Traditional vehicles may not completely disappear from manufacturers’ lists. The European Commission presented today, 16 December, a package of measures for the automotive sector which effectively cancels the total ban on the sale of cars with combustion engines from 2035.
According to the Commission, the aim is to define “an ambitious but pragmatic policy framework to ensure climate neutrality and strategic independence by 2050, while offering greater flexibility to producers”. The proposal therefore leaves room for technological neutrality, as requested by manufacturers and several Member States. The proposal will now have to be negotiated between Parliament and the European Council.
The ban on combustion engines is skipped, the EU limits the emissions target
Let’s see in detail what the community executive proposed today, 16 December, with the Automotive Package. Under current rules, from 2035 all new cars and vans in the EU must be zero-emission. The proposal announced today instead provides for a reduction in CO2 emissions of 90 percent of exhaust emissions (which come out of the exhaust pipes) compared to 2021 levels, rather than 100 percent. To offset the remaining 10 percent, car manufacturers will have to resort to low-emission steel produced in the European Union and the use of synthetic e-fuels and non-food biofuels, derived for example from agricultural waste or used cooking oils.
With this package, the Commission addresses both supply and demand in the automotive sector transition: on the supply side, it proposes a review of existing CO2 emissions standards for cars and vans and a targeted amendment to those for heavy-duty vehicles (HDVs). On the demand side, it proposes an initiative to decarbonise corporate fleets with binding national targets for zero- and low-emission vehicles.
The proposal thus allows plug-in hybrid vehicles, models with “range extender” (where the combustion engine only serves to generate electricity for the electric one), mild hybrid vehicles and those with an internal combustion engine to continue to circulate even after 2035, alongside fully electric and hydrogen cars.
What changes for corporate fleets
As regards the 2030 target relating to cars and vans, further flexibility is introduced through the “banking & borrowing” mechanism for the period 2030-2032. It is a system that allows manufacturers to “accumulate” or “anticipate” emission credits, reducing the rigidity of the rules while maintaining pressure towards decarbonisation. In practice, it gives manufacturers more leeway to plan investments and launch new electric models without risking immediate sanctions.
Regarding corporate fleets, targets are set at Member State level to support the deployment of zero and low emission vehicles. As company cars drive higher annual mileage, it will also mean greater emissions reductions.
A Battery Booster program will also be created, aimed at accelerating the development of a battery value chain entirely produced in the EU. However, the financial endowment is very small, just 1.8 billion euros. Under the Battery Booster programme, €1.5 billion will support European battery cell manufacturers through interest-free loans. The long-awaited package launched by Strasbourg also includes a simplification omnibus to remove regulatory obstacles with savings estimated at over 700 million per year for the industry.
Incentives for “Made in Europe” electric cars
Before 2035, car manufacturers will be able to benefit from “super credits” for affordable small electric cars produced in the European Union. The objective is to encourage the placing on the market of a greater number of small electric models. The European Commission therefore proposes to introduce a new regulatory subcategory for small electric vehicles ‘made in Europe’, which will be distinguished by a length of less than 4.2 meters and for which the European Commission intends to reduce regulatory obligations for at least ten years. The vehicles in question will benefit from a superbonus in the calculation of CO2 emissions for car manufacturers. The objective is to try to recover from the competitive disadvantage compared to Chinese dominance (also) in this segment.
Brussels’ watchword is “stay on course towards clean mobility with pragmatism”. It will be a matter of seeing in concrete terms what the role of vehicles with internal combustion engines will be, keeping in mind that car manufacturers will sooner or later have to achieve maximum economies of scale in the electric sector to face Chinese competition and offer vehicles at competitive prices.
