This EU pivot is heavily influenced by the need to protect the European automotive industry from being overwhelmed by Chinese EV manufacturers
In December last year (2025), the European Union’s zero-emissions target for 2035 was reduced to a -90% reduction in CO2 emissions. This opens the door to even the highest emitting combustion engine vehicles continuing to be sold.
Now, in early 2026, the European Union is officially modifying its 2035 Internal Combustion Engine (ICE) ban to allow for more flexibility, shifting from a 100% zero-emission target to a 90% reduction in tailpipe emissions. This move, part of a new “Automotive Package” introduced in late 2025, is a direct response to intense pressure from European automakers, particularly in Germany and Italy who are struggling with sluggish Electric Vehicle (EV) demand and fierce, cost-competitive competition from China.
BYD, SAIC, Changan and Chery are working between 14 to 16 months to roll out new EV models to keep consumers coming back.
It was agreed that car manufacturers (the European brands) could continue selling cars with petrol and also diesel engines (European Commission proposal), despite the EU’s aim to have the last polluting cars off its roads by 2050. This will divert investment away from electrification at a time when European manufacturers urgently need to catch up with Chinese EV manufacturers who have a long head start.
Here below we share the comments (from Reuters) from various European car manufacturers.
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.”
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.”
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.”
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.”
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.”
