Overview
EU officials are considering adjustments to rules that would effectively ban sales of new combustion-engine cars in 2035, including options that could delay the deadline by up to five years or remove it. The rethink reflects rising compliance costs, uneven electric-vehicle (EV) demand, and political and employment pressures tied to the auto industry’s transition.
Why the rethink now
- Major automakers warn that current rules could trigger fines exceeding 1 billion euros, amid inflation, high energy prices, and shifting EV adoption rates.
- Transport emissions in the EU rose 0.7% in 2024, underscoring slow decarbonization progress and uneven EV uptake.
- Governments, led by Germany, are pressing for flexibility to manage job risks and voter concerns over higher costs.
What’s being considered
- A potential up to five-year delay to the 2035 combustion-engine phaseout or removal of the deadline.
- Regulatory streamlining to cut compliance burdens and spur production of small, affordable EVs made in Europe.
- A proposed 10-year exemption from certain safety and emissions requirements for qualifying small EV models.
- Demand-side incentives such as subsidies and reserved parking, with tax decisions left to member states.
Industry perspective
- Automakers argue eased timelines plus targeted incentives could provide breathing room to recalibrate investments.
- Battery projects have slowed or been scaled back; suppliers of combustion-engine parts face sharp contractions before EV volumes fully offset losses.
- Trade groups warn that without better alignment of policy targets and market uptake, many small and midsize suppliers risk severe disruption.
Risks and criticisms
- Critics fear delays could slow innovation, widen Europe’s tech gap with U.S. and Chinese EV leaders, and lock in interim technologies.
- Concerns that a 10-year exemption could dilute standards and undermine consumer trust.
Political backdrop
- EU countries set a 2040 climate target but postponed carbon pricing at the pump to 2028 to avoid voter backlash.
- The 2035 phaseout was intended to send a clear investment signal; changing course tests credibility and momentum toward cleaner transport.
Timeline and process
Draft measures to streamline regulations and support small, locally made EVs could be announced as early as Tuesday, with a broader package expected next week. Any change to the 2035 framework would still need agreement among the European Commission, European Parliament, and member states.
Implications
- Automakers and suppliers: Potential relief from near-term fines and costs, but underlying challenges—energy prices, permitting, local battery capacity—remain.
- Consumers: Could see more affordable small EVs sooner if regulatory and incentive packages take hold.
- Competitiveness and climate: The balance struck will shape jobs, industrial investment, and progress toward emissions targets through the next decade.
