EU Signals Major Shift on 2035 Combustion Engine Ban Amid Auto Industry Pressure

The European Commission is preparing to soften its landmark 2035 ban on new combustion-engine cars, marking what could become the most significant rollback of the EU’s green transport policies in recent years. Under the proposed change, up to 10% of new vehicles sold after 2035 could be non-electric, following strong lobbying from Germany, Italy, and Europe’s powerful automotive sector.

According to sources, the Commission is considering allowing the continued sale of plug-in hybrid vehicles and range extenders that run on CO2-neutral biofuels or synthetic fuels. European carmakers argue this flexibility is essential as they struggle to keep pace with Tesla and rapidly advancing Chinese electric vehicle manufacturers. Companies such as Volkswagen and Stellantis, the owner of Fiat, have also urged Brussels to relax emissions targets and reduce fines for missing interim goals.

The proposal, which still requires approval from EU member states and the European Parliament, has sparked intense debate. The European Automobile Manufacturers’ Association (ACEA) described the situation as “high noon” for the industry and called on policymakers to ease not only the 2035 target but also intermediate 2030 emissions requirements.

However, the electric vehicle industry and climate advocates warn that weakening the EU’s zero-emissions mandate could undermine investment and further erode Europe’s competitiveness in the global EV race. Polestar CEO Michael Lohscheller cautioned that shifting from a 100% zero-emissions target to 90% could damage both climate goals and Europe’s industrial future. Clean transport group Transport & Environment echoed this view, arguing that clinging to combustion engines risks leaving Europe behind as China accelerates its EV expansion.

In parallel, the Commission is expected to unveil measures to increase electric vehicle adoption in corporate fleets, particularly company cars, which make up around 60% of new car sales in Europe. While details remain unclear, options may include local content requirements, new incentives, or regulatory credits. The Commission is also likely to propose a new category for small electric vehicles with lower taxes and additional CO2 credits, as well as rewards for more sustainable manufacturing practices such as the use of low-carbon steel.

If adopted, these changes would reshape the EU’s automotive and climate strategy at a critical moment for the global transition to electric mobility.