The European Commission yielded to pressure from European automakers on Monday by giving them three years, rather than just one, to meet CO2 emission targets in 2025 for their cars and vans.
Commission President Ursula von der Leyen told a news conference that the EU executive would make the proposal this month to allow compliance over three years, rather than one.
Meeting the targets relies on selling more electric vehicles, a segment where European carmakers lag Chinese and U.S. rivals.
"The targets stay the same. They have to fulfill the targets, but it means more breathing space for industry," she said, adding that the proposal will still require approval from EU governments and the European Parliament.
Shares in Volkswagen, BMW and Mercedes-Benz rose after von der Leyen's comments
Industry sources said compliance would be based on the average of the period 2025-2027.
EU carmakers, hit by factory closures and now bracing for U.S. tariffs, have urged the Commission to grant relief from fines they say could rise to 15 billion euros ($15.7 billion) if their fleets do not meet the limits in 2025.
The EU executive intends to publish its automotive action plan on Wednesday to ensure EU car producers can electrify their fleets and compete with more advanced rivals like Tesla and Chinese producers.
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