Europe Auto Industry is Preparing for New Climate Regulations
The European Commission has set a clear objective for 2035: all new cars sold on the European market must be zero-emission vehicles. In simple terms, this means that after this date no new petrol or diesel cars can be registered, only electric or other technologies that emit no CO₂ at the exhaust pipe. The aim of this measure is to gradually eliminate one of the Union’s largest sources of emissions, the transport sector, which today accounts for nearly a quarter of total EU emissions.
To pave the way, the EU has already introduced intermediate emission-reduction targets for 2025 and 2030, and automakers are required to meet these milestones. Those who fail to cut emissions sufficiently can use a mechanism known as pooling. Essentially, a manufacturer whose emissions are above the legal target can buy “compliance credits” from another manufacturer that is below the threshold. In this way, the fleet’s average emissions meet the legal standard and fines are avoided. It is a legal solution, but it does not solve the core problem: the high-emission company continues producing as before, while real progress remains limited.
Against this backdrop, most major European automakers, Volkswagen, Renault, BMW, Stellantis, and Volvo, have managed to accelerate electrification and are on track to meet their 2025–2027 targets. Falling battery costs and the expansion of charging infrastructure have supported this transformation. However, there are also cases like Mercedes-Benz, which still relies too heavily on traditional engines and bridges the gap by purchasing credits.
To understand how important political direction is, we must also mention the letter recently sent by more than 150 companies in the electromobility sector to the European Commission. They are firmly demanding that the 2035 target be maintained. Their argument is simple: without firm and clear rules, investment in electrification risks slowing down. Any delay or relaxation of the target would send a signal of uncertainty, at a time when Europe needs coherence in order to compete globally.
Global competition comes especially from China, where manufacturers like BYD and Nio have become world leaders in producing electric cars at affordable prices. Their growing presence on the European market shows that if Europe does not speed up its own transition, it will end up importing massively from Asia, losing jobs and industrial influence. This is why some European officials are even discussing the application of the CBAM mechanism to vehicles, in order to avoid trade imbalances.
All these aspects will be decided at the end of this year and, in particular, whether the 2035 net-zero target remains firm or will be changed. The decision will show whether Europe continues to assume its role as a climate leader or opens the door to a delayed transition, risking leaving control of the market to others.
(Reuters)