EU Backtracks on 2035 Combustion Engine Ban

EU Backtracks on 2035 Combustion Engine Ban
Brussels — Yielding to intense pressure from the automotive sector, the European Commission proposed on Tuesday to soften the rules that would have effectively banned the sale of new combustion engine cars in the European Union by 2035.

This pivot highlights the struggle policymakers face as the transition to electric vehicles (EVs) proves more difficult—and costly—than anticipated.

Instead of a total ban on CO2 emissions, the new plan introduces flexibility to preserve European competitiveness:

• The Target: A 90% reduction in emissions for new cars by 2035, rather than the original 100%.
• The Gap: The remaining 10% can be offset using low-carbon steel, synthetic fuels, or biofuels.
• The Impact: This effectively allows the continued sale of plug-in hybrids and vehicles with internal combustion engines (ICE) that use clean fuels, alongside fully electric and hydrogen models.

Automakers have long argued that the original "zero-emission" target was unrealistic due to slowing consumer demand for EVs.

"Clearly, the current EU and UK CO2 requirement is out of step with the market reality," said Ford CEO Jim Farley, noting that something had to change.

The financial strain on the sector is becoming undeniable:

• Ford expects to record charges of approximately $19.5 billion, largely linked to its EV business.
• Volkswagen reported a third-quarter loss. To meet regulatory quotas, the automaker had to aggressively discount its EVs, driving up sales volume but crushing profit margins.

The shift is also battering the European supply chain. Because EVs require fewer mechanical parts—a European specialty—and more electronics (dominated by Asian suppliers), local manufacturers are struggling.

Major suppliers like Bosch and ZF Friedrichshafen have announced thousands of job cuts. A study by Roland Berger suggests that up to 350,000 jobs could be lost by 2030 if current trends persist.

The proposal must still be approved by EU member states and the European Parliament before becoming law.