Headlines
Auto sector divided as EU unveils plans to undo 2035 combustion engine ban
Published by Global Banking and Finance Review
Posted on December 16, 2025
5 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 16, 2025
5 min readLast updated: January 20, 2026
The EU plans to reverse the 2035 combustion engine ban, aiming for a 90% emissions reduction and boosting electric vehicle adoption.
Dec 16 (Reuters) - The European Commission on Tuesday made public proposals that would reverse an effective ban on sales of new internal combustion engine cars from 2035, bowing to pressure from Germany, Italy and major automakers.
The proposed package cuts the planned 2035 goal to a 90% reduction in tailpipe emissions compared with 2021, and also introduces measures to accelerate the shift to electric vehicles while giving manufacturers more flexibility.
Here are the major reactions to the decision:
GERMAN LUXURY CARMAKER BMW
"It is an important first step that the EU Commission no longer pursues technology bans as a guiding principle, but recognises the future viability of the combustion engine."
STEFFEN KAWOHL, POLICY ADVISOR AT THE GERMAN MITTELSTAND ASSOCIATION (DMB)
"Abandoning the ban on combustion engines may slow down the transformation of the automotive industry, but it will not stop it entirely. This slowdown would only make sense if the German economy uses the extra time to advance the transition to fossil-free mobility."
FIAT-TO-JEEP MAKER STELLANTIS
"The proposals do not meaningfully address the issues that the industry is facing right now. Specifically, the package fails to provide a viable trajectory for the light commercial vehicles segment, which is in a critical situation, and the 2030 flexibilities requested by the industry for passenger cars."
DOMINIC PHINN, HEAD OF TRANSPORT AT CLIMATE GROUP
"The watering down of the petrol and diesel-engine phase-out flies in the face of leading companies across Europe, who are investing billions in electric fleets and desperately need the stability it provides."
GERMAN CARMAKER MERCEDES-BENZ
"The EU Commission has taken a step in the right direction towards more flexibility for us as manufacturers and towards the necessary technological neutrality... The EU is thus reacting to the stagnating ramp-up of electric mobility in Europe."
CHRIS HERON, SECRETARY GENERAL OF E-MOBILITY EUROPE
"By reopening the door to plug-in hybrids and unscalable biofuels, we slow ourselves down in a highly competitive global race. The future of transport is electric; the question is whether Europe builds it or imports it."
FRIEDRICH MERZ, GERMAN CHANCELLOR
"It is good that the Commission is now opening up regulation in the automotive sector following the clear signal from the German government. Greater openness to technology and more flexibility are right steps to take in order to better align climate targets, market realities, businesses and jobs."
JAN DORNOFF, RESEARCH LEAD AT THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION (ICCT)
"The Automotive Package signals that the European Commission remains committed to car electrification, as the corporate fleets and small affordable electric car initiatives show. But the proposed changes to the CO2 standards are risky concessions that will delay necessary transformations."
ANTONIO TAJANI, ITALY'S FOREIGN MINISTER
"We have stopped the ban on combustion engines from 2035 ... A choice that protects 70,000 jobs in Italy alone. Yes to protecting the environment, but always safeguarding the dignity of the individual, of those who do business and create jobs."
BEN NELMES, CEO OF NGO NEW AUTOMOTIVE
"What the battery manufacturing sector needs is clarity and consistency from Europe.. In rewriting these rules, the European Commission is undermining trust in its own regulations and gambling with Europe's economic future."
JULIEN THOMAS, TP ICAP MIDCAP ANALYST
"In our view, these measures are generally favourable to European manufacturers, particularly those producing high volumes and light commercial vehicles (where regulatory uncertainty has caused sales to fall this year), such as Renault, Volkswagen and Stellantis."
FRENCH CARMAKER RENAULT
"Renault Group welcomes the Commission's adoption of an automotive package that addresses some of the major challenges facing the European industry.
"We particularly note the emphasis placed on the need to accelerate the adoption of electric vehicles, both through the introduction of a category of small electric vehicles under 4.2 metres and through a European initiative on the greening of fleets."
GERMAN CARMAKER VOLKSWAGEN
"The European Commission's pragmatic draft proposal for new CO2 targets is economically sound overall."
"The fact that small electric vehicles are to receive special support in future is very positive... Opening up the market to vehicles with combustion engines while compensating for emissions is pragmatic and in line with market conditions."
VOLVO CAR
"Weakening long-term commitments for short-term gain risks undermining Europe’s competitiveness for years to come. A consistent and ambitious policy framework, as well as investments in public infrastructure, is what will deliver real benefits for customers, for the climate, and for Europe’s industrial strength."
"Volvo Cars has built a complete EV portfolio in less than ten years and are ready to go full electric with a bridge of long-range hybrids. If we can do it, others can as well."
THOMAS PECKRUHN, PRESIDENT OF GERMANY'S ZDK ASSOCIATION FOR MOTOR VEHICLES TRADE "Every day, our businesses experience where European regulation fails: high charging costs, lack of infrastructure and suitability for everyday use by consumers. Climate-neutral mobility only works if it is affordable, practical and reliable for people. Anything else remains theoretical."
(Written by Mathias de Rozario in Gdansk; Editing by Matt Scuffham and Nick Zieminski)
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.
Internal combustion engines are engines that generate power by burning fuel within the engine itself, typically using gasoline or diesel, to create mechanical energy.
Tailpipe emissions are pollutants released into the atmosphere from the exhaust of a vehicle's engine. These emissions can include carbon dioxide, nitrogen oxides, and particulate matter.
Electric vehicles (EVs) are significant as they produce zero tailpipe emissions, helping to reduce air pollution and dependence on fossil fuels, contributing to a more sustainable transportation system.
Climate change refers to long-term alterations in temperature, precipitation, wind patterns, and other elements of the Earth's climate system, primarily driven by human activities such as burning fossil fuels.
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