The EU has been revising its CO2 regulations for companies for some time now, and many companies fear an early combustion engine ban through the back door. The Commission is expected to present its plans in mid-December.
According to the German specialized magazine Automobilwoche, citing industrial sources, the EU Commission intends to present its plans for new CO2 regulations for company fleets in December.
The Commission itself did not want to confirm the date, but stated in general terms that it was currently working on the proposal. “Further information will follow shortly,” said a spokesperson.
Combustion engine ban?
Some critics say this proposal could have at least as much impact on the vehicle market as the EU’s goal of only allowing new zero-emission cars from 2035 onwards. Since this is only possible with electric drives, there is colloquial talk of a ‘combustion engine ban’, even if combustion engines are not directly excluded.
Since the EU is not yet providing any figures or comments while work on the draft is ongoing, this is naturally fuelling rumors. Industry circles say the Commission wants to stick to a fixed electric car quota, albeit not 100% by 2030 as reported in the summer, and to bring forward the overall target for company fleets by five years.
Nevertheless, the figures currently circulating are ambitious: the EU is said to be planning an electric quota of at least 50% for 2027, with rumors presently suggesting 90% for 2030. As mentioned, this is far from confirmed, and some are likely creating unnecessary panic in an attempt to avoid possible changes.
As discussions about softening the EU’s general target to ban ICE cars by 2035, moving away from a rigid regulation towards a more flexible mechanism, are also ongoing, the EU appears to be shifting its position on this issue, with tremendous pressure being exercised by countries like Germany and practically the entire European car industry.
According to Automobilwoche, citing an industry insider, “the EV quota in fleets and the end of combustion engines are to be linked.” However, what exactly this could mean is not explained in detail.
Tight timing
One thing is clear: the timing is interesting. An EU proposal presented at the end of 2025, discussed next year, and implemented in this or a modified form, will only become binding in the course of 2026.
If an electric-car quota of at least 50% were to apply to company fleets from 2027 onwards, it could pose an enormous challenge for the market, especially as the industry is currently shifting to a somewhat slower ramp-up of electric mobility.
It should also be noted that the EU defines ‘fleets’ not only as traditional company fleets, but also as all registrations to companies. This also includes tactical new registrations by manufacturers and dealers, as well as the entire car rental industry. These commercial registrations account for a large share of registrations across many European countries. In Germany, they represent two-thirds of the market.
So one can imagine there’s a lot of commotion about this in Germany. In the past, Nico Gabriel, CEO of Sixt, one of the leading leasing/renting companies in Germany, spoke out against overly strict regulation and has already announced the impact on his own customers should such regulation be introduced.
“We would have to raise prices massively because costs would go through the roof,” Gabriel said. “Electric cars are more expensive, have lower residual values, and are more costly to maintain. We would have to pass that on to our customers.”
The Belgian example
In its efforts to lower CO2 emissions from transport, the EU Commission has been interested in the ‘Belgian example’ for some time. In Belgium, more than half of the market is professional. Already some time ago, the Belgian government set the target for company cars to be emission-free after 2026.
The result is that Belgium, along with the Netherlands and some Scandinavian countries, has one of the highest EV adoption rates among new cars in the European Union. It has not done so by imposing quotas, but by making it financially attractive to shift to electrified vehicles.
In many countries, including Belgium, fossil fuels are still very much subsidized by the government, making the energy transition even harder. Governmental incentives to stimulate this transition have been lacking in many countries, or they were abruptly abandoned when introduced (as in Germany at the end of 2023).
Except for some pioneers, the leasing/renting sector has been very slow and conservative in preparing for this energy transition. Now that the authorities are getting nervous and starting to react, the industry is growing increasingly anxious and calling for restraint. They could have responded more positively and proactively much earlier.
