All major European carmakers except Mercedes-Benz are on course to meet the European Union’s 2025-2027 carbon emission targets, thanks to rising demand for electric vehicles (EVs), according to a report by Transport & Environment (T&E).
The research group said the industry is set for a sharp turnaround compared with the first half of 2025, when only BMW and Geely-owned Volvo Cars were projected to comply while Stellantis, Renault, Volkswagen and Mercedes were trailing.
The improved outlook is driven by new, cheaper EV models entering the market, falling battery costs and an expanding charging network across the continent.
T&E forecast that battery electric vehicles will account for more than 30% of EU car sales by 2027, up from 18% this year.
It described the progress as proof that EU climate targets are working, warning that any dilution of 2030 or 2035 goals would undermine investment and hand China a long-term advantage.
“Europe now faces a decisive choice: to either lead the global BEV race and confidently enter the electric age or risk falling behind in the fossil fuel era,” the group said.
The European Commission had eased pressure on the sector in March, allowing carmakers three years, rather than one, to meet new CO2 thresholds for cars and vans. Compliance will now be measured on average emissions between 2025 and 2027, rather than in a single year.
Mercedes, however, remains an outlier. T&E said the German automaker risks trailing rivals because of its focus on higher-margin combustion engine models. Analysts expect it to avoid heavy fines by pooling its emissions with those of Volvo and Polestar, paying the Geely-controlled brands for the privilege.
EU industry executives will meet Commission President Ursula von der Leyen on 12 September to debate the bloc’s next steps for the sector.
