EU’s Pragmatic Turn: A New Chapter in Automotive Policy

The European Union (EU) is considering easing the ban on the sale of new internal combustion engine (ICE) vehicles after 2035. Initially, strict deadlines aimed at accelerating the transition to electric vehicles (EVs) faced resistance from car manufacturers and politicians, concerned about the economic implications and the pace of EV adoption.

Mercedes-Benz CEO Ola Källenius sees the relaxation of rules as a return to pragmatism rather than a capitulation to opponents of ‘green’ policies. In his view, stringent deadlines are no longer ‘feasible,’ given the challenges with infrastructure and the slow uptake of electric vehicles by consumers. Källenius emphasized the need for more flexibility to protect jobs, ensure competitiveness, and give consumers more choice.

European leaders have already urged the European Commission, the EU’s executive body, to revisit the ICE ban and propose measures to slow down the shift to a zero-carbon future. The Commission is considering applying the principle of ‘technological neutrality,’ which could allow the sale of hybrids and ICE vehicles running on synthetic or biofuels that emit less than traditional fuels. The automotive industry has long advocated for such a change, desiring hybrids and synthetic fuel vehicles to be deemed zero-emission cars even after 2035.

Källenius noted that even after 2035, more than 200 million ICE vehicles will remain on the roads. Without alternative fuels and new ICE cars to replace them, they will become obsolete, leading to a ‘Havana effect,’ where the vehicle fleet ages, harming the climate and economy. Germany is actively lobbying for a relaxation of the ban and a more extended transition period. German Chancellor Friedrich Merz has stated that a ‘hard ban’ in 2035 will not happen.

However, opponents of easing the ban argue that it will undermine efforts to combat climate change and give a competitive edge to Chinese car manufacturers. French President Emmanuel Macron, on the other hand, has said that abandoning the 2035 goal would jeopardize investments in charging station networks and battery factories. But he supports softening the wording of the law to allow alternative fuels and hybrids. The changes being discussed may include incentives for purchasing electric vehicles and requirements for manufacturers to use more European components to receive subsidies, supporting jobs and countering Chinese imports.

However, experts believe hybrids are not the best solution. A study by Transport & Environment found that plug-in hybrids (PHEVs) emit nearly five times more CO2 in real conditions than official tests show. The EU’s decision regarding the timeline to phase out internal combustion engines will significantly impact the automotive industry, economy, and environment.