The European Commission announced plans to remove its requirement for a 100% reduction in CO2 emissions from new cars and vans from 2035, marking one of the most significant moves in its initiative to ease industrial sustainability requirements.

Announced as part of its newly released “Automotive Package,” the Commission’s proposal would still require carmakers to meet a 90% tailpipe emissions reduction target by 2035, and to compensate for remaining emissions through the use of EU-made low-carbon steel and e-fuels and biofuels. The Commission said that the new 2035 target would allow a range of vehicle technologies to remain in play, including hybrids, plug-in hybrids, and range extenders, as well as internal combustion engine vehicles, in addition to full EVs and hydrogen vehicles.

The 2035 requirement formed part of a series of clean mobility regulations adopted by EU lawmakers in 2023, forming part of the Commission’s “Fit for 55” strategy to cut greenhouse gas (GHG) emissions by 55% by 2030, compared to 1990 levels. In addition to the 2035 zero emissions requirement, the regulations included interim targets requiring a 55% CO2 emission reduction for new cars and 50% for new vans by 2030, compared to 2021 levels.

Over the past few years, however, automakers have warned that a slower than expected electric vehicle uptake and a significant shift in policy direction in the U.S. under the Trump administration away from supporting a shift to EVs have made the targets unrealistic. As part of a “Competitiveness Compass” roadmap launched by EU Commission President Ursula von der Leyen, the Commission announced plans for an “industrial action plan for the automotive sector,” which included plans to update the regulations.

Following the release of the new Automotive Package, von der Leyen said:

“Innovation. Clean mobility. Competitiveness. This year, these were top priorities in our intense dialogues with automotive sector, civil society organisations and stakeholders. And today, we are addressing them all together. As technology rapidly transforms mobility and geopolitics reshapes global competition, Europe remains at the forefront of the global clean transition.”

In addition to updating the 2035 target, the new package also proposes to ease the 2030 emissions reduction requirement for vans to 40% from 50%, due to “structural near-term challenges to the uptake of electric vans,” and adds “banking and borrowing” flexibility on the 2030 requirement for cars, allowing manufacturers to exceed targets in one year if compensated by overachievement in another year from 2030 to 2032.

The package also includes plans for mandatory targets for EU member states to achieve a specific share zero emission vehicles and low emission vehicles of new corporate car and van registrations by large companies from 2030, and also introduces a €1.8 billion “Battery Booster” to accelerate the development of EU-made batteries, which includes €1.5 billion to  support European battery cell producers through interest-free loans.

Automaker industry groups welcomed the new proposals, with the European Automobile Manufacturers’ Association (ACEA) calling the package “a first step to creating a more pragmatic and flexible pathway to align decarbonisation with competitiveness and resilience objectives.”

Sigrid de Vries, Director General of ACEA, said:

“Today’s proposals rightly recognise the need for more flexibility and technology neutrality to make the green transition a success. This constitutes a major change compared to the current law.”