EU Considers Easing 2035 Fuel Car Ban Due to Competition from Tesla and BYD

Under significant pressure from Germany, Italy, and the European automotive industry, the European Commission is prepared to abandon the so-called "2035 internal combustion engine ban," which would cancel the prohibition on the sale of internal combustion engine cars within the EU starting from 2035.

The EU is set to make significant concessions on green policies.

The European Commission is reportedly set to lower the standards for the planned ban on the sale of new gasoline and diesel cars starting in 2035, instead allowing some plug-in hybrid vehicles and electric cars equipped with range extenders to be sold. The new proposal requires that by 2035, car emissions in Europe be reduced by 90% compared to the current target (original target was a 100% reduction).

The shift is due to European car manufacturers struggling to compete with Chinese electric vehicles like Tesla and BYD.

This measure needs to be approved by the governments of EU member states and the European Parliament, and it will be the most significant concession the EU has made on green policies in the past five years.

Recently, automakers like Volkswagen and Stellantis have been pushing the EU to relax green targets and penalties. The European Automobile Manufacturers Association stated that this is a "critical moment" for the automotive industry and added that the European Commission should also ease the interim targets for 2030.

The electric vehicle industry strongly opposes.

However, the electric vehicle industry has stated that the EU's move will weaken investments in the electric vehicle sector and cause the EU to fall further behind China in the transition to electric vehicles.

Polestar CEO Michael Lohscheller stated, "A shift from a clear 100% zero-emission target to 90% may seem minor, but if we step back now, it will not only harm the climate but also undermine Europe's competitiveness."

William Todts, executive director of the clean transport advocacy group Transport & Environment (T&E), stated that the EU is dragging its feet while China is speeding ahead: "Relying on internal combustion engines will not make European car manufacturers great again."

In the future, the EU will continue to support "European cars."

In the future, the European Commission will further elaborate on plans to promote the share of electric vehicles in corporate fleets, especially company cars, which account for approximately 60% of new car sales in Europe.

Currently, the specific details are not clear, but the EU might require companies to consider increasing the proportion of "localization" for their vehicles, as the local automotive industry in Europe hopes to receive more incentives rather than mandatory targets.

The EU executive may also propose a new regulatory category for small electric vehicles, which would be subject to lower taxes and could earn additional credits to help achieve carbon emission targets. Moreover, vehicles produced through more sustainable methods, such as using low-carbon steel, may also qualify for credits.