Some are happy, some are sad! Stellantis supports the EU's loosening of carbon emission rules for car companies Volvo and environmental groups criticize “rewarding the laggards”

The Zhitong Finance App learned that based on the actual situation and pressure from European car manufacturers, the European Union decided to relax automobile carbon dioxide emission regulations and give car companies more time to achieve their emission reduction targets. On Monday local time, European Commission President von der Leyen said that the EU will give automakers three years (not just one year as previously stipulated) to achieve carbon dioxide emission targets.

Von der Leyen said that a revised plan for automobile carbon dioxide emission standards and regulations will be submitted this month to give European car companies more flexible emission compliance methods. “The overall emissions target remains the same, and companies must meet their emission reduction targets, but this decision will provide more buffer space for the industry,” she added. Notably, the amendment requires approval from EU member states and the European Parliament.

Following von der Leyen's remarks, the stock prices of European automakers, including Volkswagen, Renault, BMW, and Mercedes-Benz, all rose on Monday.

The EU's latest decision means that car companies don't have to meet strict emission standards right away this year; they only need to reduce excessive emissions within the next two years. According to the EU's previous relevant regulations, from January 1, 2025, the average carbon dioxide emissions of each newly sold car must not exceed 93.6 g/km, drastically reducing the carbon dioxide emission limit for automobiles. This means that most automakers must have electric cars at least one-fifth of their total sales to avoid hefty fines. Automakers may have to pay billions of euros in fines if they fail to meet the EU's emissions targets.

In response, European car manufacturer Stellantis (STLA.US) said on Tuesday that it welcomed the European Commission's proposal to relax carbon dioxide emission targets for automobiles. “Stellantis welcomes the statement made yesterday by European Commission President von der Leyen,” Stellantis said in a statement. The company said the extension of the compliance period for automotive carbon dioxide emissions targets is “a meaningful step in the right direction”, which will help maintain the competitiveness of the automotive industry, while the company remains committed to achieving relevant targets and advancing the electrification process.

“This move, along with further support for targeted purchases and fiscal incentives, cheaper green energy, and investment in charging infrastructure, can really speed up the electrification process,” Stellantis said.

However, the EU's decision has also sparked controversy and criticism. For example, Volvo called on the European Commission to stick to its goals to help provide regulatory certainty to companies that have already invested heavily in new technology, and said adjustments to emissions reduction rules may delay the transition to electric vehicles.

Volvo CEO Jim Rowan said in a statement that the EU standards established a few years ago gave the automotive industry sufficient preparation time and provided some mechanisms to comply with the standards. Jim Rowan added that Volvo “is ready to invest heavily in 2025” and that “companies like ours should not be disadvantaged by any last-minute legislative changes.”

Environmental groups have also criticized this additional flexibility, saying it could further weaken European automakers' competitiveness during the transition period. Advocacy group T&E described the change as an unprecedented “gift” to the automotive industry. William Todts, executive director of T&E, said: “Weakening the EU's emissions reduction regulations will only reward the laggards. It will not benefit the European auto industry; it will only further lag behind China.”