This is a summary. Download the briefing to find out more.
In this paper, T&E has analysed the impact of various flexibilities for compliance with the EU’s 2025 car CO2 target. The analysis covers the flexibilities proposed by ACEA: the 90% phase-in and the 5-year averaging of the compliance period 2025-2029, as well as the 3-year average flexibility option (announced by the European Commission in the Automotive plan) as well as other alternatives like the 2-year averaging and banking and borrowing.
The analysis shows that both flexibilities proposed by ACEA (5-year averaging and 90% phase-in) have by far the biggest impact on the reduction of the ambition level of the 2025 target as it allows carmakers to keep EV sales at a similar level to 2024, resulting in further EV market stagnation, loss of competitiveness longer term and depriving drivers of more affordable EV models. These options are covered in more depth in a previous analysis.
The European Commission’s plan to set up a 3-year averaging will weaken the 2025 CO₂ targets as it allows the car industry to sell less electric cars in 2025. This would delay the scale up of EV production in Europe and remove pressure on the industry to roll out cheaper EV models in 2025.
T&E calculates that it would lead European carmakers to sell 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 more affordable EV models. Each electric car not sold would be replaced by an additional combustion car which will consume altogether a total of around 21 billion liters of oil during their lifetime and lead to additional emissions of 50 Mt, equivalent to the annual emissions of Norway. In 2025 alone, T&E expects around 600,000 fewer electric cars sold. A significant share of these missing EVs would be affordable, mass-market models, as they typically yield lower profits and are therefore the first to be scaled back in favor of more profitable combustion vehicles.
This change in the regulation rewards industry laggards and does little for Europe’s car industry except to leave it further behind China on electric vehicles. The EU risks creating very damaging uncertainty by changing the framework of the regulation during a compliance year. To restore confidence and put Europe and its industry on track in the EV transition, the EU should firmly commit and confirm the 2035 100% zero emission car target.
