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The European Commission is expected to signal a significant shift in its climate and transport policy, with plans to revise the EU’s effective ban on the sale of new petrol and diesel cars from 2035. The move follows sustained lobbying from major member states, including Germany and Italy, alongside mounting pressure from European carmakers facing fierce competition from US and Chinese manufacturers.

While final details are still being negotiated, proposals under discussion include delaying the ban by up to five years or softening its impact through exemptions and alternative compliance routes. Any change to the 2023 legislation, which requires all new cars and vans sold in the EU from 2035 to be CO₂ emission-free, would represent one of the most notable retreats from the bloc’s green policy agenda in recent years.

Senior political figures have openly criticised the original policy. Manfred Weber, leader of the European Parliament’s largest political group, described the combustion engine ban as a serious industrial policy error, arguing that it placed European manufacturers at a competitive disadvantage during a period of rapid global change in the automotive sector.

The industry itself is divided. Established manufacturers such as Volkswagen and Stellantis have pushed for greater flexibility, citing slower-than-expected consumer demand for electric vehicles and concerns about affordability and charging infrastructure. In contrast, companies focused on electric mobility warn that weakening the targets risks undermining investment and conceding technological leadership to China, where EV production has scaled rapidly.

EU policymakers originally introduced the ban to accelerate the shift towards electric and hydrogen-powered vehicles, backed by penalties for manufacturers failing to meet emissions targets. Progress has been uneven. European carmakers continue to trail competitors such as Tesla, BYD and Geely in EV sales and cost efficiency, and demand has not matched earlier forecasts. Although tariffs on Chinese-built EVs have offered some relief, they have not resolved underlying structural challenges.

Automakers are now calling for a broader, multi-technology approach. This would allow continued sales of combustion engines alongside plug-in hybrids, range-extender vehicles and cars running on so-called CO₂-neutral fuels, including e-fuels and advanced biofuels. Commission President Ursula von der Leyen has previously indicated openness to such options, reflecting a growing recognition that the transition may be more complex than initially assumed.

From a policy perspective, the debate raises an uncomfortable question. Is Europe adjusting its strategy in response to practical constraints, or diluting long-term climate ambitions to protect short-term industrial interests? Critics argue that the technology, infrastructure and consumer readiness for electric vehicles are already in place, and that regulatory uncertainty risks slowing progress further.

Alongside changes to the 2035 target, the Commission is expected to outline measures to accelerate EV adoption in corporate fleets, particularly company cars, which account for a majority of new vehicle sales in Europe. Industry groups favour incentives over mandatory quotas, pointing to countries such as Belgium where tax measures have driven uptake. There is also discussion of creating a new regulatory category for smaller electric vehicles, offering lower taxes and additional emissions credits.

Environmental groups remain firmly opposed to any rollback. They argue that biofuels are limited in supply, expensive, and unlikely to deliver genuine emissions reductions at scale. From their perspective, weakening the 2035 target sends a damaging signal at a time when global competitors are doubling down on electrification.

Whether this rethink proves a pragmatic recalibration or a strategic misstep will depend on how the final policy balances competitiveness, consumer realities and climate commitments. What is clear is that the direction of Europe’s transport policy is no longer as settled as it appeared only two years ago.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.