EU auto sector: No to regulation changes. Automakers form pools to avoid fines

Brussels – Changing the already-established standards would cause competition problems, but using them to their full capacity could lead to solutions. It has been a week since the start of 2025 – a year automakers dread because of the risk of incurring EU penalties if they fail to meet set CO2 emissions reduction targets – and speaking of the issue of fines are the European Commissioner for Climate, Wopke Hoekstra, and the companies themselves led by Tesla and Mercedes. The former does so by responding to a question sent to him in December; the latter by submitting a declaration of intent to the European Commission to form a ‘pool’ of companies that can collectively help each other achieve their goals, being considered as a single entity and no longer as separate. The regulation on CO2 emission levels for passenger cars and light commercial vehicles provides this option.

On the one hand, the text establishes a 15 percent cut in the average emissions of both new passenger cars and new light commercial vehicles as of January 1, 2025, compared to 2021; a baseline for zero- and low-emission vehicles equal to 25 percent share of the new passenger car fleet and a 17 percent share of the new light commercial vehicle fleet; in case of non-compliance with the targets, penalties of 95 euros per gram of CO2 over the limit per vehicle sold. On the other, it allows companies to unite: a tool that makes all the manufacturers in a ‘pool’ be considered “in the same way as a single manufacturer for the purposes of fulfilling their obligations” on emissions reduction. In effect, it creates a sort of intra-group compensation between those who meet reduction targets and sales of electric cars and those who do not, and collective work to get to the targets while avoiding fines. This is the path that several automakers are pursuing.

On January 6, the European Commission published the two declarations of intent to form open pools. The first one, presented by Tesla as the leader of the ‘pool’ groups 16 manufacturers – Toyota Motor Europe NV/SA, Toyota Motor Corporation, Toyota Gazoo Racing Europe GmbH, Ford Werke GmbH, Ford Motor Company, Mazda Motor Corporation, Subaru Corporation, Stellantis Auto SAS, Automobiles Peugeot SA, Automobiles Citroen SAS, Stellantis Europe S.p.A., FCA US LLC, Alfa Romeo S.p.A., Opel Automobile GmbH, Leapmotor Automobile Co., Ltd. Any other interested parties have until February 5 to join. The second, presented by Mercedes Benz AG, groups Mercedes-Benz AG, Mercedes-AMG GmbH, Volvo Car Corporation, Polestar Performance AB, and Smart Automobile Co., Ltd. Any other interested parties have until February 7 to join. In both cases, the application concerns 2025. The companies have until December 31, 2025, to officially submit the declaration of the pool’s establishment to the EU Commission.

So, it is an option that companies seek to use. Also, as Hoekstra points out in his written response to the question while “some vehicle manufacturers have expressed concern about their ability to meet their 2025 emissions target…several other major European manufacturers have expressed confidence that they will meet their targets and have strongly opposed changes to the 2025 framework,” he said. In this context, “changing the rules would distort the level playing field and put those manufacturers at a competitive disadvantage.” An unworkable path.