Investing.com -- Shares of major European car manufacturers, including Volkswagen AG (OTC:VWAGY) (XETRA:VOW3), Mercedes-Benz (OTC:MBGAF) Group AG (XETRA:MBG), BMW (ETR:BMWG) (XETRA:BMW), and Renault SA (OTC:RNLSY) (EPA:RNO), climbed in Monday’s trading session following news that the EU Commission plans to ease the burden on the industry in achieving climate targets for 2025. Volkswagen (ETR:VOWG_p) stock was up 3.5%, Mercedes-Benz shares rose 2.4%, BMW gained 2.5%, and Renault (EPA:RENA) saw a 3% increase.
The upward movement comes after EU Commission President Ursula von der Leyen announced a proposed "quick fix" that would allow car manufacturers more flexibility in meeting CO2 targets. The adjustment would combine the CO2 targets for 2025, 2026, and 2027 into a single compensation period, effectively removing the requirement for annual target achievement. The announcement was made at a press conference on Monday following a meeting with industry representatives in Brussels.
This proposed solution aims to significantly reduce the pressure on automakers to adhere to stringent CO2 fleet limits and to avoid potential fines for missing 2025 targets. Von der Leyen emphasized the need for a balanced approach, stating, "We need a balanced solution. Those who have done their homework should not be punished." The EU Commission President also highlighted the importance of pragmatism in dealing with the fines that could be imposed for not meeting the upcoming climate goals.
The shares of European carmakers reacted positively to the news, as the relaxed targets could mean lower costs and fewer penalties for the industry, which has been grappling with the dual challenges of transitioning to electric vehicles and recovering from the economic impacts of the COVID-19 pandemic.
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