Brussels will ease new emissions rules for combustion engine cars, allowing the embattled auto industry to avoid fines following a slower-than-expected transition to electric vehicles.
The European Commission will uphold its 2035 ban on petrol cars but allow flexibility over the next three years in how carmakers meet stricter CO₂ emission targets entering into force this year, according to Commission president Ursula von der Leyen.
“The targets stay the same. But it means more breathing space for the industry and it also means more clarity,” von der Leyen said on Monday in a news conference.
Under the rules, which were designed as part of the bloc’s green transition, new passenger cars and vans must reduce their C0₂ emissions by 15 per cent compared to 2021 levels.
Carmakers have been lobbying hard for Brussels to ease the regulations following a decline in electric vehicles sales in major European markets such as Germany and France last year. In 2024, registrations of new battery-powered vehicles fell 1.3 per cent from a year earlier.
The European car industry body Acea has previously estimated a total loss of €16bn if fines for 2025 were not delayed. Germany’s Volkswagen has warned that it expected a €1.5bn hit this year in order to meet the stricter emissions rules.
Under the new flexible regime, the fines would only be levied in 2027, allowing companies undershooting the targets in one year to outperform in future years and avoid payments.
It should also prevent European companies from paying overseas EV manufacturers, such as Elon Musk’s Tesla and China’s BYD, to buy carbon credits to jointly meet the targets.
There is widespread support for the move among member states and members of the European parliament, who must approve it.
Some carmakers, however, who are ahead in EV sales and have invested heavily in the electric transition, called on the EU to resist pressures to water down the regulations.
“Europe can’t afford electrification to fail, or to delay the transition,” Jim Rowan, chief executive of Volvo Cars and the Swedish group majority owned by Geely, said. “We can’t keep kicking the can down the road.”
Trade association E-Mobility Europe warned that the proposed flexibility could mean that about half a million fewer electric cars entered the EU market this year. “Europe slowing down its transition will leave the door wide open for China to continue as an undisputed market leader,” said its secretary-general Chris Heron.
But von der Leyen said averaging the emissions over three years rather than scrapping or postponing the targets provided “fairness for the first movers, those who did their homework”.
In addition to easing the emissions regulations, Brussels will also demand more local content in battery cells and car components sold in the continent and only provide support to Chinese and other foreign battery manufacturers if they share skills and technology with European partners.
“The European automotive industry is at risk of losing significant market shares in EV technology and production capabilities, and faces a significant cost gap in critical EV components, particularly batteries,” said a draft of the automotive industrial plan, which is expected to be released on Wednesday.
To boost demand for electric vehicles, Brussels will also propose measures to accelerate the shift away from petrol in company fleets.
And carmakers will be allowed to “develop shared software, chips and autonomous driving technology” without infringing competition rules, von der Leyen said.
William Todts, executive director of the environmental NGO T & E, said: “Weakening the EU clean car rules rewards laggards and does little for Europe’s car industry except to leave it further behind China on electric vehicles.”