Relaxing the European Union’s passenger-car CO₂ emissions targets could put up to 185,000 jobs at risk by 2035, according to a study by the International Council on Clean Transportation (ICCT). The analysis argues that maintaining the current standards, combined with measures to strengthen domestic electric-vehicle production, could support employment across the European automotive industry.
The 58-page report, titled Powering Jobs: Employment Under the EU’s Passenger Car CO₂ Standards, examines how different regulatory approaches could affect employment in vehicle manufacturing, battery production and recycling, and charging infrastructure.
Its findings contrast with warnings from parts of the automotive industry that the current pace of electrification could threaten jobs. The ICCT argues that weakening emissions requirements could temporarily support employment in internal combustion engine (ICE) production but slow job creation in electric-vehicle-related industries, resulting in a net employment decline.
Three Scenarios for Automotive Employment
The ICCT modelled three scenarios to assess the potential effects of future EU policy decisions.
The Current Standards scenario examines employment under the existing emissions framework. The Policy Measures scenario combines the current standards with additional measures intended to increase vehicle and battery production within the EU. The Delayed Standards scenario assumes a five-year delay in implementing the emissions requirements.
Under the delayed scenario, battery-electric and plug-in hybrid vehicles would gain market share more slowly by 2030, with battery-electric vehicles reaching 100% of new-car sales by 2040. The ICCT describes the five-year delay as a simplifying assumption rather than a prediction of the precise form any regulatory changes would take.
The policy-measures scenario considers approaches such as local-content requirements, production incentives and initiatives designed to increase European value creation. The researchers model these measures through assumptions about a higher EU production share of battery-electric and plug-in hybrid vehicles rather than evaluating each policy individually.
Up to 185,000 Jobs at Risk Under Weaker Standards
The study projects relatively small differences in employment between the three scenarios through 2030. The gap becomes more pronounced by 2035.
Under the current standards scenario, total employment would remain broadly stable, at approximately 2% below its 2025 level. Adding industrial measures to increase European production could raise net employment by around 10% compared with 2025, equivalent to approximately 320,000 additional jobs.
By contrast, delaying the emissions standards could leave employment as much as 6% below the 2025 level. The ICCT estimates that this outcome could represent a loss of up to 185,000 jobs.
The researchers attribute the difference to the pace of the powertrain transition. While slower electrification could preserve some jobs associated with combustion-engine vehicles in the short term, it could also reduce employment growth in battery manufacturing, battery recycling and charging infrastructure.
Sandra Wappelhorst, the ICCT’s research lead and the study’s lead author, said weakening the standards would not necessarily protect employment.
“Weakening the CO2 standards is being presented as a way to protect jobs, but our analysis shows the opposite.”
Wappelhorst said the EU should complement emissions rules with measures that strengthen domestic electric-vehicle supply chains.
Current EU CO₂ Rules and Proposed Changes
Under the current framework, EU manufacturers must meet a fleet-average target of 93.6 grams of CO₂ per kilometre for the 2025–2027 period, representing a 15% reduction from the 2021 baseline. The required reduction increases to 55% by 2030 and 100% by 2035.
The European Commission’s draft Auto Package, presented in late 2025, proposed changes to the 2035 framework. Positions emerging from parliamentary discussions would require manufacturers to achieve a 95% reduction by 2035 rather than 100%, with a potential additional credit of up to 7.5 percentage points for using climate-friendly European steel.
Under that proposal, the effective reduction requirement could fall to 87.5% for manufacturers able to claim the full credit. The changes remain subject to further legislative proceedings and are not yet final law.
The ICCT study evaluates the employment implications of a slower transition rather than assessing the merits of every proposed regulatory change individually.
Vehicle Manufacturing Accounts for the Largest Differences
Passenger-car manufacturing contributes the largest share of the projected employment differences between the scenarios. Battery production and recycling, along with the construction and maintenance of charging infrastructure, become increasingly important as electric-vehicle deployment expands.
The report’s results also point to the role of industrial policy. Maintaining emissions targets alone is projected to keep employment broadly stable, while measures that increase domestic production could deliver additional job growth.
Peter Mock, ICCT Europe director, said maintaining the current standards would help European manufacturers strengthen their position in the electric-vehicle market.
Study Focuses on CO₂ Policy Effects
The ICCT cautions that its analysis isolates the employment effects associated with passenger-car CO₂ regulations. It does not model other factors that could affect future employment, including automation, digitalisation, geopolitical developments and broader economic conditions.
The study also does not assess workforce retraining requirements or the skills needed for the transition to electric-vehicle production.
Its projections therefore represent scenario-based estimates rather than predictions of total future automotive employment. The results suggest that the eventual impact on jobs will depend not only on the pace of electrification but also on whether European policy supports domestic production across vehicle manufacturing, batteries and charging infrastructure.