European carmakers are breathing easier after the European Commission unveiled its new automotive package on Tuesday, 16 December. The EU has softened its combustion engine ban, stipulating that 90 per cent of new car sales must be zero-emission in 2035 rather than the previous 100, allowing a limited share of hybrid and combustion-engine vehicles to remain. The move was welcomed by industry as a lifeline amid mounting competition, but environmental groups criticised it for weakening a landmark climate law.
Hard landing?
If Tuesday’s rollout revealed anything, it’s once again that climate goals have collided and collided hard with industry realities. On one hand, consumer interest and new electric vehicle sales and registrations continue to grow; on the other, Europe’s carmakers face high vehicle and energy costs, suboptimal charging networks, uneven adoption in some sectors, and technological uncertainty. All while fighting to remain competitive in a rapidly evolving global EV market — a bit like trying to box with one hand tied behind one’s back.
The EU’s compromise—mandating that 90 per cent of new cars by 2035 be zero emission, rather than the previous 100—should free them up to find better footing. It reflects a pragmatic attempt to reconcile ambitious climate targets with industrial and economic necessities. European Commissioner for Climate, Net Zero and Clean Growth, Wopke Hoekstra, made clear speaking to the plenary on Tuesday, that the Commission intended to fully square the circle of competitiveness and growth together with emissions reduction. And he stated in so many words the Commission had the car industry’s back:
“Our automotive industry is absolutely vital to Europe’s industrial strength. Two months ago, we discussed the future of the sector, and I committed to supporting it so companies not only survive but thrive on European soil. The package presented today is designed to do exactly that.”
Automotive package
The package introduces a set of practical adjustments designed to help manufacturers meet long-term climate goals while keeping the industry viable. The most visible change is the partial rollback of the 2035 zero-emissions requirement: manufacturers can now compensate a small share of fleet emissions with low-carbon fuels, green steel, or other flexible measures, providing flexibility without abandoning the electrification trajectory.
Commissioner Hoekstra again: “[Our package] addresses the industry’s concerns while at the same time maintaining investment predictability, hugely important in the electric sector and the supply chains, and maintaining our climate neutrality goal. First, we’re staying the course towards zero emissions mobility while introducing some flexibilities for manufacturers so that they can meet their CO2 targets in the most cost-effective way. The fleet-wide CO2 emission target for 2035 will require a 90 percent decrease in emissions, abiding by the principle of technological neutrality. And then the remaining 10 percent of emissions will have to be compensated by either clean steel made in the EU or by sustainable renewable fuels. And this compensation mechanism and this flexibility, in our view, is the cornerstone of the proposal. It drives down emissions and it creates a win-win.”
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Emissions targets
To ease the near-term burden, the Commission allowed companies to average emissions compliance between 2030 and 2032, softening the strict year-on-year 2030 targets that require a 55 per cent CO₂ reduction compared with 2021. The Commission also lowered van emissions targets from 50 per cent to 40 per cent, reflecting slower adoption in that segment.
Our automotive industry is absolutely vital to Europe’s industrial strength … The package presented today is designed to do exactly that. — Wopke Hoekstra, Commissioner for Climate, Net Zero and Clean Growth
The package also sets national electrification requirements, for example for corporate fleets, which represent a significant portion of new vehicle sales. Companies will need to ensure a portion of their vehicles contain EU-manufactured components, supporting domestic supply chains and industrial resilience.
Industry reaction and compromise
The European Automobile Manufacturers’ Association (ACEA) welcomed the flexibility in the package, emphasising that it “offers breathing space to ease compliance pressure while allowing manufacturers to continue investing in electric mobility,” while noting that clear policy and infrastructure support are still critical for the transition.
But respected watch dog groups criticised the package as a step back, including T&E. The group criticised the weakening of the 2035 zero‑emission target, saying the revision sent a “confusing signal” to manufacturers by permitting continued sales of combustion engine vehicles despite the EU’s aim to phase them out by 2050. The group also warned that the reduced target could significantly cut the number of battery electric vehicles (BEVs) sold by 2035 compared with the previous goal, and that it could push manufacturers to shift investment away from electrification at a time when Chinese competitors are outpacing Europe.
These measures reflect a mix of flexibility and political compromise. Some governments pushed to retain mild hybrids and traditional engines, while others advocated stricter electrification-only rules. Taken together, the package provides room to move for manufacturers, protects jobs, and preserves Europe’s competitiveness—critical at a time when they are getting swamped by Chinese imports. Critics caution, however, that easing standards could slow EV adoption and allow other regions to pull further ahead.
This debate is not about climate policy. It’s about the economy and about physical laws. The electric motor converts 95 per cent of the energy to movement, and the combustion engine only 30 per cent. And that is why the future is electric. — MEP Gerwin-Jan Gebrandi (Renew/NLD)
On the Parliament floor
Peter Liese (EPP/NLD) highlighted that hybrids and plug-in hybrids already account for over 44 per cent of new registrations and said alternative solutions can contribute to emission reductions where full electrification is not yet feasible. “We need a framework that spurs innovation rather than prescribing a single technological path. This is why I support the Commission’s pragmatic review of the 2035 regulation and placing technological neutrality at its core to ensure a realistic, inclusive and economically sustainable transition for Europe,” he said.
Mohamed Chahine (Renew/BEL) was critical of the package, arguing it risked slowing Europe and giving competitors an edge abroad. “I cannot see how this proposal will help the car industry in Europe. I think the message today is a message of slowing down at a time when Europe should accelerate. We risk with this package to increase the gap between European and Chinese producers, on batteries, on EVs, on software, on components. And it really feels as if we are throwing in the towel with more and more uncertainty,” he said.
The future is electric
Gerwin-Jan Gebrandi (Renew/NLD) warned that hybrids and biofuels would not make Europe more competitive. “This debate is not about climate policy. It’s about the economy and about physical laws. Because the electric motor converts 95 per cent of the energy to movement, and the combustion engine only 30 per cent. And that is why the future is electric. Its technology is simply superior in energy terms and in cost terms. So to save the European car industry, we have one single challenge. How to become competitive in the global electric cars market,” he said.
Pierre-Francesco Maran (S&D/ITA) emphasised that competitiveness would be determined by software and autonomous driving rather than engines. “The future of the car will obviously be electric, as current legislation states, but this is not where the sector’s competitiveness will be decided. Autonomous driving and software will redefine the value of a car. This is a challenge we must take on in the coming months or we will end, as we did with AI and mobile phones, becoming only a consumer market for technologies developed by others,” he said.
MEP Danuše Nerudová (EPP/CZE) highlighted the need for readable conditions for industry while supporting mixed technology solutions. “Colleagues, I believe it is essential that we provide industry with stable and predictable conditions in which it can grow, innovate and invest. Alternative solutions can contribute to emission reductions and help bridge the gap where full electrification is not yet feasible for all regions, all sectors or users,” she said.
Divided and unbowed
The debate revealed a clear divide in Parliament. While most agree the transition to low- and zero-emission vehicles must continue, opinions differ sharply on how much flexibility the rules should allow without undermining climate goals or European industrial competitiveness.
The rules are eased, yet EU officials insist the mission remains on track. As Doc Emmett Brown in Back to the Future might have put it: “Where we’re going, we don’t need combustion engines!”
