Today’s EU Automotive Plan must mark a line in the sand for concessions on car industry climate targets, green group T&E has said. The European Commission plan contains crucial measures to boost demand for European EVs including a law on greening corporate fleets. But the decision to give carmakers two extra years to comply with the 2025 car CO₂ targets undermines the single greatest incentive for EU carmakers to catch up in the race to electrify.
While the plan contains vague measures on encouraging national incentives schemes and social leasing for EVs, T&E said these would be offset by the weakening of the 2025 CO₂ targets. The weaker targets would lead to European carmakers selling up to 880,000 fewer electric cars between 2025-2027 than under the current target and would remove pressure on the industry to roll out cheaper EV models.
T&E said lawmakers must stand firm against further pressure to change the car CO₂ standards for 2030 and 2035 when the EU conducts a review of the legislation. Cars, vans, trucks and buses are responsible for 22% of greenhouse gas emissions in the EU.
Julia Poliscanova, senior director, vehicles & emobility, at T&E: “The car industry is already calling for further concessions before the ink is even dry on this plan. But tariffs and other global headwinds will not be alleviated by slowing down electrification. This will only give China an even greater lead on electric cars. This EU plan must mark a line in the sand if the European industry is to finally catch up.”
The Commission said it is exploring support for battery production in the EU, as well as local content requirements. But this is too little too late. At least 100 GWh of battery capacity was cancelled last year, as European producers struggle to compete with global competition, subsidies elsewhere and the lack of a level playing field. The EU will also consider giving financial support to battery recycling, an industry which has huge potential to reduce mineral imports but is struggling to scale up in Europe.
T&E welcomed the announcement that any support for battery production would be contingent on overseas investors sharing skills and technology with EU companies – as European manufacturers have been required to do in China for decades. But the vague announcement on European content requirements on battery cells and components lacks urgency or resolve.
Julia Poliscanova said: “The age of innocence about China’s state-backed battery industry must come to an end. If the EU is serious about this clean tech being produced in Europe, financial support focused on scaling and local content requirements are needed now. Three years after the US IRA, the time for reflection is over. This support should be open to all producers, but foreign companies must be required to share their knowledge just as European carmakers had to do.”
The Commission will propose an EU law on greening corporate fleets, according to a separate Communication published today. Legislation to electrify large company fleets would boost the competitiveness of European carmakers, which sell 62% of their vehicles in the corporate market. T&E analysis has found fleet electrification targets could guarantee demand for more than 2 million electric cars for EU manufacturers in 2030 – half of the EV sales, on average, that they would need to meet their binding 2030 CO₂ emissions targets.
Corporate cars are the EU’s largest automotive market with about 60% of new sales going into this segment. But despite its high potential to support the European automotive sector in its transition to electric, this market is hardly electrifying faster than private households (14.3% vs 13.6%). Binding electrification targets for large fleets would clearly support EU car manufacturers' investments in electrification while bringing almost 7 million more affordable EVs onto the used car market by 2035 for private buyers, according to T&E analysis.
Stef Cornelis, director of electric fleets at T&E, said: “It’s a big deal that the EU will this year propose a law to accelerate the electrification of company cars and the logistics sector. This is not only the right decision to cut emissions fast, but it will strengthen Europe’s competitiveness and support carmakers in their transition. The EU needs to propose a regulation setting binding EV targets for large companies. Any delay will deprive battery-makers and the charging industry of the investment guarantee that they need in the coming years.”
