Europe’s trade regulators are proposing to give its domestic automakers a three-year window to achieve zero-emission-vehicle sales targets.
The European Commission will also publish proposals to help incentivize consumers to buy battery-electric vehicles and boost domestic production of auto batteries.
Speaking ahead of the planned publishing, commission president Ursula von der Leyen tells journalists that automakers will now see targets that had been expected to be met this year delayed, in light of a continent-wide slowdown in consumer uptake of BEVs, Bloomberg reports.
A “targeted amendment” to give the auto sector flexibility under the 2025 emissions rules will be proposed later this month, according to von der Leyen. The changes mean automakers can miss the target this year provided that they outperform in the next two. The hope is that a new program of consumer incentives will kick in by next year and help automakers hit the sales targets.
In a press briefing, von der Leyen says: “Instead of the annual compliance, companies will get three years on the principle of banking and borrowing. The targets will stay the same but it means more breathing space for industry and more clarity, without changing the agreed targets.”
The commission is working on draft proposals hoping to help its domestic automakers electrify their fleets and compete better with cheaper Chinese BEVs, Reuters reports.
It says the commission will work with the 27 European Union nations to assess how best to incentivize BEVs to attract consumers and is also proposing that zero-emission heavy vehicles should be exempt from road charges.
The move is in response to a slump in new BEV sales which fell 5.9% in 2024, according to the European Automobile Manufacturers’ Assn. (ACEA), which cites limited charging infrastructure across the continent. Germany's abrupt ending of subsidies and a shortage of cheap BEVs until now have also contributed to the decline.
It is also a response to the ACEA’s demands that its member automakers are being squeezed by unrealistic zero-emission-vehicle sales targets that are opening them to punishing fines potentially amounting to €15 billion ($15.6 billion) this year.
The commission's draft paper recognizes that Europe’s auto industry is at risk of losing market share in BEV technology and faces significantly higher costs relative to competitors, especially with Chinese-made batteries accounting for 30% to 40% of the value of a typical car.
Recommendations include mandating more European content requirements on battery cells and components in BEVs sold in Europe. To this end, regulators will look to offer more support for companies producing batteries in the EU. This could also be available to foreign manufacturers provided that they are partnered with EU companies to allow sharing of expertise and technology.
The commission plans to impose conditions for foreign investments in the automotive sector and will also look into financial support for battery-recycling facilities.
