Top European authorities want to provide the continent's struggling carmakers with "breathing space" by granting them additional time to meet the 2025 emission reduction targets without facing fines, EU chief Ursula von der Leyen said Monday.
"There's a clear demand for more flexibility on CO2 targets," the European Commission president told reporters. "Instead of the annual compliance, companies will get three years."
Von der Leyen added companies would still have to "fulfill" the same targets.
"But it means more breathing space for industry. It means also more clarity," she said.
The European Union has prioritized tackling climate change and agreed to phase out new sales of combustion engine vehicles by 2035.
Starting this year, the EU is lowering the average emissions that new vehicles sold in the 27-country bloc are permitted to produce, with carmakers facing steep fines if they fail to comply.
EU industry chief Stephane Sejourne had pushed for flexibility to support automakers.
"We will not penalize the industry that we must help. In effect, the good students will be able to capitalize on their efforts, those who are behind will have more time," Sejourne said, welcoming the announcement.
Shares in Volkswagen, BMW and Mercedes-Benz rose after von der Leyen's comments
Industry sources said compliance would be based on the average of the period 2025-2027.
Meeting the targets relies on selling more electric vehicles, a segment where European carmakers lag Chinese and U.S. rivals.
"The targets stay the same. They have to fulfill the targets, but it means more breathing space for industry," von der Leyen said.
Hit by factory closures and now bracing for U.S. tariffs, EU carmakers have urged the Commission to grant relief from fines they say could rise to 15 billion euros ($15.7 billion) if their fleets do not meet the limits in 2025.
The proposal will still need approval from EU states and the European Parliament. France, Germany and Italy had spoken out against the fines.
The announcement is part of the bloc's push to protect the auto industry, which employs 13 million people and accounts for about 7% of Europe's gross domestic product (GDP).
It is also part of von der Leyen's broader effort to revive the EU's competitiveness as it falls further behind the United States and China.
She will announce her auto sector "action plan" on Wednesday after several rounds of talks with industry leaders about the steps the EU must take to support the crisis-ridden sector.
Groups calling for cleaner transport rules, however, criticized Monday's proposal.
The Transport and Environment pressure group described it as an "unprecedented gift to Europe's car industry in the middle of a compliance year."
"Weakening the EU clean car rules rewards laggards and does little for Europe's car industry except to leave it further behind China on electric vehicles," William Todts, executive director of the clean transport advocacy group, said.
"The EU risks creating very damaging uncertainty about the electric vehicle transition in Europe," Todts said in a statement.
