Finance
Explainer-European carmakers hope for reprieve on 2035 combustion engine ban
Published by Global Banking & Finance Review®
Posted on December 9, 2025
4 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on December 9, 2025
4 min readLast updated: January 20, 2026
European carmakers seek changes to the 2035 combustion engine ban due to lower EV demand and competition. The EU may consider CO2-neutral fuels.
(Reuters) -Europe's embattled carmakers are hoping for a reprieve when Brussels unveils an auto sector package next month, which could water down an effective ban on new combustion engines initially slated for 2035 as a shift towards electric engines stutters.
The continent's automakers from Volkswagen to Renault had high hopes for the electric vehicle shift when they set ambitious targets at the beginning of the decade, efforts that have since collided with the reality of lower-than-expected demand and fierce competition from China.
WHAT IS EXPECTED ON DECEMBER 10?
Brussels is set to unveil measures designed to support the regional auto industry, one of the EU's most important sectors, in the face of high energy costs, tariffs on exports to the U.S., and Asian rivals eating into the bloc's market.
German automakers and the European Automobile Manufacturers' Association have called for a weakening of rules designed to boost battery or fuel-cell electric drive cars, while Fiat-to-Maserati owner Stellantis warned the industry risks an "irreversible decline" without help.
The regulation that all new vehicles from 2035 should have zero emissions was adopted in March 2023 when the outlook for battery electric vehicles was brighter.
The industry is now pushing for concessions. It hopes the European Commission will accept that CO2-neutral fuels, such as biofuels, could continue to power internal combustion engines, as well as plug-in hybrids or range extenders.
Automakers including Europe's biggest Volkswagen have argued that immovable targets no longer make sense, and that the market, rather than legislators, should decide when combustion engines are fully phased out. They favour instead incentives to boost demand for electric vehicles.
HOW IT STARTED VS HOW IT'S GOING
Automaker Initial 2030 Current Ambition Battery
Ambition Electric
Vehicle
share of
total,
2025 (9
months)
Volkswagen - Six battery - Plans three 10.9%
Group factories in battery cell
Europe alone factories in
by 2030, 240 Europe and North
gigawatt hours America, with
of capacity maximum capacity
- At least 70% of 200 GWh
of deliveries - No firm
in Europe forecast or EV
expected to be sales target
fully electric
by 2030
Porsche - More than - No specific EV 23.1%
80% of sales target
deliveries to
be fully
electric by
2030
BMW - Targets 50% - Remains 18%
of global committed to 50%
sales to be target,
fully electric dependent on
by 2030 market
- Interim conditions
goal: 25% BEV - 2025 BEV share
share by 2025 at the 2024
level (17.4%)
Mercedes-B - 100% EV - Expects at 8.8%
enz Group sales by 2030 least 50%
where market electrified
conditions (including
allow hybrids) by 2030
- Interim: 50% - Will keep
electrified combustion
(mostly EV) by engines well
2025 into the 2030s
Renault - 100% - Targets 100% 12.7%
Group electric as BEV share in
early as 2030 2035
Stellantis - Global BEV - Stellantis is 11.1% in
sales of five expected to Europe
million units review goals in
in 2030, Q2 2026 as part
reaching 100% of new business
of passenger plan
car sales in - Group no
Europe and 50% longer pursues
passenger cars goal of
and light-duty producing only
trucks in the electric
United States vehicles in
Europe by 2030,
former head of
Europe said in
September
Volvo Cars - To sell - Aims for 90- 20%
purely 100% of its
battery-powere global sales
d vehicles volume by 2030
from 2030 to consist of
onwards electrified
cars, meaning
mix of both
fully electric
and plug-in
hybrid models
WHERE DID IT ALL GO WRONG?
Demand is rising for EVs in Europe, but not at the pace carmakers had once planned for, with ACEA's data showing a market share of 16% for battery electric vehicles in the first 10 months of the year, up from 13% a year previously.
Charging anxiety remains an issue for consumers, with central and eastern Europe behind on infrastructure, while high electricity costs are a concern in Germany.
(Reporting by Christoph Steitz and Ilona Wissenbach in Frankfurt, Christina Amann and Rachel More in Berlin, Gilles Guillaume in Paris, Giulio Piovaccari in Milan and Philip Blenkinsop in Brussels; Editing by Jan Harvey)
A combustion engine is an engine that generates power by burning fuel, typically gasoline or diesel, to create a controlled explosion that drives the engine's pistons.
Electric vehicles (EVs) are cars that are powered entirely or partially by electricity, using batteries instead of traditional fuel sources like gasoline or diesel.
The European Commission is the executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the day-to-day operations of the EU.
CO2-neutral fuels are energy sources that do not increase the total amount of carbon dioxide in the atmosphere when burned, often including biofuels and synthetic fuels.
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