The European Union’s automotive regulatory package may not be finalized until 2027 as lawmakers continue to debate key elements of the proposed legislation, including electric vehicle quotas for corporate fleets and future carbon dioxide emissions targets for automakers.
According to a report by Automobilwoche, the European Parliament is not expected to vote on the package covering the automotive sector and vehicle fleets until November, with political groups remaining divided on several major issues. Industry associations and corporate lobby groups are also continuing to press their positions as negotiations progress.
“Everything must be finalised by the end of the first quarter of 2027,” European People’s Party lawmaker Jens Gieseke was quoted as saying by Automobilwoche. The timeline is reportedly influenced by upcoming elections in several European countries, including the French presidential election and parliamentary elections in Poland and Spain.
Corporate fleet targets under scrutiny
One of the most contentious aspects of the package concerns proposed electric vehicle requirements for corporate fleets operated by larger companies with at least 250 employees or annual turnover exceeding €50 million.
The European Commission’s original proposal called for country-specific targets, including a minimum share of 54% zero-emission vehicles in German corporate fleets by 2030.
However, a draft proposal prepared by Social Democratic lawmakers Tiemo Wölken and François Kalfon would significantly raise those requirements. Under the proposal, Germany’s corporate fleet EV target would increase to 65% by 2030 and 99% by 2035, compared with the Commission’s proposed 95% target for 2035.
The draft also includes higher targets for other member states. In Austria, for example, the proposed quota would rise to 70% by 2030, compared with the Commission’s target of 58%.
Overall, the proposal aims to increase the share of electric vehicles in corporate fleets across the European Union to 54% by 2030, up from the 45% target included in the Commission’s draft published in December.
Tax incentives for European-made EVs
The Social Democratic proposal would also require member states to end tax advantages and financial incentives for fossil-fuel-powered company cars beginning in 2028.
Under the draft, tax benefits would instead be limited to electric vehicles manufactured in Europe, a measure supporters argue would strengthen the region’s automotive industry while accelerating fleet electrification.
The proposal remains politically contentious and its prospects for securing parliamentary approval remain uncertain.
Industry opposition
The European People’s Party (EPP) has strongly opposed the stricter fleet requirements, while Germany’s automotive industry association, the VDA, has rejected additional regulatory obligations for company fleets.
The VDA argues that policymakers should focus on improving the conditions for electric vehicle adoption through investments in electricity networks and charging infrastructure rather than introducing new compliance requirements.
Industry representatives have also warned against increasing administrative burdens on businesses during a period of economic uncertainty and growing competition from overseas manufacturers.
Dispute over future CO₂ rules
At the same time, lawmakers are continuing to debate future emissions requirements for vehicle manufacturers beyond 2035.
The European Commission’s proposal would require a 90% reduction in fleet-average CO₂ emissions compared with 2021 levels rather than a full 100% reduction.
Under the proposal, remaining emissions could be offset through a credit mechanism involving low-carbon materials such as green steel and alternative fuels including e-fuels.
The EPP has opposed the credit system, arguing that manufacturers should achieve a genuine 90% emissions reduction without offset mechanisms. Supporters of that position contend it would preserve a role for internal combustion engine vehicles beyond 2035 under certain conditions.
Political negotiations continue
According to Automobilwoche, the EPP could potentially secure support for some of its positions through cooperation with right-wing political groups. However, German Chancellor Friedrich Merz is reportedly pushing for a compromise involving centrist parties, including the Social Democrats and the liberal Renew group.
With significant differences still separating lawmakers, industry stakeholders and member states, negotiations are expected to continue well into 2026. The eventual outcome is likely to play a major role in shaping corporate fleet electrification, vehicle manufacturing strategies and the broader transition to low-emission mobility across Europe.
