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New CO2 emission targets came in for 2025

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EC now set to give carmakers 3 years to comply and avoid

fines

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News sends shares of VW, Renault, BMW among others higher

(Adds Volvo Cars, campaign group T&E reactions)

By Philip Blenkinsop

BRUSSELS, March 3 (Reuters) - The European Commission

yielded to pressure from European automakers on Monday by giving

them three years, rather than just one, to meet new CO2 emission

targets for their cars and vans.

The EU significantly lowered its cap on automotive carbon

dioxide emissions this year, meaning at least one-fifth of all

sales by most car companies must be electric vehicles (EVs) to

avoid heavy fines. The ultimate goal is for zero emissions in

2035.

Commission President Ursula von der Leyen said after meeting

auto sector executives, unions and campaign groups on Monday

that the EU executive would propose later this month allowing

compliance over three years, rather than in 2025.

Meeting the targets, and avoiding related fines, depends on

selling more electric vehicles, a segment where European

carmakers lag Chinese and U.S. rivals.

Shares in European automakers, including Volkswagen

, Renault, BMW and Mercedes-Benz

rose by between 2% and 6% after von der Leyen's

comments.

"The targets stay the same. They have to fulfil the targets,

but it means more breathing space for industry," von der Leyen

told a news conference, adding the proposal will still require

approval from EU governments and the European Parliament.

Compliance would now be based on a carmaker's average

emissions over the period 2025-2027.

EU carmakers, which have been hit by factory closures

and are now bracing for U.S. tariffs, had urged the Commission

to grant relief from fines they say could rise to 15 billion

euros ($15.7 billion) if their fleets did not meet the limits in

2025.

European auto manufacturer association ACEA says the

industry faced unpalatable alternatives, including deep price

cuts, reduced production or buying credits from U.S. electric

car maker Tesla and Chinese electric vehicle makers.

Volvo Cars, which is majority owned by Chinese EV maker

Geely, said last week that companies that had heavily

invested to be ready for 2025 should not be disadvantaged by any

changes.

"These targets were set several years ago, giving the

industry the time needed to prepare, with several mechanisms to

support compliance," CEO Jim Rowans said.

Transport research and campaign group T&E described the

proposal as an unprecedented gift to the car industry for no

commitments.

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.

($1 = 0.9559 euros)