The European Union has extended the compliance period for automakers to meet CO2 emission targets from one year to three years, as experts warn it could have a huge impact on electric vehicle sales.
The European Commission announced the change on Monday, giving car manufacturers until 2027 to meet targets originally due in 2025, although the overall emission reduction goals remain unchanged.
The move comes after carmakers warned that a slump in demand for electric vehicles had left them facing heavy fines.
Ursula von der Leyen, the European Commission president, announced that carmakers would be given a three-year window to hit their CO2 emissions targets.
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Manufacturers have praised the delay to electric vehicle targets
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She said: “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.”
Under the new arrangement, if a company misses its target this year, it can avoid a fine by making up the difference over the following two years.
EU carmakers had urged the Commission to grant relief from fines they claimed could rise to €15billion (£12.4billion) for 2025.
Shares in car manufacturers surged following the announcement. Renault’s shares climbed by as much as 5.4 per cent while Volkswagen jumped by as much as 5.3 per cent and Mercedes-Benz rose by 4.7 per cent.
Other European automakers, including BMW also saw their shares rise between 1.5 and four per cent after von der Leyen’s comments.
The market reaction reflected relief among manufacturers who have been struggling with falling demand.
Chris Heron, Secretary General of E-Mobility Europe, said: “The proposal for CO2 limit flexibility will significantly delay Europe’s electric vehicle roll-out for the next two years, risking around half a million fewer electric cars entering the EU market in 2025.
“Moreover, changing the rules midway through the game is unfair for the automakers that have already achieved compliance. Europe slowing down its transition will leave the door wide open for China to continue as undisputed market leader, putting long-term job creation at risk.”
The proposal will still require approval from EU governments and the European Parliament before taking effect.
Italian Industry Minister Adolfo Urso claimed the European car industry had been saved by the decision, while the Czech Transport Minister Martin Kupka said it would push for a longer five-year extension.
Oliver Blume, CEO of Volkswagen, also praised the “pragmatic approach” that did not impact CO2 reduction goals, saying it gave carmakers flexibility to accelerate demand with affordable new models.
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Experts have warned that relaxing EV rules could lead to more Chinese vehicles flooding the market
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Renault also supported the decision, stating the flexible approach would allow EU automakers to reduce emissions while staying competitive.
The company noted this would help as the electric vehicle market continues to develop.
