Minister for Economic Affairs calls for more flexible EU fleet regulation

Federal Economics Minister Katherina Reiche (CDU) has called for more flexible EU fleet regulations to support Germany’s automotive industry during its transition toward sustainable mobility. In an interview with dpa, Reiche urged the European Commission to adopt a more technology-open approach, emphasizing that current rules risk penalizing companies through hefty fines. She stressed the importance of adjusting CO₂ emission targets and introducing adaptable factors that would allow automakers to shape their transformation strategies while avoiding financial penalties. Reiche highlighted that although German carmakers have demonstrated impressive capabilities, the shift toward greener technologies requires time and investment. “They want to, they can; the range of our manufacturers is impressive,” she said. However, she warned that penalty payments could divert critical funds away from innovation efforts. Reiche argued that automakers need a diverse portfolio of powertrain options to remain competitive across global markets, especially given the challenges posed by shifting consumer preferences and regulatory changes. The EU had already granted automakers additional time to meet climate goals, extending the deadline for complying with CO₂ fleet standards until 2027. Instead of annual compliance, manufacturers now calculate average emissions over three years. Recent data shows that manufacturers met their target levels in the first half of 2026, giving them greater flexibility in managing production schedules and investment planning. This adjustment has allowed companies to better align with evolving market demands and technological advancements. Germany's auto sector faces mounting pressures, including declining profits and sluggish sales in key markets such as China. BMW reported a drop in profitability earlier this week, reflecting broader concerns within the industry. The slowdown in electric vehicle adoption has been attributed, in part, to economic uncertainties and supply chain disruptions. Despite these challenges, Reiche remains optimistic about the potential for sustainable growth, particularly in areas like green steel production. She suggested that incorporating sustainability criteria into manufacturing processes, such as using environmentally friendly steel, could help bridge the gap between environmental goals and industrial competitiveness. Reiche proposed that such measures might create new markets for eco-friendly materials while also promoting a holistic view of sustainability. By considering both the energy used in vehicles and the environmental impact of their production, she argued, Europe could maintain its leadership in high-quality, sustainable manufacturing. However, not all experts agree with Reiche’s stance. Researchers at the Deutsches Institut für Wirtschaftsforschung (DIW) warn that advocating for technological openness could actually hinder progress. According to Martin Gornig, head of industry policy research at DIW, the concept of technological openness is often misinterpreted as a means to protect outdated technologies rather than drive innovation. He argues that such an approach risks slowing down necessary investments and delaying the transition to cleaner, more efficient systems. As discussions continue between policymakers and industry leaders, the focus remains on balancing regulatory requirements with the practical realities of transitioning to sustainable transportation. With the automotive sector playing a central role in Germany’s economy, finding a path that supports both environmental goals and business resilience will be crucial in shaping the future of mobility in Europe.