EU carmakers granted slower start to CO2 reduction race

The European Parliament today approved a measure giving more flexibility to carmakers in complying with the EU’s CO2 reduction targets.

Today’s vote came after EU lawmakers fast-tracked the legislative process on this amendment, given that auto manufacturers have to start complying with emissions reduction mandates this year.

Instead of having to cut average car emissions by 15% on an annual basis from a 2021 baseline, companies will now be able to average their performance over the years 2025, 2026 and 2027. This means they can achieve smaller reductions this year, as long as decarbonisation accelerates in the coming two years.

Car manufacturers: ‘A step in the right direction’

The move has been welcomed by the European Automobile Manufacturers Association (ACEA) as “a step in the right direction that acknowledges the complexities and the ongoing difficulties of the automotive market”, such as slow EV uptake and a lack of domestic value chains for batteries.

Sigrid de Vries, ACEA Director General, said: “While this provides some necessary flexibility for manufacturers in the short term, we need a long-term decarbonisation strategy including more charging stations, purchase and tax incentives, fairer energy prices while keeping the industry a competitive powerhouse and securing the EU’s strategic autonomy on critical technologies. We look forward to discussing this during the next Strategic Dialogue with the European Commission.” 

Volkswagen had estimated in January that it would likely have to pay a fine of €1.5 billion for failing to fully comply this year, based on a rate of €95 per gram of CO2 above the target threshold.

Transport & Environment: ‘An unnecessary gift’

However, energy transition think tank Transport & Environment (T&E) called the delay “an unnecessary gift to the auto industry just as electric car sales are surging in Europe”.

Pointing out that ​​European car manufacturers sold 45% more battery-electric cars in the first three months of the year compared to the same period of 2024, Lucien Mathieu, cars director at T&E, said: “It’s ironic that the EU is delaying emissions targets for the car industry just as EV sales surge. The boom is thanks to new, more affordable models that the carmakers launched to comply with the original EU target. This delay will allow the industry to take the foot off the gas for the EV roll-out while also slowing down investments."

Other think tanks, including the World Benchmarking Alliance, have previously accused the industry of not investing enough in the transition to electric vehicles.