The European Commission has recently announced a significant shift in its green policies, proposing to relax the ban on new combustion-engine cars by 2035. This decision comes after pressure from the region’s auto sector, particularly from carmakers in Germany and Italy who have been advocating for the easing of the rules.
The new plan, which still requires approval from EU governments and the European Parliament, would allow the continued sale of some non-electric vehicles, such as plug-in hybrids and range extenders that burn fuel. This move is seen as a response to the increasing competition from electric vehicle manufacturers like Tesla and Chinese companies in the European market.
Germany’s Volkswagen, Europe’s largest carmaker, welcomed the proposal, stating that opening up the market to vehicles with combustion engines while offsetting emissions is a pragmatic approach that aligns with current market conditions. The draft proposal also includes more flexible targets for 2030 and support for small electric vehicles.
However, not everyone is pleased with the Commission’s decision. Dominic Phinn, head of transport at the Climate Group, criticized the measures as a “tragic win” for the traditional auto industry over electric cars. He pointed out that leading companies across Europe have been investing heavily in electric fleets and need the stability that a phased-out approach to petrol and diesel engines would provide.
Under the new proposal, EU targets would shift to a 90% cut in CO2 emissions from 2021 levels, rather than the current requirement for all new cars and vans to have zero emissions by 2035. Automakers would be required to offset the remaining emissions by using lower-carbon steel made in the EU and synthetic e-fuels or non-food biofuels.
The decision by the European Commission to relax the ban on combustion-engine cars follows a similar move by U.S. carmaker Ford Motor, which recently announced a $19.5 billion writedown and the scrapping of several EV models in response to policy changes and weakening EV demand in the United States.
Despite the global shift towards electric vehicles, brokerage Jefferies noted that the EU’s approach is more nuanced and marks a turning point in Europe’s transition story. European carmakers, including Volkswagen and Fiat owner Stellantis, have raised concerns about soft EV demand and have called for looser targets and lower fines for missing them. The automotive lobby ACEA described the current situation as “high noon” for the sector.
German manufacturers, in particular, are facing challenges as they lose ground to local rivals in China and face increased competition from Chinese EV imports. The EU’s tariffs on Chinese-built EVs have provided limited relief, and industry experts believe that the easing of emissions targets could undermine investment in critical charging infrastructure and leave Europe falling further behind China in the shift to cleaner driving.
While the Commission’s proposal includes plans to boost EV uptake in corporate fleets and create a new regulatory category for small EVs, some industry groups feel that it does not go far enough to support the auto industry and places new requirements on carmakers in terms of green steel and renewable fuels.
In conclusion, the EU’s decision to relax the ban on combustion-engine cars reflects a growing recognition of the challenges facing the auto industry in transitioning to electric vehicles. While the move has been met with both support and criticism, it underscores the complex and evolving nature of the shift towards cleaner driving in Europe.
