OEMs vs EU brinkmanship over decarbonisation

The battle between vehicle manufacturers and the European Commission over the future of Europe’s automotive industry has intensified in the past month. Both sides share the same goal, namely Europe’s domination of clean, connected, and automated mobility, but the conditions and timeline to reach this objective are the subject of intense negotiations.

Car makers argue that the EU’s rigid CO2 reduction targets for 2030 and 2035 are “no longer feasible” under current industrial, economic, and geopolitical conditions.

Their counter proposals call for a recalibration of the CO2 regulations, which currently demand a 55% reduction in the emissions of new cars by 2030 and a 100% reduction by 2035, with stiff financial penalties for manufacturers that fail to comply.

The OEMs also want to see a substantial expansion of incentives for both consumers and businesses to choose low and zero emission cars, including purchase subsidies, tax breaks, and lower charging costs.

The European Commission has just completed a consultation on a mandate that would oblige large corporates to include a certain percentage of BEVs in their car orders, although no outcome has yet been published.

Manufacturers have also reiterated their calls for technology neutrality, so that battery electric vehicles (BEVs) are not the only route to net zero. Plug-in hybrid cars (PHEV), hydrogen fuel cells, and efficient internal combustion engines fuelled with biofuels should all be part of the solution, say the OEMs.

New sales figures reveal hybrid technologies to be the most popular in the EU’s new car market, securing a 35% market share in the first seven months of 2025. They proved to be more than twice as popular as BEVs (15.6%), which in turn were almost twice as popular as PHEVs (8.6%), in a new car market that was 0.7% down in the year to July, compared to the same period in 2024.

Fleet-focused companies are actively implementing enabling strategies to support customers with sustainability agendas.

Leasing company Ayvens has signed a memorandum of understanding with Plugsurfing to create a fleet charging solution that combines public, home, and workplace/depot charging into a single seamless solution across Europe.

One of Ayvens’s chief rivals, Arval, has reported a 42.6% surge in BEVs on its fleet over the past year, to almost 300,000, and is aiming for 400,000 by the end of 2026. The BNP Paribas subsidiary also reported a 4.6% year-on-year rise in its funded fleet to 1.83 million vehicles, although the normalisation of the used car market led to a 45% fall in its pre-tax profits.

Meanwhile, UK-based Octopus Energy has extended its leasing business, Octopus Electric Vehicles, into Germany, where the company already supplies electricity to over 800,000 customers.

German drivers will be offered a bundled service combining electric car leasing, home charger installation, its smart home charging tariff, and access to the Octopus Electroverse charging network.

While OEMs and the finance industry wrestle with the challenge of delivering decarbonisation, new research indicates that the next generation of employees, Gen Z, are more interested in mobility than powertrains, with 70% wanting their employers to offer car-sharing options, 66% asking for bike leasing schemes, and 53% seeking access to scooter or motorcycle leasing.

And if Europe’s car makers face an uncertain future, the outlook is even more challenging for truck and bus manufacturers, who warn that urgent action is required to support the adoption of zero emission vehicles.

Just 3.5% of sales in 2025 have been zero emission, yet the EU has set a target of 35% by the end of the decade. Charging infrastructure, grid connections, charging prices and CO₂ based road user charges, are all lagging far behind where they need to be to support electric adoption, say the OEMs.