A new analysis warns that current EU vehicle CO2 regulations could lead to significant losses for European carmakers unless policy adjustments are made, amid ongoing debates over the future of the continent’s green transportation goals.
A new analysis of the European car sector raises fresh alarms about the economic consequences of current EU decarbonisation rules for manufacturers and supply chains.
According to an analysis by consultancy Kearney, cited by Der Spiegel, the EU’s existing vehicle CO2 rules will push many European producers into substantial losses over the coming years unless compensatory measures are introduced. The study projects that if sales of internal-combustion engine (ICE) passenger and light commercial vehicles end by 2035 as planned, average sales margins across major European makers could fall from about 5.5% today to around minus 2.9% by 2030. The report warns of “unprecedented regulatory and financial pressure” on the industry and says manufacturers face the prospect of “painful downsizing” without policy relief.
Those warnings come amid a wave of policy re‑thinks in Brussels. The European Commission is reported to be considering delays and adjustments to several files connected to the green transition , including the timing and detail of legal proposals that could expand the carbon border adjustment mechanism and the practical ambit of the 2035 sales ban , as it weighs industrial competitiveness and the risk of regulatory circumvention. Industry lobbying has specifically pressed for continued market access for plug‑in hybrids and ICE vehicles running on CO2‑neutral fuels; a formal response on possible exemptions or revisions is expected from the Commission imminently.
Political pressure is building from member states too. Six governments , including Italy, Poland and Hungary , have formally urged the Commission to allow greater flexibility beyond a rigid 2035 ban, arguing that a more technology‑neutral approach would better reconcile emissions goals with industrial realities such as slow EV uptake in some markets and mounting competition from Chinese electric‑vehicle producers.
The regulatory debate is unfolding alongside other EU measures that could lower compliance burdens for industry. A draft Commission proposal to simplify environmental reporting and management requirements aims to cut administrative costs and reduce corporate bureaucracy, but critics , including environmental groups and some investors , warn that watering down reporting risks weakening climate‑risk management at precisely the moment when transparency on emissions and material flows is most valuable to decarbonisation strategies.
Market signals are already responding. Global regulatory shifts, such as recent moves in the United States to relax fuel‑efficiency mandates, have supported European carmakers’ share prices, underlining how international policy choices interact with EU industrial competitiveness. At the same time, leading manufacturers are setting their own decarbonisation paths: BMW, for example, has announced a strengthened interim target to reduce lifecycle CO2‑equivalent emissions by at least 60 million tonnes by 2035 versus 2019, covering all drive types and reflecting efforts to cut emissions across design, supply chains and production.
For industrial decarbonisation professionals, the immediate implications are twofold. First, firms in vehicle and supply‑chain ecosystems should prepare for a policy environment in flux: short‑term regulatory relief or exemptions may be announced, but substantive changes to the long‑term 2050 net‑zero trajectory remain politically and legally constrained. Second, companies should accelerate cost‑and‑risk analysis across powertrain lines and upstream suppliers, modelling scenarios that incorporate both potential regulatory easing and stricter market‑access mechanisms such as an expanded carbon border tariff. Strategic decisions now , on product mix, plant investment, workforce planning and supplier contracts , will determine which firms retain competitiveness as electrification proceeds and as policy and market conditions evolve.
According to the original report and recent Commission drafts, the choice facing policymakers is stark: pursue rigid near‑term cuts that risk industrial contraction, or adopt transitional measures that ease competitiveness pressures while safeguarding the EU’s broader emissions and net‑zero commitments.
- https://www.actualno.com/economy/prouchvane-ocherta-neblagoprijatni-perspektivi-za-evropejskata-avtomobilna-industrija-news_2529714.html – Please view link – unable to able to access data
- https://www.reuters.com/sustainability/climate-energy/eu-delay-proposals-carbon-border-tariff-auto-industry-draft-document-shows-2025-12-08/ – The European Union plans to delay the release of legal proposals related to expanding its carbon border adjustment mechanism and potentially softening its 2035 ban on new CO2-emitting vehicles. This decision comes amid pressure from automotive industry stakeholders and governments like Germany and Italy, who are advocating for revisions to the current policy. The proposals may face further delays into 2026, as the Commission considers expanding the carbon border tariff to include more consumer goods to prevent foreign circumvention of the measure. European carmakers are lobbying for policy adjustments that would allow continued sales of plug-in hybrids and combustion vehicles using CO2-neutral fuels, citing challenges in transitioning to electric vehicles and growing competition from Chinese manufacturers. However, rolling back the current 2035 targets could jeopardize the EU’s broader goal of achieving net-zero emissions by 2050.
- https://www.reuters.com/sustainability/climate-energy/eu-weaken-more-environment-reporting-rules-draft-document-shows-2025-12-08/ – A draft proposal by the European Commission reveals plans to further weaken EU environmental laws by reducing industry reporting requirements related to pollution and waste. Part of the EU’s broader effort to cut business bureaucracy, the plan seeks to eliminate the need for individual industrial sites and livestock farms to maintain detailed environmental management systems (EMS). Instead, companies could use a simplified EMS for all their sites, with exemptions from disclosing hazardous chemical usage. The proposal also drops the requirement for industrial facilities to have climate-alignment transformation plans and ends water and energy use reporting for livestock and fish farms. Environmental assessments for industrial and energy projects would also be simplified. The Commission claims the changes would make environmental goals more efficient and cost-effective, estimating a €1 billion annual cut in administrative costs. While Brussels aims to reduce corporate reporting burdens by 25% by 2029, the move faces criticism from environmental groups and some investors, who argue that the rollback undermines climate risk management and the green transition. Though the EU retains its main climate targets, it is under pressure to soften regulations, including its planned 2035 ban on new CO2-emitting vehicles.
- https://www.reuters.com/sustainability/cop/bmw-sets-new-mid-term-climate-goal-2025-12-02/ – BMW has announced a new mid-term climate goal, aiming to cut CO2 equivalent emissions by at least 60 million metric tons by 2035 compared to 2019 levels. This target represents an additional reduction of approximately 20 million tons beyond its previously established 2030 goal. The commitment applies to all drive variants and encompasses the vehicle’s entire life cycle, including design, raw material sourcing, production, and usage. As part of its strategy, BMW plans to enhance the use of renewable energy throughout its production processes and supply chain, and to expand the share of electrified vehicles in its fleet. This new milestone is part of BMW’s overarching climate commitment to reach net-zero emissions by 2050.
- https://www.reuters.com/business/autos-transportation/trumps-u-turn-fuel-economy-rules-lifts-european-carmakers-shares-2025-12-04/ – On December 4, 2025, shares of several major European carmakers surged between 2.5% and 5% following U.S. President Donald Trump’s proposal to roll back fuel economy standards introduced by Joe Biden. The change, intended to ease the sale of gasoline-powered vehicles and reduce consumer costs, led to strong market reactions: Porsche’s shares rose over 5%, Mercedes and Volvo nearly 4%, and Renault by 3.3%. Stellantis saw gains of approximately 2.7% in its Milan and Paris listings after an earlier 8% surge. Stellantis CEO Antonio Filosa expressed support for environmentally responsible policies that balance consumer choice and affordability. Volvo Cars, which plans to be fully electric by 2040, said it was premature to assess the regulatory shift but noted ongoing hybrid production plans in the U.S. Analysts suggested the change could positively impact the auto sector. Additionally, speculation arose that the European Commission might delay a support package for the auto industry and adjust its 2035 internal combustion engine ban, further boosting investor sentiment.
- https://www.reuters.com/business/retail-consumer/six-countries-push-eu-allow-hybrid-cars-other-technologies-beyond-2035-2025-12-05/ – Six EU member states—Bulgaria, the Czech Republic, Hungary, Italy, Poland, and Slovakia—have formally requested that the European Commission revise its planned 2035 ban on the sale of internal combustion engine (ICE) cars. In a joint letter, the countries advocated for a more flexible policy that would permit the continued sale of hybrid vehicles or cars powered by alternative technologies, including low-carbon and renewable fuels, as part of the EU’s emissions reduction strategy. The appeal comes ahead of the European Commission’s presentation of a new automotive support package, scheduled for December 10, though it may be delayed. Citing a disconnect between ambitious regulations and market realities such as underwhelming demand for electric vehicles and strong competition from China, the letter emphasizes the need to achieve climate goals without sacrificing industrial competitiveness. The original 2035 zero-emissions vehicle regulation was adopted in March 2023, but support has waned as automakers face growing challenges in transitioning to full electrification.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative presents recent findings from a Kearney analysis, dated 7 December 2025, highlighting the impact of EU decarbonisation regulations on the European automotive sector. Similar reports have emerged in the past week, notably from Clean Energy Wire on 4 December 2025, discussing the same Kearney analysis. ([cleanenergywire.org](https://www.cleanenergywire.org/news/no-longer-competitive-china-consultancy-forecasts-decline-european-carmakers?utm_source=openai)) The presence of multiple reports within a short timeframe suggests a high freshness score. However, the repetition across various outlets may indicate recycled content.
Quotes check
Score:
7
Notes:
The narrative includes direct quotes attributed to Wulf Stolle, partner at Kearney, as reported by Der Spiegel. A matching quote appears in the Clean Energy Wire article from 4 December 2025, indicating potential reuse of content. ([cleanenergywire.org](https://www.cleanenergywire.org/news/no-longer-competitive-china-consultancy-forecasts-decline-european-carmakers?utm_source=openai)) The consistency of the quotes across sources suggests a high degree of originality, but the repetition raises concerns about content recycling.
Source reliability
Score:
6
Notes:
The narrative originates from Actualno.com, a Bulgarian news outlet. While the report cites Der Spiegel, a reputable German magazine, the reliance on a single source for the Kearney analysis introduces potential uncertainty. The lack of direct access to the original Kearney report further complicates verification. The absence of a clear publication date for the Kearney analysis adds to the uncertainty.
Plausability check
Score:
8
Notes:
The claims regarding the impact of EU decarbonisation regulations on European automotive manufacturers’ profit margins align with recent industry analyses. For instance, a report by AInvest discusses the financial implications of the EU’s 2035 CO₂ targets for automakers, highlighting potential penalties and market volatility. ([ainvest.com](https://www.ainvest.com/news/feasibility-financial-implications-eu-2035-targets-automakers-2509/?utm_source=openai)) The narrative’s focus on the Kearney analysis and its implications for the automotive industry is consistent with current industry discussions.
Overall assessment
Verdict (FAIL, OPEN, PASS): OPEN
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents recent findings from a Kearney analysis on the impact of EU decarbonisation regulations on the European automotive sector. While the content is fresh and aligns with current industry discussions, the reliance on a single source and the potential recycling of content from other outlets introduce uncertainties. The lack of direct access to the original Kearney report and the absence of a clear publication date further complicate verification.
