The European Commission is expected to announce a significant shift in its automotive climate policy, potentially reversing the European Union’s effective ban on the sale of new combustion-engine cars from 2035. The move follows sustained pressure from Germany, Italy and major European automakers facing growing competition from Chinese and U.S. rivals, according to Reuters.
EU officials and industry sources said discussions are still underway, but the proposal could either delay the ban by five years or soften it indefinitely. Any change to the 2023 law—which mandates that all new cars and vans sold in the 27-member bloc from 2035 must be CO₂ emission-free—would represent the European Union’s most notable retreat from its green policy framework in the past five years.
“The European Commission will be putting forward a clear proposal to abolish the ban on combustion engines,” Manfred Weber, leader of the European Parliament’s largest political group, the European People’s Party, said on Friday. “It was a serious industrial policy mistake.”
Automakers split as policy rethink gathers pace
The prospect of easing the ban has sharply divided the automotive sector. Legacy carmakers such as Volkswagen and Fiat-owner Stellantis have lobbied strongly for more flexible targets, arguing that the current framework leaves them exposed to lower-cost Chinese competitors. Electric vehicle manufacturers, however, see the move as a strategic misstep that risks ceding further ground to China in the global electrification race.
“The technology is ready, charging infrastructure is ready, and consumers are ready,” said Polestar CEO Michael Lohscheller. “So what are we waiting for?”
The original legislation was designed to accelerate Europe’s shift away from internal combustion engines towards battery-electric and fuel-cell vehicles, with penalties for automakers that failed to meet emissions targets. Compliance effectively requires a rapid increase in EV sales—an area where European manufacturers trail Tesla and Chinese players such as BYD and Geely.
Demand concerns and calls for flexibility
European carmakers argue that while EV production capacity is expanding, consumer demand has not kept pace. High prices and gaps in charging infrastructure continue to weigh on adoption, they say, while EU tariffs on Chinese-built EVs have provided only limited relief.
“It’s not a sustainable reality today in Europe,” Ford CEO Jim Farley said last week in France, where he announced a partnership with Renault aimed at reducing EV costs. Industry needs were “not well balanced” with EU CO₂ targets, he added.
In March, the EU offered automakers some short-term relief by allowing compliance with 2025 emissions targets to be spread over three years. Still, manufacturers are pushing for broader changes, including the ability to continue selling combustion-engine vehicles alongside plug-in hybrids, range-extender EVs and cars powered by so-called CO₂-neutral fuels such as biofuels derived from agricultural waste and used cooking oil.
European Commission President Ursula von der Leyen signalled openness to this approach in October, saying she was willing to consider the use of e-fuels and “advanced biofuels.”
“We recommend a multi-technology approach,” said Todd Anderson, chief technology officer at combustion-engine fuel systems supplier Phinia, adding that the internal combustion engine will “be around for the rest of the century.”
EV sector and environmental groups push back
The EV industry warns that rolling back the 2035 target could undermine investment certainty and slow Europe’s electrification efforts. “It’s definitely going to have an effect,” said Rick Wilmer, CEO of charging hardware and software provider ChargePoint.
Automakers are also seeking changes to interim targets, including phasing the 2030 goal of a 55% reduction in car emissions over several years and scrapping the 50% reduction target for vans. Germany has additionally argued that low-carbon manufacturing practices, such as the use of green steel, should count towards emissions reductions.
Alongside potential regulatory easing, the Commission is expected to outline measures to increase EV adoption in corporate fleets—particularly company cars, which account for roughly 60% of new vehicle sales in Europe. The auto industry has called for incentives rather than mandatory targets, citing Belgium as an example where subsidies have successfully driven adoption. Officials are also likely to propose a new regulatory category for small EVs, offering tax advantages and additional credits toward CO₂ compliance.
Environmental groups, however, have urged the EU not to dilute its ambitions. They argue that biofuels are scarce, expensive, and not genuinely carbon-neutral at scale.
“Europe needs to stay the course on electric,” said William Todts, executive director of clean transport advocacy group T&E. “It’s clear electric is the future.”
The Commission’s final proposal, expected this week, is likely to shape not only Europe’s automotive strategy but also its credibility as a global leader in climate policy at a time of intensifying geopolitical and industrial competition.
