Car manufacturers' CO₂ targets: who needs to step up?

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Federal Minister for Economic Affairs Robert Habeck will lobby in Brussels for the revision of the CO₂ fleet limit value to be brought forward. Instead of 2026 as planned, the review is to begin earlier. Habeck made this clear after the car summit with representatives of German industry and at their request. "I am happy to comply with this." However, there was no talk of softening or even abolishing the CO₂ mechanism. The prescribed reduction of minus 15 percent from 2025 remains in place. As it currently stands, all manufacturers will meet the target. But only if they sell slightly more electric cars.

All newly registered cars in the European Economic Area –, i.e. including Iceland, Liechtenstein and Norway –, are assigned their own CO₂ value. This is determined using the WLTP (Worldwide harmonized Light vehicle Test Procedure), which measures emissions at the tailpipe. Electric cars are therefore included in the balance with zero grams. The average CO₂ value of all newly registered cars from a manufacturer in a registration year is decisive for the fleet limit value.

Brand and weight-specific limit value

In the years 2021 to 2024, 95  grams per kilometer are permitted. Please note that this figure refers to the abolished NEDC (New European Driving Cycle). Converted to the WLTP value, this results in 120 g CO₂/km. In addition, so-called "Eco Innovations" are considered in the measurement result. These are technical measures that lead to CO₂ reduction but do not take effect in the WLTP procedure. In addition, each manufacturer or car company is assigned an individual limit value based on the actual unladen weight of the fleet. In the past, this led to BMW, for example, reaching an average limit of 128 g CO₂/km in 2023, while Hyundai had to comply with 113 g CO₂/km. This weight reference will lead to the opposite situation from 2025 – more on this shortly.

2024: All manufacturers on course

According to an analysis by Dataforce for the first half of 2024, the automotive industry is on track to meet targets across the board. The situation is still tight at Volkswagen, where 121 g CO₂/km must be achieved and 123 g CO₂/km is available. The Group must therefore sell more economical cars with combustion engines in the second half of the year or slightly increase the proportion of electric cars. Ford also needs to find another gram and reduce its emissions from 125 g CO₂/km to 124 g CO₂/km. Other manufacturers are significantly undercutting the individual targets: Toyota, for example, was at 105 instead of the necessary 114 g CO₂/km in the first half of 2024 according to Dataforce's analysis. BMW, where many electric cars are sold largely unnoticed by the public, and Mercedes are relaxed at 106 and 108 instead of the required 131 and 138 g CO₂/km for 2024.

	Avg. CO2 Jan-Jun 2024	Ziel 2024	Ziel 2025
Volkswagen	123	121	94
Stellantis	113	113	97
Renault-Nissan-Mitsubishi	114	113	97
Toyota	105	114	97
Hyundai	108	117	96
BMW	106	131	91
Daimler	108	138	88
Ford	125	124	93
Geely	56	138	88
Tesla	0	137	89

Negative limit value line

In reality, this means that the car industry no longer needs to show any particular ambition when it comes to selling electric cars this year. Discount campaigns are hardly to be expected. Instead, it is plausible that new registrations will tend to be postponed until 2025. Several parameters will change here. Firstly, the average value of the respective registration years 2025 to 2029 must be at least 15 percent below that of the years 2021 to 2024.

The weight reference is also being recalculated: due to the increasing proportion of electric cars, the basis for calculating the unladen weight has risen to 1609.6 kg. Until now, heavy vehicles were synonymous with high CO₂ emissions. This is changing with electric cars, which weigh a lot but have no CO₂ emissions in the WLTP. In the European Union's CO₂ mechanism, this in turn means that the manufacturers with the heaviest cars no longer receive the laxest, but the strictest specifications. The slope of the limit value line for the weight reference will therefore be negative from 2025.

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Elektroautos und die CO2-Ziele (3 Bilder)

Devaluation of plug-in hybrid cars

One example of this is Mercedes: instead of 138 g CO₂/km in 2024, the current Dataforce forecast is that it must not exceed 88 g CO₂/km in 2025. The Group with the Mercedes and Smart brands must therefore significantly reduce its emissions from 108 g CO₂/km in the current year. At Renault and Stellantis, where smaller and lighter cars are being put on the road overall, the target will be reduced from 113 g CO₂/km this year to 97 g CO₂/km next year.

Another new aspect is that plug-in hybrid cars will be assessed more and more strictly by 2030. They must have a significantly higher electric range in order to achieve the previous CO₂ result. Or manufacturers will have to accept that plug-in hybrids are less valuable in the internal mix due to the stricter Utility Factor (UF).

What will this lead to in 2025?

There is a from-to spectrum of estimates. Schmidt Automotive Research, for example, assumes that a share of electric cars of a good 22 percent for 2025 instead of around 16 percent in the current year will be sufficient to achieve the CO₂ targets. At the International Council on Clean Transportation (ICCT), the assumptions are less favorable. In a study that will be published in the coming weeks, ICCT analysts assume that around 28 percent electric cars will be the minimum level. The ICCT has based this on rather pessimistic framework conditions. For example, no further reduction in cars with combustion engines is to be expected, and the proportion of plug-in hybrids would also be constant or declining.