The European Commission has overturned the previous deadline for its controversial combustion engine ban, presenting on December 16 the Automotive Package to support the sector’s efforts in the transition to clean mobility and strengthen Europe’s battery industry, reducing reliance on third countries, especially China. “It sets an ambitious yet pragmatic policy framework to ensure 2050 climate neutrality and strategic independence while providing more flexibility to manufacturers. It also responds to calls by EU industry to simplify rules,” the Commission said in a statement. The Commission will now present it to the European Parliament and the Council in the new year.
Acknowledging the automotive sector’s continuing contribution to Europe’s industrial strength, the Commission argued that the package set forward on December 16 maintains a strong market signal for zero-emission vehicles (ZEV) while giving the industry more flexibility to achieve CO2 targets, and supports vehicles and batteries made in the EU. “The corporate vehicles initiative will support the uptake of zero- and low-emission vehicles. The automotive omnibus enhances competitiveness by saving costs, expected to be approximately €706 million per year, and cutting red tape, while providing greater investment certainty,” the Commission said.
Commission President von der Leyen stressed that innovation, clean mobility and competitiveness were top priorities this year in the Commission’s intense dialogues with automotive sector, civil society organizations and stakeholders. “And today, we are addressing them all together. As technology rapidly transforms mobility and geopolitics reshapes global competition, Europe remains at the forefront of the global clean transition,” she said.
Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy, argued that this package will be a lifeline for the European automotive industry. “We are pulling every lever at our disposal – simplification, flexibility, European preference, targeted support and innovation. Together, these measures are our commitment to restoring Europe’s industrial leadership while leading the global transition on climate,” he said.
Economy and Productivity and for Implementation and Simplification Commissioner Valdis Dombrovskis noted that Europe’s automotive sector has reached a crossroads. “We need to act now to ensure it remains an integral part of Europe’s industrial future, not just its heritage. The targeted simplification initiatives contained in today’s Automotive Omnibus are an important first step. We are determined to stay the course, continue our engagement and provide our automotive industry with the simple, clear, supportive, and predictable rules it needs to thrive,” he said.
The Commission presents a package that addresses both supply and demand of the automotive sector’s transition: on the supply side, it presents a review of the existing CO2 emission standards for cars and vans and a targeted amendment to those for heavy-duty vehicles (HDVs). On the demand side, it proposes an initiative to decarbonize corporate vehicles with binding national targets for zero- and low-emission vehicles, the statement read.
The CO2 standards now provide further flexibilities to support the industry and enhance technological neutrality, while providing predictability to manufacturers and maintaining clear market signal towards electrification.
From 2035 onwards, carmakers will need to comply with a 90 percent tailpipe emissions reduction target, while the remaining 10 percent emissions will need to be compensated through the use of low-carbon steel Made in the Union, or from e-fuels and biofuels.
This will allow for plug-in hybrids (PHEV), range extenders, mild hybrids, and internal combustion engine vehicles to still play a role beyond 2035, in addition to full electric (EVs) and hydrogen vehicles, the Commission said.
Prior to 2035, car manufacturers will be able to benefit from “super credits” for small affordable electric cars made in the European Union. The Commission argued that this will incentivize the deployment on the market of more small EV models. For the 2030 target for cars and vans, additional flexibility is introduced by allowing “banking & borrowing” for 2030-2032. An additional flexibility is granted for the vans segment, where the electric vehicle uptake has been structurally more difficult, with a reduction of the 2030 CO2 vans target from 50 percent to 40 percent.
The Commission is also proposing a targeted amendment to the CO2 emission standards for heavy-duty vehicles, seen as major polluters, with flexibility for easing the compliance with the 2030 targets.
Regarding corporate vehicles, mandatory targets are set at the Member State level to support the zero- and low-emission vehicle uptake by large companies. Having more zero- and low-emission vehicles on the market, both first- and second-hand markets – will benefit all customers. As companies’ cars cover higher yearly mileages, it also means more emission reductions. It will also make zero- or low- emissions and “Made in the EU” a pre-requisite for vehicles benefitting from public financial support, the Commission said.
Strengthening Europe’s own battery industry
With €1.8 billion, the Battery Booster will accelerate the development of a fully EU-made battery value chain. As part of the Battery Booster, €1.5 billion will support European battery cell producers through interest-free loans. Additional targeted policy measures will support investments, create a European battery value chain and foster innovation and coordination across Member States. These measures will enhance the cost competitiveness of the sector, secure upstream supply chains and support sustainable and resilient production in the EU, contributing to the “derisking from dominant global market players,” the statement read.
The Commission also vowed to reduce red tape and strengthen enabling conditions for the transition. The Automotive Omnibus will ease administrative burden and cut costs for European manufacturers, boosting their global competitiveness, and freeing up resources for decarbonization. Businesses are expected to save approximately €706 million per year, bringing the administrative savings thanks to all omnibuses and simplification initiatives the Commission has presented so far to around €14.3 billion per year. Among other things, it proposes to reduce the number of secondary legislations that will be adopted in the upcoming years and to streamline testing for new passenger vans and trucks. This will reduce costs while maintaining highest environmental and safety standards. The roll-out of electric vans in domestic transport is supported by measures that place them on an equal footing with internal combustion vans regarding drivers’ rest times and rules.
The Omnibus also introduces a new vehicle category under the Small Affordable Cars initiative, covering electric vehicles up to 4.2 meters in length. This will enable Member States and local authorities to develop targeted incentives, stimulating demand for small EVs made in the EU.
The Commission is also updating and harmonizing car labelling rules, for customers to have complete information about the vehicles’ emissions when making purchases.
The proposals presented on December 16 build on the Automotive Action Plan, and input from industry and key stakeholders gathered during the Strategic Dialogue.
While some groups have criticized the Commission’s combustion engine plans, Sustainable Transport and Tourism Commissioner Apostolos Tzitzikostas argued that the Automotive Package strengthens the sector’s competitiveness introducing flexibility into the CO₂ standards for cars and vans and a technology neutral framework. “We are also creating demand for cleaner corporate cars and vans reinforcing EU manufacturing and supply chains,” he said.
Climate, Net Zero and Clean Growth Commissioner Wopke Hoekstra said, “We want our industries to be the leaders of the transition to a low-carbon economy because that is what is best for our climate, competitiveness and independence. Today, we are stepping in to ensure a successful clean future for the automotive sector. We are introducing flexibilities for manufacturers, and in turn this will have to be compensated with low-carbon steel and the use of sustainable fuels to drive down emissions. We maintain investment predictability in the electric sector, drive down emissions and stay on track for climate neutrality by 2050.”
The International Council on Clean Transportation argued that the European Commission proposal raises concerns about Europe’s future position in the global electric vehicle (EV) race. “The plan would weaken the 2035 zero-emissions target for cars and vans by lowering the required CO2 emissions reduction from 100 percent to 90 percent, allowing the registration of all powertrain types—including combustion engine vehicles—from 2035 onwards. This will result in at least one billion tonnes of additional CO2 emissions,” ICCT said in a press release, arguing that these changes are expected to slow the momentum of Europe’s EV market at a time when global car electrification is accelerating.
