EU Relaxes Automotive CO2 Targets Amid Industry Pressure

The European Commission has extended the timeframe for automakers to meet new CO2 emission targets from one to three years, allowing more time for electric vehicle sales. This comes as automakers face competition from U.S. and Chinese rivals, and amidst industry pressure to ease potential fines.

In a significant move, the European Commission has bowed to industry pressures, extending the timeframe for automakers to meet stringent new CO2 emission targets from one year to three. This decision, announced by Commission President Ursula von der Leyen, aims to ease the burden on European car manufacturers, which have been struggling to keep pace with their U.S. and Chinese counterparts in the electric vehicle market.

Shares in major European auto firms like Volkswagen, Renault, BMW, and Mercedes-Benz saw a positive uptick, rising between 2% and 6% following the announcement. Von der Leyen emphasized that while the targets remain unchanged, the extension allows the industry more breathing room. However, this proposal awaits approval from both EU governments and the European Parliament.

The EU's new compliance direction seeks to assist automakers, who otherwise face potential fines amounting to billions if their fleets fail to meet emissions targets by 2025. Automotive groups have expressed concern, citing steep price cuts and reduced production as possible consequences without such an intervention. The European Commission's automotive action plan is expected to be unveiled on Wednesday, further clarifying the future path for EU car producers.

(With inputs from agencies.)