Article by Kim Mackrael – Stephen Wilmot, courtesy of The Australian
11.12.2025
The EU has proposed watering down rules that would have effectively banned the sale of new combustion-engine cars in the bloc from 2035, after heavy pressure from the car industry.
The move announced on Tuesday is the latest sign of a major economy pulling back on its electric-vehicle ambitions as the transition away from petrol-powered cars proves more difficult than many policymakers had anticipated. It comes as the EU seeks to improve its competitiveness and trim some of the rules that businesses say are holding them back.
Instead of requiring carmakers to eliminate carbon-dioxide tailpipe emissions for new cars starting in 2035, the EU’s new proposal calls for a 90 per cent reduction from baseline levels. The remaining 10 per cent would need to be made up through the use of low-carbon steel or from e-fuels and biofuels, according to the proposal.
The European Commission, the EU’s executive arm, said its plan maintained a strong market signal in favour of zero-emission vehicles while giving carmakers more flexibility. The change would mean plug-in hybrid electric vehicles, range extenders and internal combustion engines could still be sold in the EU after 2035, in addition to fully electric and hydrogen vehicles, it said.
The proposal will need approval from the EU’s member states and the European parliament before it can become law.
Industry groups said the proposal was a positive first step but raised questions about the details. The measures “are too complex” and won’t be enough to protect production and jobs, the European Association of Automotive Suppliers said.
Carmakers had argued that the original 2035 target for zero emissions was unachievable because of a slower-than-expected uptake of EVs among consumers.
“Clearly the current EU and UK requirement for CO2 is out of sync with the market reality,” Ford CEO Jim Farley said last week, when the US carmaker said it would outsource production of two small EVs to Renault.
In a sign of how the bumpy transition is hurting carmakers more broadly, Ford said on Monday that it expected to take about $US19.5bn ($29.4bn) in charges, mainly tied to its EV business.
In Europe, carmakers have had to price their EVs aggressively to hit regulatory targets this year, resulting in a surge in sales but weaker profits.
Volkswagen, for example, reported a loss for the third quarter. The region’s largest carmaker said it sold more lower-margin EVs while its Porsche brand was hit by writedowns related to EV investments that hadn’t yielded the expected returns.
Europe’s vast complex of automotive suppliers is being particularly hard hit by the transition. EVs contain fewer of the mechanical parts the companies specialise in and more electronics, where Asian supply chains dominate.
Bosch and ZF Friedrichshafen – two of Europe’s largest automotive suppliers – announced thousands of job cuts in recent months. A study by consulting company Roland Berger for the European Association of Automotive Suppliers found that as many as 350,000 jobs could be lost by 2030 if the current trend continues.
