The EU’s draft light-duty vehicle CO2 regulation, which would effectively provide for full ZEVs in new car sales by 2035, was passed by the European Parliament in February 2023 and was due to be voted on by the EU Council of Ministers at the beginning of March 2023. However, Germany, Italy, Poland and several other Eastern European countries expressed their opposition to the final draft and the Council vote has been postponed due to the prospect of difficulties in adopting it. Germany has requested the Commission to immediately present a legally binding draft regulation to allow the registration of vehicles with internal combustion engines using renewable fuels (eFuel) beyond 2035. The final draft of the CO2 regulation, which was expected to be adopted, included the future development of a rule to allow ICE vehicles using eFuel outside the regulatory framework. Rather than presenting the proposed system after adoption, Germany has insisted that the registration permit for ICE vehicles using eFuel should become law at the same time as the finalisation of 100% ZEVs for new vehicle sales in 2035. In response, the EU has proposed the introduction of a system to permit the registration of vehicles equipped with technology that would make it impossible to drive when using fuels other than eFuel, but Germany is reluctant to do so because it would lead to a burden on the development of new ICE technology. Italy also argues that the use of biofuel should be allowed instead of eFuel alone.
It remains to be seen whether any agreement will be reached at the EU Council Summit of 23-24 March 2023, when the Heads of State and Government of the Member States will meet.

All global car manufacturers have clarified their policy to achieve CN in the medium to long term throughout the entire lifecycle, from the procurement of raw materials, the manufacture of products and components, and the use of products through to recycling. In order to sustain corporate growth while contributing to climate change mitigation targets in the long term, strategies are being strengthened to increase the proportion of BEVs in new vehicle fleets and to shift to a business model that can increase profitability even if it becomes BEV-centric. At the same time, geopolitical risks, climate change and sudden natural disasters make it difficult to steer towards optimising the energy balance towards decarbonisation, while aiming for BEV-centric CN in the long term, a CN approach based on the installation or combination of ICE technology will also be important in the shorter span The main markets in Europe, the USA, Japan and South Korea are the United States, Japan and South Korea.

This report provides a comparative analysis of the strategies towards life-cycle CN by the major car manufacturers in Europe, the USA, Japan and South Korea. It also focuses on efforts to realise the Circular Economy, including battery and material recycling; policy trends to maintain and enhance industrial competitiveness while aiming for CN, and developments in the materials industry to support CN and Circular Economy practices.