European Carmakers Given Two Year Breathing Space On Pollution Targets Amid Slump In EV Sales

European carmakers have been granted a two-year extension to meet emissions targets for 2025, according to the European Commission president, Ursula von der Leyen. The move, described as offering the industry “breathing space,” allows companies to offset excess sales of polluting vehicles in 2025 by selling more zero-emission cars by 2027. This measure, however, does not change the overall emissions targets, maintaining pressure on the automotive sector to transition towards cleaner technologies.

Environmental groups have criticised the decision, arguing it rewards manufacturers who have lagged in their commitments to reducing pollution. William Todts, executive director of Transport & Environment, called it a setback for Europe’s green ambitions, particularly in light of competition from China’s electric vehicle market. Agustín Reyna, director general of the consumer group BEUC, voiced concerns that the move could make electric vehicles less affordable for consumers, further slowing market growth.

Data from the European Environment Agency showed a 28% decline in new passenger car emissions between 2019 and 2023, driven largely by the expansion of electric vehicle sales. However, sales of electric vehicles struggled in 2024, prompting fears that carmakers could face substantial fines for failing to align their fleets with emissions standards.

The European Automobile Manufacturers’ Association (ACEA) lobbied for loosened timelines, citing slow growth in the zero-emissions vehicle market. Industry leaders emphasised the need for more robust support to address cost challenges, improve charging infrastructure, and stimulate consumer demand. Ola Källenius, the president of the ACEA and CEO of Mercedes-Benz, stressed that a balance must be struck between achieving zero-emission goals and safeguarding a strong European automotive sector.

The policy adjustment will need approval from both EU governments and the European Parliament. It follows a broader trend of scaling back on green finance rules under the current European Commission presidency. Shares in European car manufacturers responded positively to the announcement, with Volkswagen, Renault, Mercedes-Benz, and BMW each recording gains.

Critics caution that granting the industry more time could weaken Europe’s leadership role in the clean vehicle market, potentially delaying progress towards achieving climate goals. Supporters of the move argue it provides necessary flexibility to manufacturers in challenging market conditions while allowing for continuous investment in green technologies.