Stellantis warns this issue could destroy the European auto industry

F +0.15% GM +0.04% STLA -2.09%

U.S. automakers have taken the U.S. tariff burden in stride this year, as the Trump administration has focused on taxing auto imports.

But President Donald Trump hasn't been entirely unfair to the Detroit Big 3.

He signed the One Big Beautiful Bill Act into law earlier this year, which dismantled many Biden-era climate policies, as outlined by Carbon Brief. The loosened regulations have some benefits for original equipment manufacturers (OEMs), such as Ford, General Motors, and Stellantis.

It removed nearly all of the tax credits for low-carbon manufacturing and electric vehicles.

The U.S. government's Corporate Average Fuel Economy (CAFE) rules for automakers codify the average fuel efficiency for their fleets.

The Department of Transportation declared that Biden's administration exceeded its authority when calculating emissions standards by inflating the expected adoption of electric vehicles.

As of July, Congress eliminated CAFE penalties, meaning automakers won't face any government fines for not meeting fuel economy standards.

Automakers get a break on emissions in the U.S.

Under the Biden administration, General Motors and Stellantis faced hundreds of millions of dollars in fines over emissions rules.

Last July, Reuters reported that General Motors agreed to pay a $145.8 million penalty and forfeit emission credits worth an additional $300 million following a multi-year investigation that found 5.9 million vehicles from the 2012-2018 model years were emitting, on average, more than 10% higher carbon dioxide than GM's initial compliance reports claimed.

General Motors Q3 facts at-a-glance

• U.S. market share: 17%

• Electric vehicles sold: 67,000

• EV market share: 16.5%

• Dealer inventory: Down 16% year over year

• EV inventory: Down 30% since June

GM also admitted that through 2023, its total costs expensed in connection with emission compliance were about $450 million.

Last year, Stellantis paid $191 million in civil penalties for failing to meet fuel economy requirements for 2019 and 2020, following nearly $400 million in fines paid from 2016 through 2019, according to Reuters.

Stellantis stated that it supported the Senate Republican proposal, which ultimately led to the elimination of the CAFE penalties.

Meanwhile, EU emissions standards aren't budging, but that isn't stopping Stellantis from petitioning for lowered standards.

Stellantis chairman says lower emissions standards or risk "irreversible decline"

On Nov. 25, Stellantis Chairman John Elkann advocated for a change to the European Union's rules on auto emissions, warning that failing to do so could choke the industry.

According to Reuters, Elkann stated that the auto industry has its own package of proposals, which it claims will provide more flexibility in meeting emissions targets.

"There is another way to cut emissions in Europe in a constructive and agreed way, restoring the growth we have lost and people's needs," Elkann said. If it doesn't, he says, the European auto industry risks an "irreversible decline."

The European Commission is scheduled to present a package of proposals for a scheduled review of emission standards on December 10.

The auto industry proposes allowing plug-in hybrids, range extenders, and alternative fuels beyond 2035, averaging the interim carbon reduction goals of 2030 over several years, introducing a wide vehicle scrappage scheme, and adapting regulations to favor small car production, according to Reuters.

The EU has set a goal of reaching zero exhaust-pipe emissions for new cars by 2035.

U.S. automakers have mixed reactions to relaxed emission rules

Ford has already outlined a multibillion-dollar strategy that will help it pivot as emissions rules are relaxed and the company no longer has to buy emissions credits from rivals such as Tesla.

That strategy includes a slower electric rollout and a greater focus on hybrids. Looser emission standards could also lift sales for Ford’s traditional internal combustion engine vehicles.

More lax emissions standards and the end of the regulatory credits market have decreased the cost of building a vehicle by 3% to 5%, according to Wedbush analyst Dan Ives told CNN.

But lower standards cost as well.

"Over the past several years, our portfolio and capacity plans have been shaped by steadily increasing regulatory stringency for fuel economy and emissions," GM CEO Mary Barra said.

"To meet these requirements, we aggressively expanded our electric vehicle capacity. However, with the evolving regulatory framework and the end of federal consumer incentives, it is now clear that near-term EV adoption will be lower than planned. That is why we are reassessing our EV capacity and manufacturing footprint.”

GM already stated in an 8-K filing earlier this year that it will lose $1.6 billion due to “the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emission regulations.”

With changing attitudes in Washington, Barra now says GM expects to sell internal combustion engine vehicles for longer, but it is not abandoning its EV strategy altogether.

She told analysts on the earnings call, asking about EVs, that GM will focus on “cost reduction, maintaining production discipline, and leveraging new battery technologies. We aim to improve EV profitability by reducing complexity and commonizing parts across our EV platform.”

Related: Tesla gets eye-popping message from latest survey

This story was originally published by TheStreet on Nov 26, 2025, where it first appeared in the Automotive section. Add TheStreet as a Preferred Source by clicking here.