trade association E-Mobility Europe cautioned that the flexibility could reduce EV market penetration, potentially allowing China to maintain its dominant position.
The revised emissions rules, coupled with additional measures to boost EV demand such as promoting the shift from petrol in company fleets and enabling collaborative development of shared technologies form part of a broader industrial plan aimed at preserving the EU’s leadership in the automotive sector amid a challenging global environment.
