Commentary on a potential change to the EU's passenger car CO2 roadmap

Although things remain fluid regarding the Automotive Package, due for release by the EU Commission on December 16th, there certainly appears to be movement. According to Politico Europe, the Commission is still deciding whether to lower the 2035 0g/km CO2 fleet emission target by a certain percentage or introduce flexibilities beyond 2035, two people familiar with the matter told the Brussels-based publication. However, following Manfred Weber’s (EPP/EVP) comments to Bild Zeitung, a dilution is now looking inevitable, but we still issue caution before the package is opened just days before Christmas.

The package lingers, as always, on the finer points and nuances yet to be revealed, which would still have to be passed by lawmakers at the European Parliament (EP)as well as at the European Council stage, which isn't likely to be such an issue given the EPP’s kingmaker position working with the right following the fraying Cordon Sanitaire across the EP.  

CO2 development across European markets from our monthly European Electric Car Study.

So what about the nitty-gritty...

If the utility factor is dropped for PHEVs, in a similar fashion to what happened across the UK earlier this year, that would allow PHEVs with a range of over 200 kilometres and combined CO2 emissions to average around 10-20 g/km, opening the floodgates to a wide range of PHEVs assuming a 10% dilution to the 2035 target is offered. However, with the business case for PHEVs only realistically working for mid-sized vehicles and above, it would limit market exposure to a degree.

Additionally, real-world data collected across 849,955 PHEV vehicles collected and collated by the European Environment Agency (EEA) shows that PHEVs actually emitted 100 g/km more CO2 emissions than advertised.

European On-Board Fuel Consumption Monitoring CO2 emissions vs. paper values 2023. EEA

So if the change in the utility factor, penalising PHEVs and inflating CO2 emissions, remains as part of the legislation, it would only, in reality, leave the door open for a small number of exotically priced ICE models coupled together with high margins, such as the Porsche 911, which is intended for the privileged few rather than the vast majority.

Norway provides us with a good reference point:

In January 2024, the average CO2 emissions of the vehicle fleet were 11 g/km

The composition during the month was:

BEV: 90.1%

PHEV: 2.0%

ICE/HEV/MHEV: 7.9%

= 11g/km total fleet average

Let us wait until December 16th to pass a real analysis. Any other analysis up until then is simply speculative.

Full details, data, forecasts, trends and background information can be found in our industry-leading studies, providing key context and trusted by stakeholders breaching industry divides. 

Source: Schmidt Automotive Research 

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*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK