Europe's plans for new cars after 2035 may become more flexible than originally expected. A revised proposal would reduce the emissions targets for passenger cars and vans, creating room for some vehicles with combustion engines to remain available beyond the deadline. It also introduces credits for manufacturers using lower-carbon steel produced in the European Union.

The proposed changes do not mean that existing emissions requirements have already been replaced. They outline a possible new approach that would give manufacturers more ways to meet their targets while continuing to reduce the environmental impact of vehicle production and use.

<h3>What Could Change by 2035?</h3>

Under the existing framework, new passenger cars and vans are subject to a 100% reduction target for average fleet emissions by 2035, compared with 2021 levels. The revised proposal would make that requirement less strict. For passenger cars, the proposed reduction would fall to 87.5%. Manufacturers could then use credits linked to low-carbon steel produced within the EU, with this allowance capped at 7.5% of the reference target. The arrangement would bring the effective reduction requirement closer to 95%.

This distinction is important because the target applies to the average emissions of a manufacturer's new-vehicle fleet. It does not establish a single emissions limit for every model. A less demanding fleet target could therefore leave manufacturers with more flexibility when deciding which types of vehicles to offer.

For vans, the proposed adjustments would be different. The 2030 reduction target would be set at 35%, compared with the European Commission's proposed 40% and the existing requirement of 50%. By 2035, the target would fall from 100% to 80%, with the same low-carbon-steel credit mechanism available, subject to a 7.5% cap.

<h3>Why Low-Carbon Steel Matters</h3>

The proposed credit system introduces another way for vehicle manufacturers to demonstrate progress toward their emissions targets. Rather than focusing exclusively on emissions from vehicle exhausts, it also recognizes improvements in the materials used during manufacturing.

Steel is an important part of vehicle production, and producing it can generate substantial emissions. Using steel made through lower-carbon processes can reduce the environmental impact associated with a vehicle before it even reaches the road.

Under the proposed arrangement, manufacturers would receive recognition for using qualifying low-carbon steel produced in the EU. This would help them meet part of their emissions obligations without relying entirely on reductions in vehicle exhaust emissions.

There would also be a tighter limit during the earlier years of the proposed framework. From the rules' entry into force until the end of 2034, credits for low-carbon steel would be restricted to 3% of the specific targets for both passenger cars and vans. The higher 7.5% allowance would apply to the longer-term targets.

<h3>More Flexibility for Vehicle Manufacturers</h3>

The revised targets could give automakers additional room when planning future vehicle lineups. Instead of working toward a complete reduction in average fleet emissions by 2035, companies would have a less demanding target and an additional compliance option through qualifying steel.

This could make it possible for some combustion-engine and hybrid vehicles to remain part of manufacturers' offerings beyond 2035. However, the proposal does not provide unrestricted permission to sell any type or quantity of vehicle. Manufacturers would still need to meet the applicable fleet-wide requirements and follow the final rules governing emissions calculations and credits.

The changes also distinguish between passenger cars and commercial vans. Their proposed reduction targets are not identical, reflecting separate requirements for the two vehicle categories. For manufacturers, understanding the difference will be important when planning production, investing in materials and deciding how to balance electric models with other powertrains.

<h3>The Current Rules Still Apply</h3>

Although the revised framework offers a possible alternative, it has not yet become law. The proposal still requires further approval and agreement through the remaining legislative process before it can replace the existing requirements.

A full European Parliament vote is expected in December 2026. Until the process is completed and a final agreement takes effect, the existing 100% reduction targets for passenger cars and vans remain in place.

The proposed changes would reshape how European automakers approach the 2035 emissions targets. Lower reduction requirements for cars and vans, together with credits for EU-produced low-carbon steel, could provide manufacturers with more flexibility in their future product strategies.

However, the proposal remains unfinished, and the current requirements have not changed. For consumers and manufacturers alike, the most important distinction is between a possible future framework and the rules that are legally in force today. The coming stages of the process will determine how much room different vehicle technologies will have in Europe's new-car market after 2035.