• Automakers will have three years, instead of one, to comply with the EU’s CO2 emissions targets, avoiding significant fines.
• Industry leaders welcome the move as necessary flexibility, while critics argue it slows Europe’s EV transition.
• The EU is considering support for local battery producers and broader technology neutrality in its 2035 emissions strategy.

The European Commission has announced a plan to extend the compliance period for CO2 emissions targets from one year to three, giving automakers more time to meet stringent regulations and avoid hefty fines. European Commission President Ursula von der Leyen confirmed the proposal, emphasizing that “the targets stay the same,” but the extended timeline provides “more breathing space for industry.”

The Shift in Policy

The EU’s clean mobility regulations, adopted in 2023, require a 100% reduction in CO2 emissions from new cars and vans by 2035. Automakers were initially required to meet incremental targets annually, starting in 2025. However, European automakers, struggling with slowing EV demand and competition from U.S. and Chinese manufacturers, lobbied for relief, citing billions in potential penalties.

Industry leaders, including Volkswagen CEO Oliver Blume, welcomed the shift as a “pragmatic approach” that allows manufacturers to scale up EV production with greater flexibility. Renault echoed this sentiment, noting that the move helps balance emissions goals with market realities.

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Industry Reactions

While automakers saw the decision as a lifeline, environmental groups and some policymakers criticized it. Transport & Environment’s Executive Director William Todts argued the move is a setback: “The key to competitiveness is to produce EVs at a price mass consumers want. Postponing this in Europe does not make you more competitive.” The BEUC, a European consumer advocacy group, called the delay “deeply regrettable,” warning it could slow the rollout of affordable EVs.

What’s Next

Von der Leyen also highlighted additional policy adjustments under consideration, including “full technology neutrality”—suggesting a potential shift away from an EV-only approach to include e-fuels and other alternatives. The EU is also exploring direct support for European battery producers and new content requirements for EV battery cells and components to bolster regional supply chains.

The proposal requires approval from EU governments and the European Parliament. Meanwhile, automakers must continue navigating the evolving regulatory landscape while ramping up EV production to remain competitive.

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