EU Legislation
The automotive package – what’s in it?
With a collection of legislative files, the European Commission wants to reestablish competitiveness of the bloc’s automotive industry, while keeping climate ambition.
Joshua Starbatty in Paris | Published FEB 16 2026
“As technology rapidly transforms mobility and geopolitics reshapes global competition, Europe remains at the forefront of the global clean transition”, said European Commission (EC) president von der Leyen at the presentation of the automotive package on Dec 16th 2025.
The bundle of legislative proposals followed a nine month-long strategic dialogue between the Brussels executive, carmakers, suppliers, civil society organisations and automotive regions from the EU’s member states.
Among the files, which will have to pass the European Parliament and the Council of Ministers before adoption, two in particular turned heads.
With a revision of the CO2 standards for cars and vans regulation, the EC suggests cutting the 2035 fleet-wide tailpipe reduction target from 100 to 90 per cent versus 2021. This would effectively scrap the full combustion phase-out agreed on in 2023 by allowing some diesel and petrol models, plug-in hybrids, and EVs with back-up fuel engines (so-called range extenders) after 2034.
The flexibility would not come for free. Instead, carmakers must compensate the remaining 10 per cent of emissions using credits for renewable fuels (e- and biofuels) and “low-carbon EU-made” steel.
What exactly it should mean for steel – or other industrial goods – to be made in the EU is part of a controversial discussion around a broader “Buy European” initiative, pushed by the Union’s industry chief, Stéphane Séjourné. More details on final definitions are expected to come with the Commission’s draft for the Industrial Accelerator Act, planned for mid next week.
Besides its headline change, the revision suggests further compliance flexibilities for manufacturers’ in allowing them to later offset exceeding annual emissions from 2030-2032 and lowering the 2030 CO2 reduction target for vans from 50 to 40 per cent.
It also seeks to deliver on the “small affordable cars initiative” that the Commission’s president called for in her last year’s State of the Union address. By including a so-called “super credit system”, “EU-made” zero-emission vehicles (ZEVs) under 4.2 metre length could count at a factor of 1.3 for the calculation of manufacturers’ annual fleet emissions.
“This will incentivise the deployment … of more small EV models”, the EC stated.
Where the CO2 standards proposal would relax the EU’s supply-side electrification ambition, the other side of the coin – the draft for a new regulation on clean corporate vehicles – is designed to create EV demand.
It presents binding member state targets by 2030 for the annual registration mix of large corporate fleets, covering “zero-emission” (essentially full battery- and hydrogen-powered fuel cell EVs) and “low-emission” cars and vans with exhaust pollution below a threshold of 50 g CO2/km.
The targets – which the Commission says it calculated to align with the revision of the CO2 standards goals – vary according to the member states GDP per capita. They are also specified higher for cars than for vans, reflecting the latter’s slower uptake.
By 2035, nine countries are expected to guarantee 95 per cent of new corporate registrations are ZEVs. Other member states, mostly the eastern European ones, are viewed with less stringency. Here, only a little over half of registrations must be zero-emission.
While national governments are free to choose how to deliver, any financial support schemes would be limited to “EU-made” vehicles from 2028.
With the Clean Vehicles Directive that sets procurement targets for public authorities, the Commission has a similar act already in place since 2019. However, the EC argues the lever on electrification is more powerful with corporate fleets.
According to an impact assessment, firm registrations make up 60 per cent of the EU’s 10mn annual new cars and 90 per cent of the 1.5mn vans. Corporate vehicles also get higher yearly mileages than private ones, for example taxis, and often enter the second-hand market much quicker – sometimes in under a year.
Besides the direct effects on EV uptake and emissions, this leaves the EC hoping for a rapid scale-up of the second-hand market and more affordable options for consumers. However, in a bid not to burden less well-heeled businesses, the EC decided to leave small and medium-sized enterprises out of the scope, which means that in reality not all 60 per cent of new EU sales are addressed.
Also read:
The divisive question of how to save the European automotive industry – by Joshua Starbatty
The Commission’s approach with its new automotive package sparks controversy among lawmakers, industry and civil society.