EU Grants Car Manufacturers Extended Compliance Period for CO2 Emissions Targets
Brussels, Belgium – May 8, 2025 – The European Union has introduced a temporary flexibility measure for car and van manufacturers, allowing them to meet stringent 2025–2027 CO2 emissions targets over a three-year average rather than annually, as announced by the European Commission on April 1, 2025. This decision, formalized by the European Parliament on May 8, 2025, responds to intense lobbying from automakers facing potential fines of up to €15 billion for failing to meet the 2025 targets, amid a sluggish electric vehicle (EV) market and global competitive pressures.
Under Regulation (EU) 2019/631, manufacturers were required to reduce fleet-wide CO2 emissions for new passenger cars by 15% from 2021 levels, targeting 93.6 g/km by 2025, as measured by the Worldwide Harmonised Light Vehicles Test Procedure (WLTP). The new measure, part of the EU’s Industrial Action Plan for the automotive sector, allows manufacturers to average their emissions across 2025–2027, meaning over-emissions in one year can be offset by under-emissions in another, provided the three-year average meets the target. This aims to ease financial pressures while maintaining the EU’s climate neutrality goal by 2050.
The European Automobile Manufacturers’ Association (ACEA) welcomed the relief, with President Ola Källenius calling it a “first step” toward a pragmatic transition to zero-emission mobility. However, automakers like Volkswagen, Renault, and Ford, which face emission reductions of up to 21% from 2023 levels, had pushed for leniency due to declining EV sales (down 5.4% year-to-date in November 2024) and competition from Chinese manufacturers. In contrast, Volvo, already close to compliance, warned that the change could disadvantage early adopters.
Environmental groups, including Transport & Environment (T&E), criticized the decision as a “gift” to laggards, arguing it delays EV production scale-up and undermines competitiveness against China. T&E’s William Todts noted that affordable EV models like the Renault R5 were timed for the 2025 target, and loosening rules could reduce pressure to deliver such vehicles. Posts on X, including @staunovo’s May 7, 2025, update, reflect mixed sentiment, with some praising the flexibility and others decrying weakened climate ambition.
The measure, backed by EU countries and fast-tracked by the European Parliament, also aligns with calls from Italy and Germany for a review of the 2035 zero-emission target, which effectively bans new combustion engine sales. While the Commission has resisted amending the 2035 goal, the early review scheduled for 2025 signals potential further concessions, raising concerns among green advocates about the EU’s Green Deal integrity.
Manufacturers can still use pooling strategies, with alliances like Toyota, Ford, and Stellantis partnering with Tesla, and Mercedes-Benz collaborating with Volvo and Polestar, to meet targets collectively. Despite the flexibility, the EU emphasizes that the overall climate ambition remains intact, with stricter targets of 49.5 g/km from 2030–2034 and 0 g/km from 2035.
As the automotive sector navigates economic challenges and tariff tensions, the extended compliance period offers breathing room but intensifies the debate over balancing industry support with climate goals.
Sources: European Commission, Reuters, ACEA, Transport & Environment, Forbes, EUR-Lex, posts on X