Reversing the EU’s 2035 phase-out of combustion engine sales sends a confusing signal to the European car industry and consumers, T&E has said. Carmakers could continue selling cars with engines, the European Commission proposed today, despite the EU’s aim to have the last polluting cars off its roads by 2050. This will divert investment away from electrification at a time when European manufacturers urgently need to catch up with Chinese EV-makers.
Car CO2 targets
The zero-emissions target in 2035 would be weakened to a -90% reduction in CO2 emissions. This opens the door to even the highest emitting combustion engine vehicles continuing to be sold. T&E calculates that up to 25% fewer battery electric vehicles would be sold in 2035 than under the current target.[1] However, BEVs will still dominate the car market from 2030 onwards.
These flexibilities would be conditional on carmakers gaining credits for green steel in vehicle manufacturing. Carmakers will also be awarded credits for advanced biofuels and e-fuels in Europe’s fuel mix. T&E said the fuels credits would allow carmakers to sell fewer EVs in return for non-existent emissions savings. In the case of advanced biofuels, which cannot be scaled sustainably, they would also increase Europe’s reliance on imports of used cooking oil and animal fats that are often subject to fraud.
William Todts, executive director at T&E, said: “The EU has chosen complexity over clarity. Breeding faster horses could never have halted the ascent of the automobile. Every euro diverted into plug-in hybrids is a euro not spent on EVs while China races further ahead. Clinging to combustion engines won't make European automakers great again.”
Greening corporate fleets
T&E welcomed the announcement of national electrification targets for large company fleets, but these will not be ambitious enough to drive greater uptake in a sector which should be leading Europe’s electrification efforts.
Alarmingly, PHEVs could count towards the corporate fleet targets, despite having far higher CO2 emissions than carmakers claim – especially in the corporate sector where drivers with fuel cards have less incentive to charge. The EVs would need to meet local content requirements that will be defined later. The failure to include electrification targets for the trucking sector is a missed opportunity to support EU manufacturers to scale zero-emission trucks.
Small EVs
The EU’s plan to promote the production of small EVs could result in fewer electric cars being sold, T&E warned. Every small electric car sold would count as 1.3 zero-emission cars towards a carmaker’s CO2 target, reducing the number of EVs they would need to sell overall. The small EV supercredits would be conditional on the cars meeting local content requirements.
Battery Booster strategy
The EU Battery Booster strategy, also published today, failed to secure any new finance to support the EU battery industry and it repackaged Innovation Fund money that had already been announced.
William Todts said: “Electrifying corporate fleets is the low hanging fruit of European industrial policy and it’s great to see the Commission taking action on this. But we should be aiming for large companies to go fully electric in a market that is propped up by tens of billions in publicly funded tax breaks.”
The legislative proposals on car CO2 standards, corporate fleets, and small EVs (Omnibus regulation) must be debated and agreed on by the EU Parliament and national governments before entering into force. An Industrial Accelerator Act, to define what counts as ‘made-in-EU’ EVs and batteries, will be published in January.
ENDS
Notes to editors:
[1] A 25% decrease in BEV sales takes into account the impact of green steel credits, alternative fuels, and super credits for small BEVs. T&E assumes a worst case scenario where carmakers focus on PHEVs (including range extenders, EREVs) which will reach on average 46 gCO₂/km by 2035. This is coherent with a PHEV utility factor correction update in 2027. Earlier calculations assumed weaker utility factors would lead to lower official PHEV emissions and thus higher PHEV sales.
