EU Automakers Get Pollution Targets Breather as EV Sales Falter

The European Commission has granted carmakers in the EU more breathing room to achieve the regional bloc’s mandated pollution target amidst a widespread drop in electric vehicle sales. Commission president Ursula Von der Leyen says European carmakers that sell too many fossil fuel-powered cars in 2025 will be granted a two-year grace period where they can compensate by selling more clean energy vehicles.

Although the move is ostensibly meant to support carmakers who have been struggling to sell their EVs amidst a slump in demand, environmental groups argue that the grace period is tantamount to rewarding ‘laggard’ carmakers. The proposal would extend the compliance window for fleet emission targets from 2025 to 2027, giving automakers on the continent 24 additional months to make up for the gas-powered cars they sell this year.

According to Commissioner Von der Leyen, the extension will give the EU’s vehicle sector extra ‘breathing space’ but doesn’t make any changes to the European Union’s green energy targets. On the other hand, environmental groups argue that the Commission’s proposal essentially rewards firms that haven’t made the investments needed to meet the EU’s electrification targets.

The move will slow down the regional bloc’s transition to clean energy-powered cars, the groups warn, especially the cheaper vehicles that are key to achieving mass EV adoption. Transport & Environment executive director William Todts said weakening the European Union’s clean vehicle rules doesn’t benefit Europe’s auto sector, benefits ‘laggards’, and puts the EU behind the Chinese electric vehicle sector.

BEUC Director General Agustin Reyna argued that the Commission’s decision to give extra breathing room to automakers with high fossil fuel vehicle sales would reduce electric vehicle availability and affordability. Now that the early adopter market that’s much more likely to purchase premium electric cars is mostly saturated, automakers need affordable EVs to attract regular drivers.

Despite the low demand that’s currently impacting EV sales, the European Union has still achieved quite a lot. The European Environment Agency estimates that new passenger vehicle emissions dropped by 28% from 2019 to 2023 thanks to a surge in EV purchases. However, electric vehicle sales fell last year and increased the chances of automakers with fossil fuel-powered cars receiving substantial fines.

As electric vehicle sales in the EU declined, the European Automobile Manufacturers’ Association (ACEA) lobbied the European Commission to loosen the EU’s emission targets. The association argued that the European market for battery electric vehicles (BEVs) wasn’t developing fast enough for automakers to meet the EU’s targets.

This ‘breather’ given to automakers in the EU could give American startups like Mullen Automotive Inc. (NASDAQ: MULN) an opportunity to enter the EU market while domestic manufacturers scale down their aggressive programs to develop affordable electric vehicle models.

NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN

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