BRUSSELS — The European Union on Tuesday diluted its landmark 2035 ban on new petrol and diesel cars, a move previously hailed as a milestone in the fight against climate change, as the bloc pivots to bolster its crisis-hit automotive sector.
Under the new proposals, which environmental groups have condemned as an act of “self-sabotage,” carmakers will be required to cut exhaust emissions from new vehicles by 90 percent from 2021 levels—a significant rollback from the originally envisaged 100 percent reduction.
In practice, this allows automakers to continue selling a limited number of carbon-emitting vehicles—ranging from plug-in hybrids to efficient diesel cars—beyond the 2035 deadline, provided the resulting emissions are “compensated” through various carbon-credit mechanisms.
Stéphane Séjourné, the EU’s Executive Vice-President for Prosperity and Industrial Strategy, insisted the bloc’s green ambitions remained intact while presenting the plan as a “lifeline” for Europe’s industrial base. “The European Commission has chosen an approach that is both pragmatic and consistent with its climate objectives,” Séjourné told AFP.
The full combustion-engine ban was adopted in 2023 to drive investment in electrification. However, automakers have lobbied intensely for relaxation, citing fierce competition from China and a slower-than-expected consumer shift to electric vehicles (EVs).
Europe’s largest carmaker, Volkswagen, welcomed the move as “pragmatic” and “economically sound.” German Chancellor Friedrich Merz also endorsed the decision, stating that allowing for “more openness to technology and greater flexibility” was the right step for the economy. However, the response from the industry was not uniformly positive. Germany’s leading auto industry association, the VDA, called the proposals “disastrous,” arguing that the complex conditions attached to the exemptions create new bureaucratic hurdles rather than true technological neutrality.
“Self Sabotage”?
The weakening of the ban is the most striking result yet of a pro-business push that has seen the EU pare back several environmental laws this year, citing risks to economic growth. “This backward industrial policy is bad news for jobs, air quality, and the climate, and would slow down the supply of affordable electric cars,” said Martin Kaiser, executive director of Greenpeace Germany. Post-2035, carmakers will have to compensate for planet-warming emissions from combustion vehicles by purchasing credits generated through the use of European-made low-carbon steel, as well as e-fuels and biofuels introduced to the market by energy firms.
Beset by job cuts and factory closures over the past year, Europe’s auto industry—which employs nearly 14 million people and accounts for about seven percent of the continent’s GDP—had long maintained that the original 2035 goal was no longer realistic.
Producers argue that high upfront costs and a lack of adequate charging infrastructure have kept consumers from embracing EVs. According to industry figures, battery-powered vehicles accounted for just over 16 percent of new sales in the first nine months of 2025.
Critics, including Spain, France, and Nordic nations, warned that diluting the ban risks slowing the electric transition and deterring future investment. While the French presidency called the plan “balanced” overall, the country’s environment minister criticized the “flexibility” granted to combustion engines, signaling that Paris may attempt to block the proposal from becoming law.
“Every euro diverted into plug-in hybrids is a euro not spent on EVs while China races further ahead,” said William Todts, director of the clean-transport advocacy group Transport & Environment (T&E).
“Weakening the CO2 standards for cars is an act of self-sabotage,” added Linda Kalcher of the think tank Strategic Perspectives.
Greening the Fleets
The Commission also unveiled additional measures to support the sector, which still require approval from the EU Parliament and member states. In the run-up to 2035, carmakers will benefit from “super credits” for producing small, affordable electric cars within the EU—an accounting mechanism designed to make meeting emission targets easier. Brussels also proposed reducing the interim 2030 emission reduction target for vans from 50 to 40 percent and granting truck manufacturers more time to meet their own 2030 targets.
To further stimulate EV demand, medium and large firms will be required to decarbonize their corporate fleets, which currently account for about 60 percent of new car sales in Europe. Additionally, the EU will provide €1.5 billion in interest-free loans to support European battery producers. Road transport accounts for approximately 20 percent of total planet-warming emissions in Europe, with 61 percent of those emissions coming from passenger cars, according to EU data.
