Automakers will now have three years instead of one to meet the EU’s CO2 emissions targets, easing pressure and helping them avoid significant fines. While industry leaders welcome the extension as much-needed flexibility, critics argue it could slow Europe’s transition to electric vehicles.

The European Commission has proposed extending the compliance period from one year to three, allowing automakers more time to meet stringent regulations. Commission President Ursula von der Leyen emphasized that while “the targets stay the same,” the extension provides “more breathing space for industry.”

Policy Shift and Industry Impact

Under the EU’s clean mobility regulations, adopted in 2023, new cars and vans must achieve a 100% reduction in CO2 emissions by 2035. Automakers were initially required to meet incremental annual targets starting in 2025. However, amid slowing EV demand and rising competition from U.S. and Chinese manufacturers, European automakers lobbied for relief, warning of billions in potential penalties.

The EU is also considering broader policy adjustments, including “full technology neutrality,” which could expand the focus beyond EVs to include e-fuels and other alternatives. Additionally, the Commission is exploring support for European battery producers and new content requirements for EV battery cells and components to strengthen regional supply chains.

What’s Next?

The proposal still requires approval from EU governments and the European Parliament. In the meantime, automakers must continue navigating regulatory changes while ramping up EV production to stay competitive in the global market.

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