Sixt CO2 Emission Impact

Investments
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This topic discusses the impact of EU’s upcoming CO2 regulation on Sixt.

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EU Commission wants to prevent car rental companies from buying non-electric vehicles from 2030

  • EU Commission is working on a regulation that will prevent car rental companies such as Sixt from buying non-electric vehicles from 2030, Bild reported citing EU sources.
  • The commission plans to present the proposal in summer before seeking parliamentary approval.
  • The commission confirmed that work is underway on the new regulations.
  • German Chancellor Friedrich Merz warned yesterday against such regulation, saying consumers should make the decision, not the EU.

Assessment

Such a law would be detrimental to car companies, as the EU market is not yet mature enough for widespread electric vehicle adoption. In 2024, Sixt’s profit fell 28% year-over-year to EUR 243 million, largely due to a decline in residual values. However, it remains uncertain whether the EU Parliament will pass the law, especially given the recent opposition to the proposed CO2 regulations for automakers.

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Oh that would be very drastic. Which probability do you assign to a regulation like this passing?
I think it’s certainly a topic worth doing further in-depth research on so that we get a strong understanding of probabilities of this risk

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I assign a 30–40% probability of it passing. Here’s my reasoning:

  • The regulation will contradict the EU CO2 regulation for 2035 which bans combustion vehicles from 2035. This gives member states and companies justification to oppose it.
  • Passing the regulation requires a high threshed, a majority in the EU parliament and 55% of countries and 65% of EU population should vote for it. Germany, Italy, Poland and Czechia have opposed the strict EU CO2 regulation. Their population makes up 42% of the EU population, enough to form a blocking minority.
  • Representatives of four parties including the EPP, ECR, PfE and ESN which control 375 or 52% of votes in the EU Parliament have opposed the planned mandate.
  • Corporate/rental companies buy 60% of new cars, hence building framework conditions such as charging stations for such a large number of EVs takes time.

EU 2030 CO2 regulation on corporate/rental fleet (Notion)

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Good points. Why do you still assign such a high probability? Shouldn’t it be way lower? I assume there might be more countries and parties opposing it then the ones mentioned or do we know that everyone else is in favor of it?

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Because EPP (which makes up about 26% of EU parliament) does not campaign to scrap the EU’s climate agenda outright but is championing for flexibility, hence it may negotiate with the EU Commission to pass the regulation with adjustments such as banning corporate ICEs in phases from 2030.

Slovakia has been another country against the EU CO2 agenda. So it could also oppose the planned 2030 regulation.

France, Spain, Netherlands, Hungary and Nordic countries (37% of the EU population) are seen as supportive of the EU decarbonization agenda. So I don’t expect them to oppose it. These countries are making great progress in decarbonization.

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EU plans to set new rules for company fleets in Mid-December 2025, with reports indicating it may require 50% EV share by 2027 and up to 90% by 2030

  • According to recent reports, the EU Commission plans to unveil CO2 rules for company and rental fleets requiring around 50% EV share by 2027 and up to 90% by 2030 in mid-December, effectively accelerating the phase-out of combustion engines in commercial registrations.
  • Earlier reports indicated the Commission wants to completely ban combustion vehicles for corporates in 2030.
  • The plan would affect almost two-thirds of new registrations in Germany.

Assessment
I still believe that the possibility that the EU Commission will succeed in passing the new regulation will be hard given existing framework conditions and current opposition.

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Co-CEO Alexander Sixt criticized the planned phaseout of combustion engine vehicles from 2027

“The legislative process, which the EU is now apparently pushing forward very quickly, is surprising in its design and timeline,” says Alexander Sixt. “The entire economy has so far been geared towards phasing out combustion engines by 2035. Of course, we clearly support the transformation – but realistically.”

“We continue to explicitly support electromobility, but on a realistic basis,” said Alexander Sixt.

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EU Commission may introduce national-level quotas for corporate fleet instead of an EU-wide mandate, FT reported

  • EU Commission may introduce national-level quotas for corporate fleet instead of an EU-wide mandate, giving some flexibility to member states, Financial Times reported citing some EU Commission officials.
  • The officials noted the quota could be framed as voluntary or recommended to keep member states aligned.

Assessment
If quotas end up being voluntary or set at national level, that would be slightly positive for companies like Sixt compared with a strict, binding EU-wide mandate. In my opinion, the EU Commission is trying to shift the green goals blame to member states i.e. if a country like Germany will fail to achieve the quotas, it will be the one to blame and not the EU Commission. Countries like Germany, Italy, Poland and Czechia have been against the targets so I don’t think they will force companies like Sixt to adopt the quotas.