How will EU emission targets impact carmakers by 2027?

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EU Emission Targets Set to Impact Carmakers by 2027

Nearly all European car manufacturers are projected to meet the European Union's emission targets by 2027, following a regulatory adjustment that allows for averaging emissions over a three-year period. This revised compliance framework, introduced earlier this year, provides carmakers with more flexibility between 2025 and 2027, a period during which electric vehicle (EV) sales are anticipated to grow significantly.
Carmakers on Track to Meet Revised Emission Averages

With the exception of Mercedes-Benz, all major European car manufacturers are expected to comply with the EU's emission reduction requirements for the 2025-2027 period. This compliance is largely facilitated by the European Commission's decision to permit companies to average their carbon emissions over three years, rather than being held to annual targets. This adjustment aims to support the automotive sector as it navigates the transition towards cleaner vehicle technologies.
EV Sales Growth Underpinning Compliance

The projected increase in electric vehicle sales is a key factor enabling manufacturers to meet the emission targets. By the end of 2025, EVs are forecast to constitute 18 percent of new cars sold in Europe, a notable rise from 13.6 percent in the previous year. This surge in EV adoption directly contributes to lowering the overall carbon footprint of new vehicles sold within the 27-country bloc, thereby aiding manufacturers in their efforts to adhere to the EU's progressively stringent standards.
Flexibility Offered by Averaging Period

The recent regulatory reprieve allows carmakers to average their emissions from 2025 through 2027, a shift from the previous requirement of meeting targets each individual year. While this provides necessary flexibility, it has also been observed to potentially slow the pace of EV market growth, as some manufacturers have reduced discounts on electric models. Transport & Environment (T&E) estimates that this extension could result in two million fewer electric cars being sold between 2025 and 2027 compared to a scenario with stricter annual targets.
Industry Calls for Further Regulatory Adjustments

Despite the general trajectory towards compliance, the automotive industry is advocating for additional revisions to the EU's climate regulations. Carmakers are seeking greater allowances for alternative vehicle types, such as plug-in hybrid models and highly efficient internal-combustion-engine vehicles, beyond the current focus on battery-electric vehicles. This push for further flexibility comes as the industry faces challenges including competition from Chinese manufacturers and potential US tariffs.

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How will EU emission targets impact carmakers by 2027?

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