Mercedes-Benz Falls Short of EU Emission Targets for 2025–2027, Raising Concerns Over Compliance

Mercedes-Benz is the only major European auto manufacturer projected to miss the European Union's 2025–2027 carbon dioxide (CO₂) emission targets, according to a recent report by environmental organisation Transport & Environment (T&E). While most of its challengers are on track to meet or exceed the norms, Mercedes-Benz faces a situation that may require buying compliance credits from other companies.

The EU's emission targets for the 2025–2027 period are part of the broader European Green Deal, aiming to reduce the automotive sector's carbon footprint. These regulations set strict limits on the average CO₂ emissions of new vehicles sold within the EU, compelling manufacturers to accelerate the transition to electric vehicles (EVs) and other low-emission technologies.

According to T&E's EV Progress Report, BMW, Stellantis, Renault, and Volkswagen are all anticipated to meet their emission targets. BMW is expected to exceed compliance by 13 grams of CO₂ per kilometre, while Stellantis and Renault are projected to be 9 and 2 grams per kilometre overcompliant, respectively. Volkswagen is expected to comply narrowly, with no margin to spare.

In contrast, Mercedes-Benz is projected to fall short by 10 grams of CO₂ per kilometre. To bridge this gap, the company may need to engage in a "pooling deal," buying compliance credits from other manufacturers such as Volvo Cars and Polestar. This arrangement allows companies that exceed emission targets to sell credits to those that do not, ensuring overall compliance within the industry.

The delay in the EU's emission target deadline, extended from 2025 to 2027, has been a point of contention. Some industry leaders argue that this extension provides necessary flexibility for manufacturers to adapt to the rapidly changing market dynamics. However, environmental groups warn that such delays could undermine the EU's climate goals and hamper progress towards a sustainable automotive future.

Despite these challenges, market conditions remain favourable for the adoption of electric vehicles. Battery prices are anticipated to drop by 27% between 2022 and the end of 2025, with a further 28% reduction by 2027 compared to 2025 levels. Charging infrastructure is also expanding, with 77% of the EU's core highway network now equipped with charging stations, and all member states having met or surpassed the number of public charging points required by the EU's 2025 target.

The surge in electric vehicle sales is evident, with the market share of battery electric vehicles (BEVs) projected to reach 25% over the 2025–2027 period, up from 18% in 2025. This growth is driven by the introduction of more affordable models, declining battery costs, and expanding charging infrastructure.

In response to the evolving regulatory landscape, over 150 companies from Europe's automotive, battery, charging, and clean technology sectors have signed an open letter urging the European Commission to maintain its commitment to the 2035 zero-emission target. These companies emphasise the importance of bold industrial action to support the transition to a sustainable automotive future.

As the EU continues to navigate the challenges of decarbonising the transport sector, the performance of manufacturers like Mercedes-Benz will be closely scrutinised. The company's ability to meet its emission targets will not only impact its compliance status but also influence the broader industry's path towards a sustainable and competitive future.

In conclusion, while Mercedes-Benz faces challenges in meeting the EU's 2025–2027 emission targets, the broader European automotive industry appears to be on track to comply. The company's efforts to buy compliance credits highlight the importance of industry collaboration in achieving collective climate goals. However, the situation underscores the need for continued investment in electric vehicle technology and infrastructure to ensure long-term sustainability and competitiveness in the global market.

As the EU's emission regulations continue to evolve, the automotive industry's response will play a vital role in shaping the future of transportation. The ongoing developments serve as a reminder of the critical importance of aligning industrial strategies with environmental objectives to foster a sustainable and prosperous future for all.