Fleet consumption: how car manufacturers comply with the new limits

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94 instead of 119 grams per kilometer: The permitted limit for the average CO₂ emissions of new cars actually sold by a manufacturer in the EU will fall significantly in 2025. According to figures from the International Council on Clean Transportation (ICCT), the car industry has already covered a good part of the distance to the 94 gram target in 2024 with an average of 107 g CO₂/km. However, it will not be possible to meet the stricter legal requirements without making an effort. The companies have many options. Selling more electric cars is the simplest way to improve. The forecast: no one will transfer even one euro in fines to Brussels because of the CO₂ fleet mechanism. Which manufacturer will choose which strategy?

Before answering this question, the system itself should be explained once again: Every newly registered car in the European Economic Area (EU 27, Iceland, Liechtenstein, and Norway) is assigned a CO₂ value per kilometer. This is measured during the general type test on the test bench at the exhaust. Electric cars are included in the balance with zero grams. The average of all cars sold by a manufacturer in the European Economic Area is the relevant CO₂ value. At the same time, fuel and traction power emissions are regulated by the Renewable Energy Directive (RED).

Joint balancing

Each manufacturer is allowed to carry out joint balancing with each other. These so-called pools must be registered in advance. The decisive factor is that the overall result is correct. For the years 2021 to 2024, an average limit value of 95 g CO₂/km applied in the New European Driving Cycle (NEDC), which has actually long since been abolished. Converted into the current Worldwide harmonized Light vehicle Test Procedure (WLTP), this was the aforementioned 119 g CO₂/km. For the 2025 to 2029 billing period, the provisional limit value is 94 g CO₂/km in the WLTP as described.

Heavy fleets will be burdened

The CO₂ limits of a particular manufacturer's fleet vary because there is a weight factor. In the past, this has led to a discount for brands with particularly heavy cars. The same formula now has the opposite effect. The manufacturer-specific limit values for 2025 have been recalculated. Unlike in the past, when heavy cars were synonymous with high CO₂ emissions, electric cars of the same weight lower the CO₂ average from – and these were registered proportionately more frequently by precisely those manufacturers that already had a clientele with a lot of purchasing power. For example, when Mercedes sold an EQC in addition to a GLC (test), this lowered the average CO₂ value. This reduction in turn leads to the aforementioned paradoxical effect: the fleet limits have been significantly tightened for all manufacturers that bring a particularly weighty portfolio onto the road.

Here are two extreme examples: BMW had an individual CO₂ target of 129 instead of the average 119 g CO₂/km in 2024. In 2025, on the other hand, it will be 93 g CO₂/km. Formally, therefore, a minus of 36 g CO₂/km. Renault, with a relatively light fleet, had to achieve 111 g CO₂/km last year and reduce it to 96 g CO₂/km this year. That's minus 15 g CO₂/km. What options, sensitivities and presumed strategies do car manufacturers have to achieve the 2025 CO₂ targets without penalty?

Tesla

Tesla only sells electric cars. This opens up the possibility of forming a pool with other manufacturers and receiving money for it. Contrary to popular belief, this has not yet happened in Europe. The sums that Tesla reports in its balance sheet for CO₂ trading come primarily from the USA. It is striking which two companies have formally registered a pool with Tesla with the European Union in 2025: The multi-brand group Stellantis and Ford. It is not known what contracts exist between these two and Tesla. Whether Stellantis and Ford have merely created a kind of option or have already agreed on a minimum purchase volume is confidential. The mere possibility of Stellantis and Ford pooling with Tesla is important for the current marketing strategy.

Volvo and Polestar (73 -> 90 g CO₂/km)

Volvo and Polestar belong to the Geely Group from China and, just like Tesla, have already undercut the 2025 limit. Polestar only sells electric cars anyway, and Volvo is expanding its range after the popular EX30 (test) with the voluminous EX90 (driving report). Geely is also the largest single shareholder in Mercedes with around ten percent. It is hardly surprising that Mercedes has applied to the European Union for pooling with Volvo and Polestar.

Mercedes and Smart (106 -> 91 g CO₂/km)

On the one hand, Mercedes is well on the way to meeting the stricter CO₂ requirements. On the other hand, Mercedes has made several mistakes that could lead to the aforementioned pooling with Volvo becoming elementary. For example, Mercedes has alienated traditional European customers with the design of the EQE and EQS. At the same time, the deliberate pandering to supposed tastes in China did not work there. The fact that no estate car based on the EQE is offered is a further burden in Western Europe. The facelift of the conventional Mercedes EQA and EQB also seems unkind.

Conservative buyers in Europe will have to make do with the plug-in hybrid cars in all model series for now. The catch: in the fleet mechanism, plug-in hybrids will be devalued in two stages in 2025 and 2027: CO₂ emissions will increase significantly on paper if the electric range does not increase drastically. Mercedes was of course aware of this. Nevertheless, corporate lobbyist Eckart von Klaeden, former Minister of State in the CDU Federal Chancellery, is fighting for a postponement or abolition of this gradual devaluation of plug-in hybrid cars at the strategic dialog in Brussels.

2025 will be an unpleasant year for Mercedes. Innovations such as the CLA with the overdue 800-volt platform will not really take effect until 2026. The electric GLC, one of Mercedes' most popular models worldwide, will then also be available on the same basis. It will all get better in the foreseeable future. Until it isn't, Mercedes will be campaigning against retaining the CO₂ fleet mechanism in its current form. See also the paragraph on flexibilization in the Stellantis chapter.

BMW and Mini (99 -> 93 g CO₂/km)

BMW has a particularly successful electrification strategy: in terms of design, many electric cars are identical to the combustion engine models. It has turned out to be true that electric cars do not have to look any different from those with a combustion engine. This is presumably a result of the experiments with the i3 and i8. Externally, BMW likes to present itself as open to technology and is, in fact, very consistent: everything will be battery-electric, even if not all customers have understood this yet.

After successful model series such as the iX1 (test), the New Class will follow in 2025 with an SUV (NA5) as a replacement for the iX3 and later with the NA0 saloon as an electric 3 Series. An estate (NA1) will follow shortly afterward. The strategic dialog between the EU Commission and industry representatives will take place in Brussels until March 5. According to industry insiders, the mood is sour. The car industry is demanding a softening of the CO₂ targets. Should this happen, it would be a punishment for BMW's ambition.

Toyota (109 -> 94 g CO₂/km)

Toyota would never publicly complain about the CO₂ fleet mechanism. Nevertheless, the world market leader from Japan makes it clear with its model policy what it thinks of electric cars: Very little. So far, the broad hybrid range has been sufficient. A few bZ4X SUVs and, above all, a large number of hybrid cars were enough to easily undercut the CO₂ targets in 2024. 2025 will be different. Toyota will have to sell a few Urban Cruisers. This electric interpretation of the Yaris Cross (test) could be a respectable success thanks to its target group-oriented design.

Incidentally, the Urban Cruiser is built in India and is supplied with robust and inexpensive LFP cells. This fits in well with the brand's reliable reputation. Toyota has long since announced that a completely redesigned generation of electric cars will be launched on the market from 2026. This may be logical from the company's point of view, but there is a risk of losing buyers to other brands meanwhile.

Kia (104 -> 93 g CO₂/km)

Similar to BMW, Kia has established itself as a manufacturer of electric cars. The means to comply with the upcoming CO₂ limits are more and more electric cars. In the price-sensitive segments – this is currently only the Kia EV3 (test) –, the electric cars have a battery system with a voltage of 400 volts. From the EV6 onwards, the first-class 800-volt system will be used. Kia will soon be launching a model offensive: the ramp-up of the EV3 will be accompanied by the premiere of the EV4 in two body versions and the EV2 small car. All have a 400 volt battery voltage. The PBV commercial vehicle series is an addition for trades people.

Stellantis (111 -> 96 g CO₂/km)

The Stellantis Group had actually presented a large number of low-cost electric cars. For example, the Citroën ë-C3 and the ë-C3 Aircross. Opel, Alfa Romeo, Fiat, and Jeep also belong to Stellantis. Delivery on a large scale is delayed. Is it really due to problems with the software? Or does the Group want to tactically document that it is particularly difficult for suppliers in the price-sensitive segment to offer electric cars?

In any case, the high price difference between hybridized combustion cars with automatic transmission and electric cars on the same basis is striking. The Peugeot 208, for example, costs around 10,000 euros. A difference that is likely to be exaggerated considering rapidly falling battery costs. The suspicion: there is stonewalling. Circles in Brussels report that Stellantis is campaigning for more flexibility. What is meant is what the then Federal Minister of Economics Habeck outlined in December 2024: if a manufacturer fails to meet the CO₂ targets in 2025, it could take out a loan for the years 2026 and 2027.