Brussels (Belgium) (AFP) - EU chief Ursula von der Leyen offered Monday to give struggling European carmakers “breathing space” by allowing them extra time to meet 2025 emission reduction targets without facing fines.

The announcement is part of the bloc’s push to protect the auto industry, which employs 13 million people and accounts for about seven percent of Europe’s GDP.

“There’s a clear demand for more flexibility on CO2 targets,” the European Commission president told reporters in Brussels. “Instead of the annual compliance, companies will get three years.”

Von der Leyen added companies would still have to “fulfil” the same targets.

“But it means more breathing space for industry. It means also more clarity,” she said after talks on Monday with industry representatives including from BMW, Renault, Volkswagen and Stellantis, which owns several brands including Jeep, Fiat and Peugeot.

The European Union has prioritised tackling climate change and agreed to phase out new sales of combustion engine vehicles by 2035.

Starting this year the EU is lowering the average emissions that new vehicles sold in the 27-country bloc are permitted to produce, with carmakers facing steep fines if they fail to comply.

Carmakers had expressed concern that they would not be able to meet the target because of falling sales of electric vehicles in Europe and amid fierce Chinese competition.

The proposed changes will still need approval from EU states and the European Parliament.

The fines had faced criticism from Germany, Italy and France – whose European affairs minister Benjamin Haddad welcomed the commission’s move as “a common sense decision to safeguard our industrial sovereignty.”

The European Automobile Manufacturers’ Association (ACEA), an industry group, welcomed the proposal as “a first step in the right direction”.

- Boosting European production -

The EU is focusing on reviving its competitiveness as it falls behind the United States and China. Brussels already announced measures last week to bring down energy costs in Europe, which are far higher than in the United States.

Von der Leyen will officially present her broader “action plan” for the auto sector Wednesday after several rounds of talks with industry leaders about EU steps to support the crisis-ridden sector.

But she laid out its key measures on Monday.

In addition to flexibility on emissions, she said that to boost innovation the EU would support an industry alliance to pool resources for the development of software, chips and autonomous driving technology.

She also promised to launch large scale pilot projects for autonomous cars and direct support for EU battery producers to compete with cheaper batteries produced outside the bloc.

ACEA welcomed the moves as “positive signs” while the CEO of German auto behemoth Volkswagen, Oliver Blume, welcomed the EU’s “pragmatic approach.”

In a “Made in Europe” push, von der Leyen said the EU would “gradually introduce European content requirements” for battery cells and components.

Brussels will also present plans to decarbonise company car fleets, which represent 60 percent of new vehicles placed on the market, an EU official told AFP.

- ‘Unprecedented gift’ to auto sector -

EU industry chief Stephane Sejourne welcomed the emission rule delay after pushing for flexibility.

“We will not penalise the industry that we must help. In effect, the good students will be able to capitalise on their efforts, those who are behind will have more time,” Sejourne said.

Groups calling for cleaner transport rules, however, criticised the proposal.

The Transport and Environment pressure group described it as an “unprecedented gift to Europe’s car industry in the middle of a compliance year”.

“Weakening the EU clean car rules rewards laggards and does little for Europe’s car industry except to leave it further behind China on electric vehicles,” William Todts, executive director of the clean transport advocacy group, said.

“The EU risks creating very damaging uncertainty about the electric vehicle transition in Europe,” Todts said in a statement.