The European Commission has backed away from its plan to ban all new petrol and diesel cars by 2035, responding to intense pressure from automakers who warned they’d face billions in fines if electric vehicle demand doesn’t pick up.
The EU’s original rules required all new cars sold from 2035 to be “zero emission” – meaning fully electric. The Commission’s revised proposal now calls for a 90% reduction in CO2 output compared to 2021 levels instead of 100%.
That remaining 10% gives automakers wiggle room to keep selling some conventional petrol, diesel and hybrid cars. They’d have to offset those emissions through other measures like biofuels and e-fuels – synthetic fuels made from captured carbon dioxide. The proposal also includes stricter requirements for materials like low-carbon steel produced within the EU.
The change comes after months of lobbying, especially from German manufacturers. The European Automobile Manufacturers’ Association (ACEA) has repeatedly warned that EV demand remains too weak and companies would face “multi-billion euro” penalties without more flexibility.
Sigrid de Vries, ACEA’s director general, called the flexibility “urgent” ahead of the announcement.
“2030 is around the corner, and market demand is too low to avoid the risk of multi-billion-euro penalties for manufacturers. It will take time to build charging points and introduce fiscal and purchase incentives to get the market on track. Policymakers must provide breathing space to sustain jobs, innovation and investment.”
Critics worry that watering down the 2035 target could hurt Europe’s shift to electric vehicles and weaken its position against China and the US, who are pouring money into EV technology.
Transport & Environment (T&E) warned the UK not to follow Brussels by weakening its own Zero Emission Vehicles mandate, which phases out new petrol and diesel sales by 2030.
“The UK must stand firm. Our ZEV mandate is already driving jobs, investment and innovation. As major exporters, we cannot compete unless we innovate – and global markets are going electric fast,”
said Anna Krajinska, T&E UK’s director.
UK carmakers have argued they need stronger incentives to get consumers to switch to electric vehicles before the 2030 deadline, particularly since upfront costs remain high.
Carmakers Split on Softer Approach
Automakers aren’t united on the EU’s new stance. Volvo said it had already built a fully electric lineup in under a decade and warned that backing away from commitments could damage Europe’s industrial future.
“Weakening long-term commitments for short-term gain risks undermining Europe’s competitiveness for years to come. A consistent and ambitious policy framework, combined with investment in infrastructure, is what delivers real benefits for customers, the climate and Europe’s industrial strength.”
Germany’s Volkswagen welcomed the draft proposal, calling it “economically sound overall.”
The company praised special support for small electric vehicles and said opening the market to combustion engines while offsetting emissions was “pragmatic and aligned with market realities.”
UK experts warned that changing policies could scare off investors. Colin Walker from the Energy and Climate Intelligence Unit said consistent government policy had already delivered results.
“It was government policy that saw Sunderland chosen to build Nissan’s original electric Leaf. Today, the latest Nissan EV is rolling off production lines in the North East, securing jobs for years to come.”
Fiona Howarth, chief executive of Octopus Electric Vehicles, said any UK move to soften targets would send a “damaging signal” to investors and manufacturers who’ve already committed billions to the transition.
“Many have invested heavily on the assumption the UK would stay the course.”
The Commission’s revised proposal will likely trigger more debate among member states and lawmakers as Europe tries to balance climate goals against economic and political pressures in one of its most important industries.
