CO₂ Balance 2025 of Car Manufacturers: Narrowly Missed and Still Fined Zero

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The automotive industry narrowly missed the CO₂ limits for 2025: with an average of 98 grams per kilometer, the actual value was four percent above the average target value of 94 g CO₂/km across all manufacturers. This data was published by the International Council on Clean Transportation (ICCT). The mechanism, whose basic principles were decided in 2009, should have automatically triggered penalty payments from car manufacturers to the European Union. However, this is not happening: the EU has adopted so-called flexibilization, which literally gives manufacturers more room to maneuver. The CO₂ balance for 2025 also shows how diverse the automotive industry is: their strategies for complying with the requirements differ.

The seemingly worst result was achieved by the Volkswagen Group, whose fleet emits 102 g CO₂/km instead of the manufacturer-specific limit of 93 g CO₂/km, exceeding the limit by eight percent. At the same time, the company is consistently on track to smoothly achieve its reduction targets. How does the CO₂ mechanism work in the first place?

From NEFZ to WLTP

All new passenger cars registered in the European Economic Area (EEA) in a calendar year are assigned an individual CO₂ value. The EEA comprises the 27 EU states as well as Iceland, Liechtenstein, and Norway, but not the United Kingdom or Switzerland. Owners can find this figure under item V.7 in the registration certificate II, also known as the vehicle registration document. The average value of the cars actually brought onto the road is relevant.

In 2020, the permissible limit was 95 g CO₂/km and was determined based on the abolished New European Driving Cycle (NEFZ). For the billing period 2021 to 2024, the value converted from NEFZ to the now valid Worldwide Harmonized Light Vehicle Test Procedure (WLTP) of 118 g CO₂/km applied.

Measurements from the test laboratory ensure comparability

The CO₂ emissions of a car type are measured in a standardized way on a roller dynamometer in the laboratory, specifically at the exhaust. Electric cars therefore contribute zero grams to the balance. Incidentally, the EU also regulates driving energy: the assumption that the electricity source is irrelevant and does not need to contribute to improvement is incorrect.

After the billing period from 2020 to 2024, during which 95 g CO₂/km according to NEFZ and from 2021 onwards 118 g CO₂/km according to WLTP had to be consistently maintained, a reduction to 94 g CO₂/km according to WLTP followed in 2025. Slight deviations of a few grams upwards or downwards for some manufacturers result from an individual weighting factor. As a result of flexibilization, often referred to by the English term "Averaging", the limit of 94 g CO₂/km does not have to be met in every calendar year up to and including 2029. It is sufficient if the average value for the years 2025 to 2027 is correct.

The pressure to act is increasing

What sounds like a generous concession from the EU is not: those who do not meet their individual limit in 2025, see Volkswagen, must deliver even more in 2026 and 2027. After that, it really gets serious, because the limit for 2030 is set not at 94, but at 50 g CO₂/km. The pressure to act is increasing significantly. What this means in detail, heise Autos has already explained elsewhere.

On paper, a penalty of 95 euros is due for every gram of excess and per car sold in the EEA in the reference year – regardless of whether the individual car met the limit or not. A minor transgression of, for example, an average of three grams can easily result in a sum of many millions of euros when multiplied by 95 euros and the number of first registrations. However, no one has had to pay yet.

Electric cars are the cost-effective CO₂ reduction measure

The EU has deliberately designed the CO₂ fleet mechanism in such a way that different paths are possible and market principles apply: the automotive industry must weigh which CO₂ reduction measure is the most cost-effective. In the past, it was usually sufficient to optimize combustion engines, for example through hybridization, and to remove particularly CO₂-intensive vehicles from the product range.

With the reduction of the limit to 94 g CO₂/km in 2025, this is no longer sufficient even for Toyota. The largest car manufacturer is extremely successful in producing increasingly economical and therefore lower-CO₂ passenger cars with combustion engines. Even Toyota now has to build electric cars to achieve further reductions. The fact that CO₂ targets are equated with an electric car quota is factually correct, because electric cars are the most cost-effective measure to achieve current and future goals. Formally, however, the EU is completely technology-neutral.

Volkswagen balances as a group, Hyundai and Kia do not

The Volkswagen Group brands, from Audi to Cupra, Porsche, and Skoda, to the core brand VW Passenger Cars, had an electric car share of 19 percent in 2025. In addition, there are eleven percent plug-in hybrids, which have temporary statistical significance because they are usually accounted for with 50 grams or less of carbon dioxide per kilometer. Volkswagen balances as a group together. This does not have to be the case, as Hyundai and Kia show. The Hyundai Group brands settle separately: Hyundai was six percent above the limit with 100 g CO₂/km instead of the permitted 94 g CO₂/km, while Kia was only two percent over with 96 g CO₂/km.

Nissan only looks good in pooling

The possibility of pooling, as it is commonly called, exists for all companies in any combination. Nissan, for example, has 123 g CO₂/km and compensates for this through pooling with BYD from China. The joint result of 76 g CO₂/km is the best. What Nissan pays BYD for pooling is a matter for the contractual partners. What is clear is that the EU's intention to financially reward innovative manufacturers and compel others to act is working.

This also leads to the conclusion that the Volkswagen Group is not doing as badly as its last place suggests. Rather, it can be assumed that the offensive in electric cars in the B and A segments will lead to noticeably decreasing CO₂ values. This refers to the models VW ID. Polo and ID.Cross, Skoda Epiq and Cupra Raval, and in 2028 the VW ID.1, which may be called Lupo or Up.

Things are going well at BMW

Meanwhile, things are going very smoothly for BMW, where, in addition to many diesel cars, they have also sold many with electric drive: 25 percent of new registrations for BMW and Mini had no internal combustion engine in 2025. In addition, there were 15 percent plug-in hybrids. The outlook is good: the order books for the iX3 are full. Those who order now will generally receive their car next year.

A peculiarity is the pool that Tesla forms with Stellantis and Toyota, which, at 98 g CO₂/km, is four percent above the limit: Tesla naturally has zero grams because it exclusively offers electric cars. Contrary to popular belief, Tesla has not received any money from trading CO₂ reduction credits in Europe so far, unlike in the USA; pooling with Stellantis and Toyota is new.

Stellantis needs to catch up

For Stellantis, the balance sheet in isolation looks quite unfavorable: the multi-brand group (Opel, Citroën, Peugeot, and others) was significantly above the Volkswagen Group (102 g CO₂/km) with 107 g CO₂/km. This is far from the weight-adjusted target (96 g CO₂/km). The group urgently needs CO₂ compensation from Tesla. It is noticeable that Stellantis prices its own electric cars unusually confidently. This is by no means meant cynically: discounts at Stellantis could be very high in 2026.

Toyota, in turn, will wonder why it is entering the pooling with 97 g CO₂/km against a target of 95 g CO₂/km; after all, this also involves a certain damage to its image. Interested parties can hope that the C-HR+ built in Japan will be heavily discounted in the foreseeable future. Perhaps Toyota will forgo the pooling option.

Affordable electric cars lead to low margins

The increase in the market share of electric cars in general is fundamentally related to falling battery costs. Brands like BMW find it easy to produce competitive electric cars that generate sufficient profit. It is completely different for Dacia: Dacia builds cars for price-sensitive customers and is very successful in Europe with the Sandero. The Polo competitor regularly ranks among the top three best-selling cars across all vehicle classes. However, the CO₂ value of 113 g CO₂/km contradicts Renault's 91 g CO₂/km within the joint group. Dacia's answer is a counterpart to the Renault Twingo: this electric car will be presented soon and will be available at dealerships in the second half of the year.

The end of the end is not coming

Against the backdrop of these current figures, some observers might wonder what has become of the end of the end of the internal combustion engine: so far, nothing. The EU Commission merely presented a draft to amend the CO₂ fleet mechanism in December 2025. If it were finally adopted in this form, the CO₂ target for 2030 would be softened by another flexibilization period (2030 to 2032), and in 2035 the target of zero grams would increase to eleven grams.

Overall, this is at most background noise. For everyone planning to buy a new car, the message is becoming increasingly clear: the powertrain transition is happening. Everything is becoming electric. This can be ignored in real life for many more years as long as there are enough gas stations and users accept the predictably rising prices there.

(afl)