Italy, Poland urge EU to spare carmakers from carbon fines

A coalition of seven European Union member states is calling for action to preserve the competitiveness of the bloc’s automotive industry at a time when it needs to invest in innovation to comply with the stricter emissions limits.

Italy, Poland and Austria joined a group that will urge EU competition ministers on Thursday to find a solution to avoid fines for car producers exceeding new emission targets due to take effect in 2025.

The alliance, which also includes Bulgaria, the Czech Republic, Romania and Slovakia, also wants to refine automotive policy by balancing demand stimulation with support for investments.

“The industry is now at a critical juncture, facing significant challenges related to production, employment, and global competition, which require urgent and coordinated action at the EU level," the countries said in a joint proposal seen by Bloomberg News. The next five-year legislative cycle “presents an opportunity to better align industrial policy with the EU’s broader goals of decarbonization and competitiveness."

Boosting the position of European producers on the global scene is one of key priorities of European Commission President Ursula von der Leyen during her second term in office until 2029. As a new team of commissioners was approved earlier on Wednesday by the European Parliament, von der Leyen told lawmakers the region’s car industry is “European pride" and pledged to ensure that “the future of cars will continue to be made in Europe."

Von der Leyen also told reporters that she will personally lead a new ongoing strategic dialog with the car industry and related players.

“I think it starts with having the political will to relieve what we believe is a disproportionate cost of compliance," said Sigrid de Vries, director general of the European Automobile Manufacturers’ Association, known as ACEA. “I think that political will is building."

The bloc’s automakers are facing deepening challenges as demand for electric vehicles disappoints and costs rise, ahead of tougher regulation to reduce carbon emissions, according to ACEA. Car producers have also called for a regulatory fix to avoid fines for exceeding 2025 emissions targets, which could potentially amount to billions of euros for some of them — just as Chinese EV makers boost sales in the region.

“Such penalties would severely limit the ability of the industry to reinvest in innovation and development, thus harming Europe’s competitiveness on the global stage," the seven nations said. “The European Automobile Manufacturers’ Association has highlighted these concerns, and we support the need for urgent appropriate measures and adequate financial means at the EU level, including a possible short-term package, to facilitate a just transition that does not further undermine European competitiveness."

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In its proposal, the alliance called for an assessment of the carbon-emission standards for new passenger cars and new vans, saying regulation is also urgently needed to ensure prevent the outflow of investments from green technology research and development.

“A progress report and comprehensive assessment need to be brought forward as soon as possible with a revision being proposed by the commission still in 2025," it said, adding that it may also necessitate an assessment of other related measures, such as laws on renewables, alternative fuels infrastructure and the EU emissions trading system.

A signal of political support from the ministers on Thursday could be the first step toward finding a solution to the issue of compliance with 2025 targets, according to ACEA’s de Vries.

“Is not an easy one to fix, absolutely," she told Bloomberg News. “But we’ve seen also politically where there is a will, there is a way."

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