Car manufacturers' carbon footprint: share of e-cars must continue to rise

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Fleet CO₂ emissions in January and February were on average around eleven percent above the legally permitted limit. This is the result of an analysis by the International Council on Clean Transportation (ICCT). New cars registered in the European Economic Area (EEA) to date have an average CO₂ value of 103 grams per kilometer. However, they are actually only allowed to reach 93 g CO₂/km over the course of 2025 – The actual restriction here means that the European Commission has announced a softening of the mechanism. A closer look at the ICCT evaluation also reveals that the car industry is not on a uniform path. Some manufacturers will clearly undercut the CO₂ targets. Others will have to make quite an effort.

How the CO₂ fleet mechanism works

Every new car registered in the EEA – the 27 EU states, Iceland, Liechtenstein and Norway – is assigned a CO₂ value. This value is measured on the test bench using the WLTP (Worldwide harmonized Light vehicle Test Procedure) and assigned to the respective vehicle type. Plug-in hybrids have low CO₂ values because the cycle is run once with a full and once with an empty traction battery and then weighted on the basis of the electric range. Electric cars have no direct CO₂ emissions and are included in the balance with zero.

Each manufacturer has an individual CO₂ limit value, which includes the average unladen weight of its fleet – of the manufacturer's cars actually registered in the EEA for the first time. A new mechanism has been in place since 2025. This means that brands with heavy vehicles have particularly strict requirements and vice versa. Volvo, for example, has a limit of 90 g CO₂/km. At Fiat, with a lighter fleet, it is 99 g CO₂/km. There was also a weight reference in the 2021 to 2024 billing period. The calculation formula is the same, but due to the large number of electric cars, which weigh a lot and do not emit CO₂ locally, there will be a new result from 2025: manufacturers with heavy vehicles will be charged – this was previously the other way around.

For every gram that exceeds the individual limit value and for every car sold, a theoretical penalty of 95 euros must be paid to the EU – regardless of whether the car in question has complied with the limit value or not. For mass manufacturers in particular, even a small breach of the limits can be extremely expensive. The Volkswagen Group, for example, with over 1.2  million new cars delivered in Europe, would have to pay over 100  million euros per gram of deviation. In practice, nobody has paid a cent so far.

Averaging and pooling

Even in 2025, it is unlikely that a manufacturer will have to pay fines. One reason for this is the flexibilization – also often referred to as averaging –, which is being announced by the European Commission. Under the current regulation, the CO₂ fleet limit value is constant for the years 2025 to 2029 and must be complied with every year. The averaging, which has not yet been adopted, stipulates that only the overall balance must be correct from 2025 to 2027. A negative result in the current year can be compensated for in 2026 and 2027.

Who wants to pay Tesla?

In addition, and this option was planned from the outset, manufacturers can balance their accounts together in pools. These pools must be registered in advance; however, registering the pooling does not mean that it will be carried out. Tesla has registered a pool with the multi-brand group Stellantis (Opel, Citroën, Fiat, etc.), Toyota and others. Should Stellantis or Toyota actually use this option, they would have to pay money to Tesla. How much that is is up to the contractual partners. Contrary to popular belief, this has not yet happened in Europe. Tesla's income from CO₂ trading comes mainly from the USA. Mercedes has registered another pool with Geely and its brands Volvo and Polestar. Geely is Mercedes' largest shareholder with around ten percent.

Weighing up the options

Manufacturers essentially have three ways of complying with the CO₂ targets: firstly, through their own efforts by producing ever lower-CO₂ cars with combustion engines and a steadily increasing proportion of electric cars. Here, electric cars may have a lower margin, which means an indirect disadvantage. However, this is not necessarily the case in view of radically falling battery costs.

Secondly, manufacturers can use pooling or averaging. With pooling, money has to be paid internally to each other, see above; with averaging, the ramp-up of electric cars has to be all the steeper in the medium term. Thirdly, the manufacturers can simply pay the penalties. This is an unattractive option due to the damage to reputation, and it would also be expensive. The trade-off for the car industry is to check which route is the cheapest.

BMW top, Volkswagen must deliver

The first thing that stands out in the ICCT analysis is that BMW is already within the target corridor with 92 instead of the permitted 93 g CO₂/km. The Group has obviously succeeded in convincing its own customers of the benefits of electric cars. The portfolio ranges from the popular iX1 to the i5 Touring company car and the i4 saloon. There are also the electric Minis from the Cooper to the Countryman. The internal share of electric cars is 25 percent, plus 15 percent plug-in hybrids.

The picture is different at Volkswagen. The special leasing campaign for the ID.3 or the attractively priced Skoda Elroq are not yet having a full impact, as the orders have yet to roll onto the roads as registrations. As a result, the Volkswagen Group has fallen well short of the target of 92 g CO₂/km with a current figure of 109 g CO₂/km. However, Volkswagen has repeatedly made it clear that sales of electric cars will be stepped up this year. In other words, potential buyers can look forward to further promotions like the ID.3. The situation is similar at Hyundai and Renault. Both brands are on the offensive with new electric cars. New registrations for the Hyundai Inster and the Renault 5, for example, are lagging somewhat behind.

If you look at the potential pooling of Tesla with Stellantis and Toyota, it is noticeable that the total value of 103 g CO₂/km is a long way from the target value of 95 g CO₂/km. That's not how it works. A detailed look at the brands reveals several problems that suggest that the pooling option is not being used. At 98 g CO₂/km, Toyota is only three grams away from the manufacturer-specific limit of 95 g CO₂/km. Toyota will be offering the Urban Cruiser electric car in the volume segment from the summer and is revamping the bZ4X SUV to such an extent that it will be interesting. Why should the Japanese still pool with Tesla?

Stellantis as a candidate for averaging?

The fact that the balance of the potential pool with Tesla is so weak naturally also has to do with Tesla itself: Registration figures in January and February were weak. This could presumably change with the delivery of the revised Model Y. Brussels circles report that Stellantis has formed a pool with Tesla, but is reluctant to make use of it. It is easy to imagine that Stellantis will instead make use of averaging, i.e. compensate for a failure to meet the 2025 targets by overfulfilling them in 2026 and 2027.

In terms of the carbon footprint, the start to the new year has been pretty tough overall. Although the proportion of electric cars has risen to 16 percent, this is not enough. Anyone interested in an electric car can play poker: it is very likely that the supply will increase over the course of the year and there will be many discounts. Far from being ruinous for most manufacturers, this is the most lucrative route. Pooling or penalty payments would not only be detrimental to the image, but also simply more expensive than a ramp-up of e-mobility.

(olb)