German court hears lawsuit against BMW and Mercedes over combustion engine sales after 2030

Germany’s Federal Court of Justice (BGH) is set to rule whether carmakers BMW and Mercedes can continue selling combustion engine cars beyond 2030 following a lawsuit by NGO Environmental Action Germany (DUH). DUH argues that the companies violate Germany’s Climate Action Law by placing additional fossil fuel-powered vehicles on the market, thereby consuming a disproportionate share of the country’s 'remaining carbon budget'. The term refers to the amount of carbon dioxide that can still be emitted by human activities while limiting global warming to a specified level. However, countries have not agreed to national carbon budgets, and the German government has repeatedly argued against the use of such budgets. 

DUH said private companies must be held legally accountable for contributing to a carbon budget’s depletion, as this would limit the scope for political action and necessitate far-reaching measures to reduce CO2 emissions for future generations. The case builds on a landmark 2021 ruling by Germany’s Constitutional Court, which found that insufficient climate action today could violate fundamental rights of future generations. The court had decided that the government must tighten emissions reduction measures to avoid shifting an excessive mitigation burden into the future. DUH argued that this constitutional logic also applies to corporations, as the continued sale of combustion engine cars depletes the carbon budget and thus restricts the freedom of younger generations.

The lawsuit had already been rejected by two lower courts, leading DUH to seek a revision by the BGH. “Companies also need to abide by the Federal Constitutional Court’s decision on basic rights and climate action,” DUH head Jürgen Resch said in 2023, when the case was referred to the BGH. It is not clear when the court will announce a decision.

The NGO seeks to prohibit the sale of new combustion engine vehicles by the two manufacturers after October 2030 unless they run exclusively on climate-neutral fuels. It also calls for a cap on total emissions from vehicles placed on the market by BMW and Mercedes from 2022. If a defined emissions threshold is exceeded, the companies should no longer be allowed to register new combustion engine cars unless they are powered solely by climate-neutral fuels.  

The lobby group Federation of German Industries (BDI) warned that lawsuits against individual companies could undermine legal certainty and investments made under different assumptions. “Lawmakers must safeguard climate policy politically and create legal certainty,” said BDI managing director Holger Lösch. The government therefore had to ensure that agreed transformation pathways “cannot be circumvented by individual court decisions in civil law.” These could lead to immediate effects on local production and jobs instead of providing a clear legal framework and planning security, Lösch argued. 

The German government played a key role in the watering down an already-agreed de-facto ban on the registration of new combustion engine vehicles in the EU after 2035. Carmakers and their suppliers are one of the country’s most influential industry lobby groups. These still rely heavily on combustion engine technology, despite plans by Germany’s government to quickly ramp up the share of electric vehicles. Germany is a leading production location for electric vehicles, but the automotive industry is struggling in its traditional heartlands due to weak sales, challenges in global trade regimes, and due to strong emerging competitors from China in electric mobility.