European automakers facing challenges in transitioning to emission-free vehicles may receive a reprieve as the European Union considers softening ambitious rules that would have effectively banned new combustion-engine vehicles from 2035. The proposed changes come amid concerns about the competitiveness of the European manufacturing sector and potential job losses. The EU’s transport sector faces a critical moment as it navigates this transition.
While the situation remains fluid, discussions are underway regarding loopholes that could lead to a five-year extension of the deadline or even the complete removal of the ban. The EU is also considering measures to reduce the regulatory burden and provide incentives for small electric cars manufactured within the region. According to sources familiar with the discussions, these changes are designed to alleviate pressure on automakers.
The potential step back from the initial ban is the result of lobbying efforts from major automotive companies such as Stellantis and Mercedes-Benz Group. These companies sought to mitigate the risk of substantial fines, potentially exceeding €1 billion in the coming years. Major auto-producing countries, including Germany – home to Mercedes, Volkswagen and BMW – also advocated for changes to address political tensions and the risk of job losses. Mercedes-Benz Group is a global automotive manufacturer, producing luxury vehicles and commercial vehicles. Stellantis is a multinational automotive manufacturing corporation that produces and sells vehicles under a variety of brands.
German Chancellor Friedrich Merz emphasised the need to ensure a competitive manufacturing sector in Europe to effectively protect the climate. He stated the importance of rapidly adjusting conditions in Europe to secure the industry’s future. The changes may be unveiled as early as Tuesday following intense lobbying from key stakeholders in the automotive industry.
