EU Rolls Back Car Emission Rules, Giving Automakers a Free Pass

The EU’s new Automotive Action Plan weakens car CO2 regulations, prioritizing competitiveness over emissions reduction. Previously strict annual targets can now be averaged over three years, making it easier for automakers to avoid fines. This shift follows heavy lobbying and signals a retreat from the EU’s zero-emission transport goals. Critics warn it could slow EV adoption and benefit Chinese manufacturers. While incentives for EVs are still under discussion, weaker regulations may reduce pressure to produce affordable European models. Environmental groups argue the move undermines climate efforts and risks Europe falling further behind in the EV market.

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• Volkswagen and Stellantis Benefit as EU Eases CO₂ Rules

EU Rolls Back Car Emission Rules, Giving Automakers a Free Pass

The European Commission is shifting its stance on vehicle emissions, prioritizing competitiveness over strict environmental regulations. Its newly introduced Automotive Action Plan eases CO2 standards, rolling back previous commitments to zero-emission transport.

In 2017, long before the Green Deal took shape, the EU set emissions limits that would have effectively banned new petrol and diesel vehicles by 2035. However, after extensive lobbying, car manufacturers’ appeals for looser regulations have been granted.

The latest plan amends CO2 rules by allowing automakers to average their emissions performance over three years instead of meeting annual targets, making it easier to sidestep fines.

Initially, Commission President Ursula von der Leyen envisioned economic growth driven by the clean transition. But this plan makes it clear that competitiveness has taken precedence.

“This raises serious concerns about the EU’s commitment to reducing transport emissions and achieving climate targets,” said Dominic Phinn of the Climate Group.

The proposal suggests that Brussels either no longer views strict regulations and penalties as effective tools or believes the industry’s well-being outweighs environmental goals. It also signals further dilution of the EU’s zero-emission policies, with both industry leaders and the European People’s Party (EPP) calling it just the beginning.

Lucie Mattera of Charge Up criticized the introduced flexibilities, warning they create uncertainty. Meanwhile, Chris Heron, secretary general of E-Mobility Europe, expressed disappointment over the weakened 2025 CO2 limits, fearing a decline in short-term EV sales.

While the new framework removes strong incentives for market growth, the Commission has yet to introduce concrete measures to boost EV demand. For now, EU member states are encouraged to share best practices on incentives, and the Commission is advocating for social leasing programs to make zero-emission vehicles more accessible to lower-income households.

Until then, consumers may have to choose between expensive European EVs or more affordable Chinese alternatives, which, despite EU tariffs, continue to gain market share.

NGO Transport & Environment (T&E) warned that weaker targets reduce pressure on manufacturers to produce cheaper EVs, which could ultimately harm Europe’s competitive edge.

“This will only strengthen China’s lead in the EV sector. If the European industry is to catch up, this plan must serve as a turning point,” said Julia Poliscanova, senior director for vehicles & e-mobility at T&E.

Volkswagen and Stellantis Benefit as EU Eases CO₂ Rules

Car manufacturers, particularly Volkswagen AG and Stellantis NV, are relieved after the European Commission proposed easing emissions rules that were set to become stricter this year. The policy change, which allows automakers to exceed 2025 targets and avoid penalties, follows months of industry pressure and could boost earnings by nearly €3 billion.

The Commission’s new plan, aimed at balancing competitiveness with the green transition, introduces a three-year window for compliance and includes measures to accelerate EV adoption, support battery production, and modernize the company car market. However, critics argue the relaxed rules could undermine the EU’s long-term climate goals.

VW and Stellantis had already adjusted their EV strategies, shifting focus to hybrids and alternative fuels. VW scrapped a €2 billion EV factory and delayed new models, while Stellantis abandoned an all-electric Maserati supercar. The plan’s three-year compliance period gives automakers flexibility, but climate groups fear it may weaken the EU’s commitment to its 2035 zero-emissions target.