The European Union (EU) begins 2025 with the implementation of the Corporate Average Fuel Emissions (CAFE) regulation, which sets CO2 emissions at 93.6 grams per kilometre for cars sold in the 27 EU member states.
Additionally, any manufacturer that fails to comply could face fines of up to 95 euros for each gram exceeded, potentially resulting in multi-million-euro penalties for automakers unable to meet the zero-emission vehicle sales targets outlined in the EU regulation.
The CAFE regulation requires manufacturers to reduce the average CO2 emissions of their vehicles by 15% compared to the levels at the start of the decade.
The specific limit of 93.6 grams of CO2 per kilometre, which has now come into force and will remain until 31 December 2029, will drop to 49.5 grams of CO2 per kilometre between 2030 and 2034.
This is intended to pave the way for the 2035 de facto ban on the sale of petrol and diesel combustion vehicles. In 2000, average emissions exceeded 170 grams of CO2 per kilometre, falling to 130 grams in 2010 and 120 grams by 2019, just before the COVID-19 pandemic.
In response to the new regulation, the European Automobile Manufacturers’ Association (ACEA) has called for “clarity” to avoid harming Europe’s competitiveness, though it affirmed the automotive industry’s commitment to the EU’s 2050 climate neutrality goal and the transition to zero-emission mobility.
According to the European Environment Agency, the average CO2 emissions of new passenger vehicles registered in the EU fell by 1.6% compared to 2022, reaching 106.4 grams of CO2 per kilometre.
This reduction is largely attributed to the increased sales of electric vehicles, which rose from 13.5% of total sales in 2022 to 15.5% in 2023.
However, ACEA warns that, unlike four years ago, achieving stricter CO2 reduction targets this time will require smooth interaction of factors both within and beyond the direct control of manufacturers.
At present, EV sales in Europe remain stagnant at around 13% market share, which is ten percentage points below the target.
This gap is considered “too large to close in time,” experts caution.
Estimates of the fines automakers could face for failing to meet these quotas vary widely, ranging from ten billion euros to 16 billion euros.
However, some market sources suggest that the potential impact could be limited to 5.1 billion euros under a central scenario.
Meanwhile, ACEA members have committed 250 billion euros to the transition to electric mobility. At current EV sales levels, manufacturers would need to stop producing 2.5 million combustion vehicles or face penalties from the European Commission.
Some European countries have unsuccessfully sought to delay the regulation’s application.
France attempted to build a coalition against the European Commission, led by Ursula von der Leyen, to block fines for manufacturers.
In September, Italy called on Brussels to conduct a comprehensive review of the regulation, fearing that it could lead to the “collapse” of the EU automotive industry.
Similarly, Romania, home to Dacia (part of the Renault Group), which has no battery-electric vehicles in its range except the Spring imported from China, considers the EU electrification plan overly aggressive.
