EU Commission releases Automotive Package proposals
17 December 2025
The European Commission has presented a new Automotive Package set of proposals amending several regulations for the automotive sector. The package—intended to reverse the decline of the European automotive industry, increase its competitiveness, and reduce overregulation—follows several calls from the industry and from EU member states to relax the 2035 CO2 emission targets from new vehicles, a.k.a. the combustion engine ban, and other regulatory burdens.
Key proposals include:
- revision of CO2 emission standards for cars, vans, and heavy-duty vehicles
- mandatory uptake of zero- and low-emission vehicles by corporate fleets
- “battery booster” strategy with €1.8 billion for a fully EU-made battery value chain
- “automotive omnibus” to ease environmental reporting obligations for EU corporations and introduce a new vehicle category of ‘small affordable cars’
- revised car labeling rules for consumers to have more complete information about the cars’ emissions
CO2 Emissions. The proposed updates to CO2 standards in cars and vans include a relaxation of the 2035 emission reduction target—currently 100%—to 90%, relative to the 2021 baseline. This will allow for plug-in hybrids (PHEV), range extenders, mild hybrids, and internal combustion engine vehicles to still play some role beyond 2035, in addition to electric vehicles. Car manufacturers must compensate the 10% remaining emissions through the use of low-carbon steel made in the EU, or by using e-fuels and biofuels.
Up to 2035, the proposals allow for banking and borrowing of emission credits for 2030-2032 to meet 2030 target for cars and vans. Additionally, the 2030 CO2 target for vans will be reduced from 50% to 40% emission reduction.
The amendment to the CO2 emission standards for heavy-duty vehicles will provide flexibility that introduces stronger incentives for early deployment of electric trucks—manufacturers will be allowed to collect more emission credits from 2025 and 2029 if their CO2 emissions are below the 2025 target.
Corporate Fleets. Starting in 2030, member states must ensure that a specific share of new corporate cars and vans registered by large companies in their territories are zero- or low emission. The proposal introduces mandatory national targets reflecting member states’ level of technology and market development.
National authorities will have full flexibility to choose the measures to achieve their targets. However, zero- or low-emissions vehicles must be “Made in the EU” to benefit from public financial support.
Automotive Omnibus. The proposal includes a series of amendments to several regulations to reduce regulatory burdens on the auto industry. Some of the key changes include:
- Introduction of a new sub-category of passenger cars, small electric vehicles of category M1 (M1E), based on a maximum length of 4.2 meters (Regulation (EU) 2018/858). According to some expectations, these small vehicles could achieve cost reductions of 10-20%, allowing sticker prices between €15,000-€20,000.
- Member States will be allowed to exempt e-Vans with GVWs between 3.5 tonnes and 4.25 tonnes engaged exclusively in domestic transport from the obligation to install smart tachographs.
- e-Vans with GVWs between 3.5 tonnes and 4.25 tonnes (classed as N2 vans) will be exempted from the obligation to be equipped with speed limitation devices.
- Type 6 low-temperature laboratory test will be removed from the Euro 7 framework (Regulation (EC) 2024/1257).
The Commission’s proposal received mixed response from the industry. ACEA (European Car Manufacturers Association) and several manufacturers issued cautiously optimistic statements, welcoming the proposals as a step in the right direction, while some EV makers and lobby groups criticized the Commission for backtracking from the 100% CO2 target. AECC (Association for Emission Control and Climate) said the proposed changes “fail to offer a truly technology-neutral approach based on lifecycle considerations.”
It remains to be seen whether the proposed regulatory relief will be sufficient to revive the European auto industry. While the European economy continues to struggle, the proposals pale in comparison to the ongoing massive deregulation in the United States.
Source: European Commission