Preview 2026 - Softening EU fleet limits is a step backwards for Europe’s car industry - NGO
[This piece is part of a series of expert interviews to preview energy and climate policy developments in Germany and Europe in 2026. We will publish more at the start of the new year.]
Clean Energy Wire: What has the government achieved this year in terms of climate-friendly mobility? What are the successful approaches and the biggest failures?
Sebastian Bock: Shortly after taking office, the government launched the Expert Forum on Climate-Friendly Mobility and Infrastructure (EKMI). We welcome the fact that representatives of civil society were also involved in this. Even if the results of the EKMI are not sufficient to close the climate gap in transport, it was right to focus on climate protection right at the beginning of the legislative period.
The special tax allowances for electric company cars introduced by the government are also noteworthy. We welcome this innovation in principle, but it has given particularly expensive electric company cars even more tax advantages. It is therefore a measure with high deadweight effects that primarily benefits high earners. The mileage increase in the commuting tax allowance is another failure, as it creates false incentives and the funds would be better used elsewhere to actually promote climate-friendly mobility. The situation is similar with the new master plan for charging infrastructure for cars and lorries. It contains some good approaches, but in many cases remains limited to support programmes and announcements. Binding measures and a clear implementation roadmap are lacking.
In 2025, the federal government missed the opportunity to adopt a social leasing programme similar to that in France. This would have given people on low and modest incomes better access to climate-friendly mobility. It would have been an important signal, as this population group in particular has hardly benefited from previous subsidies. Instead, the decision to once again subsidise plug-in hybrids, which emit almost five times as much CO2 on the road as on paper, is a step in the wrong direction.
What steps must the government take in the coming year?
In the coming year, the federal government must set the course for the ramp-up of e-mobility: the announced subsidy programmes for electric cars should be specifically targeted at small electric cars produced in Europe and enable people with low and middle incomes to make the switch.
The government should support the European Commission's initiative for faster electrification of company fleets. German manufacturers would particularly benefit from this initiative.
At the same time, tax breaks for PHEVs [plug-in hybrid electric vehicles] must be abolished and subsidies for combustion engines, such as in company car taxation, must be consistently reduced. In addition, Germany should introduce a registration tax for combustion engines, which would primarily affect commercial vehicles and give e-mobility an additional boost. This is already the case in almost all EU countries.
At the same time, there is a need for rapid expansion of private charging infrastructure in existing multi-unit buildings, as over 50 percent of people in Germany live in rented accommodation or multi-unit buildings. It is therefore essential that the government implements ambitious targets in the Building Electromobility Infrastructure Act in 2026 to make charging as easy as possible for this section of the population.
What do you make of the softening of the EU’s fleet limits and abandoning the 2035 ban on petrol and diesel car sales, following pressure from Germany? Will that help the auto industry?
There are three reasons why softening the fleet limits represents a step backwards rather than forwards:
1️. Competitiveness: It will be more difficult for European manufacturers to compete with global, purely electric competitors if they now have to develop e-mobility and combustion engines in parallel in the long term.
2️. Investment: Companies that have invested billions in e-mobility will be penalised. Those who have hesitated will be rewarded. This is poison for Europe as a business location. Manufacturers now have to invest in two technologies in parallel. Worse still, investments in batteries, charging infrastructure and the entire e-mobility ecosystem are becoming more uncertain again.
3️. Affordability: Plug-in hybrids, e-fuels and biofuels are expensive niche solutions. Ultimately, consumers and the climate will foot the bill.
Our T&E analysis shows the consequences of the car package that the European Commission has presented, mainly at the urging of the German government and German manufacturers: the market share of electric cars would fall by 13 percentage points in 2030. By 2035, we could be missing up to 25 percentage points in electric cars. As a result, Europe would generate up to 600 million tonnes of additional CO2 emissions.
We do not need “technology neutrality”, which in reality is just indecision. We need planning security in order to remain competitive on the global stage.
Manufacturers like to cite potential fines as an argument for watering down fleet limits. A T&E analysis in September showed that all European car manufacturers except Mercedes are on track to meeting the interim fleet limits. Europe's car manufacturers must finally get back on track so that they can catch up on the global market, which they themselves have neglected.
