The European industry remains committed to the EU’s 2050 climate neutrality goal and the shift to zero-emission mobility. However, as new CO2 tailpipe limits for cars and vans come into effect in 2025, auto makers alone bear the damaging consequences if targets are missed.

Luca de Meo, President of the European Automobile Manufacturers’ Association (ACEA) and CEO of Renault Group: “Without a clear political statement by the European Commission by the end of 2024, as also urged by the German, French, Italian and other European governments, the auto industry risks losing up to €16 billion in investment capacity by either paying penalties, reducing production, pooling with foreign competitors or selling electric vehicles at a loss. Waiting for the start of the Commission’s Strategic Dialogue on the future of the automotive industry or for the 2026 review of the CO2 legislation is not an option, welcome and necessary as both may be. Manufacturers need clarity now to finalise compliance strategies, making pooling arrangements and other provisions for 2025.”

Contrary to four years ago, meeting tougher CO2-reduction targets this time requires the seamless interplay of factors within and beyond manufacturers’ direct control. Regulatory targets and the supply of cars alone are not enough; the transition needs to be market-driven, too. However, electric vehicle sales are currently stagnating at around 13% market share; or 10 percentage points below where they need to be, and this gap is too large to close on time. A timely and unambiguous declaration of support in this pivotal moment of the transition is critical to securing competitiveness and jobs along the value chain.

“In a well-working system, paying penalties should be the exception, not the default. And avoiding penalties should rest on sound economics, not inflict harm”, said De Meo. “ACEA members have pledged €250 billion into the green mobility transition and, just like everyone else, we want this to succeed. Unfortunately, the honest assessment must be that the transition is not going to plan and that sticking to legal rigidity leads to potentially irreversible damage. Legal flexibility, instead, will keep investment flowing and the transition on track.”

Current options discussed for compliance burden relief, such as phasing-in or multi-year average compliance, do not alter CO2 targets or overall EU climate ambitions but address market realities beyond manufacturers’ control — trade tensions, rising manufacturing costs, sluggish charging infrastructure growth, and declining purchasing subsidies. These options are also already known in EU law (eg for heavier vehicles like trucks and buses) and are used in other prominent jurisdictions with CO2 reduction legislation.

Without a clear political statement by the European Commission by the end of 2024, as also urged by the German, French, Italian and other European governments, the auto industry risks losing up to €16 billion in investment capacity by either paying penalties, reducing production, pooling with foreign competitors or selling electric vehicles at a loss.