Balancing green transition goals and the competitiveness of Europe’s car industry

Subject: Balancing green transition goals and the competitiveness of Europe’s car industry

The European car industry is a cornerstone of our economy, supporting millions of jobs and driving innovation. However, concerns have been raised that current EU emission standards and related policies (including fines and the phasing out of the combustion engine) risk undermining the sector’s competitiveness and capacity to invest in the green transition.

Issues include high fines for non-compliance, which divert resources away from investments in sustainable car technologies; rising vehicle prices, particularly for smaller combustion engine models, which make cars less affordable for European consumers; and job losses across the EU as domestic car production struggles to compete with increasing imports of non-EU vehicles (even after EU tariffs on Chinese electric vehicles).

In the light of these challenges and within the framework of the strategic dialogue on the future of Europe’s car industry:

1. Is the Commission willing to review the current regime of fines and emission standards to better balance environmental objectives with the economic sustainability of Europe’s car industry?

2. Will the Commission consider refraining from implementing the 2035 ban on combustion engines? If not, is it willing to delay its date of entry into force to allow the industry more time to adapt?

Submitted: 17.12.2024

Answer given by Mr Hoekstra on behalf of the European Commission

(21 February 2025)

The CO2 emission standards for new cars and vans (1), including a 100% emission reduction target from 2035 onwards, provide long-term certainty and predictability for investors, while allowing sufficient lead time for a fair transition.

They will drive the transition towards zero-emission mobility and support the competitiveness of the EU industry in view of global trends, and are essential to deliver the EU objective of becoming climate neutral by 2050.

It is clear that manufacturers need to act to reduce their emissions and comply in 2025, but it is premature to draw any conclusion on specific compliance situations.

These targets were agreed by the co-legislators in 2019 and confirmed in 2023, providing manufacturers with the necessary lead-time to set-up their compliance strategies, which may include selling more zero-emission cars, hybrids and plug-in hybrids, but also deploying smaller and more efficient conventional vehicles.

Several European manufacturers are launching new and cheaper electric car models, which should increase the attractiveness of zero-emission vehicles for a broader audience.

The President of the Commission has convened on 30 January 2025 a Strategic Dialogue on the Future of the Car Industry in Europe to urgently address the current challenges and design concrete strategies and solutions to ensure this key industry has a solid future in Europe (2).

As part of the dialogue, solutions will be identified to safeguard industry’s capacity to invest, by looking at possible flexibilities to make sure the EU industry remains competitive, without lowering the overall ambition of the 2025 targets (3).

The dialogue will feed into an EU industrial action plan for the automotive sector, to be presented on 5 March 2025.

1 ∙ ⸱ http://data.europa.eu/eli/reg/2023/851/oj

2 ∙ ⸱ https://ec.europa.eu/commission/presscorner/detail/en/ip_25_299

3 ∙ ⸱ https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-e0ed18105a34_en