Sustainability goals risk being commercially unsustainable

The waves of sustainability are crashing onto the rocks of financial and operational reality, as vehicle manufacturers, funders and customers reconcile their climate ambitions with real-world profitability and cost-of-living pressures.

The automotive industry’s goal to decarbonise is clear and almost universally shared, but the route to achieve this objective is no longer obvious.

A new report from Ennis & Co has identified a widening gap between ambition and execution across the automotive sector. With new entrant OEMs reshaping expectations and compressing timelines, industry leaders are having to prioritise more ruthlessly, focusing on fewer initiatives.

Fleet customers are making similar decisions, attempting to balance their environmental commitments with cost pressures, infrastructure limitations and regulatory requirements, according to Arval Mobility Observatory’s Global Fleet and Mobility Barometer 2026. Based on more than 10,000 interviews with fleet decision-makers across 33 countries, the research found that businesses are adopting a more pragmatic and operationally focused approach to their mobility needs.

Cost pressures are pushing green-minded organisations towards used-car leasing, especially for second-life electric vehicles, where savings of 10-25% are achievable.

It is too early to identify how the spike in fuel prices due to the war in the Middle East will impact demand for new and used petrol and diesel models, but new car sales were 4% down across Europe in January, whereas registrations of battery-electric vehicles rose 13% year-on-year to account for 19% of the market.

While the trend to zero emission cars is positive for both the climate crisis and for OEMs, the market share of battery-electric vehicles needs to triple within four years for carmakers to stay within emissions limits and avoid heavy fines. OEMs have called on the EU to introduce greater flexibility to CO2 targets, and warned that current targets for light commercial vehicles are unrealistic.

Announcing net losses of €22.3 billion for 2025, manufacturing group Stellantis pledged to deliver a better alignment between its product plans, customer demand and new regulatory requirements, effectively signalling a dialling down of the speed of its transition to battery electric powertrains.

“Our 2025 full-year results reflect the cost of over-estimating the pace of the energy transition and the need to reset our business around our customers’ freedom to choose from the full range of electric, hybrid and internal combustion technologies,” said Antonio Filosa, CEO, Stellantis.

Leapmotor International, a 51/49 joint venture between Stellantis and Chinese EV manufacturer Leapmotor, illustrates the speed and scale of new competition facing legacy OEMs. The new brand more than doubled its European retail and aftersales footprint last year, compared with 2024, securing over 800 points of sales and service across the continent.

The sales performance of OEMs has an immediate impact on their captive finance operations. In Germany, for example, almost 70 percent of all vehicles delivered by the Volkswagen Group are managed by the Volkswagen Group Mobility, with the figure rising to 82% for electric vehicles.