The shift reflects mounting industrial, political, and market pressure as Europe recalibrates its green transition.

The original rule, adopted in 2023, effectively banned new petrol and diesel cars by requiring a 100 percent cut in fleet-average CO₂ emissions by 2035.

The revised framework lowers that requirement while introducing offsets and flexibility mechanisms for manufacturers.

From Ban To Flexibility

Under the new proposal, the EU would require a 90 percent reduction in fleet-average CO₂ emissions from new cars and vans by 2035, compared with 2021 levels, instead of the previously mandated 100 percent cut.

This change allows continued sales of vehicles equipped with internal combustion engines, provided manufacturers offset the remaining emissions.

Eligible pathways include plug-in hybrids, range extenders, mild hybrids, and limited volumes of conventional ICE vehicles.

The remaining 10 percent of emissions could be compensated through the use of CO₂-neutral synthetic e-fuels, advanced biofuels derived from waste streams, or low-carbon materials such as EU-produced “green steel.” Notably, the proposal sets no definitive end date for combustion engine sales beyond 2035.

Broader Automotive Package

The revision is part of a wider automotive policy package aimed at stabilizing the sector. Interim targets are softened, including a reduction of the 2030 emissions cut requirement for vans from 50 percent to 40 percent.

The Commission also proposed incentives for small, affordable electric vehicles produced in the EU, introducing “super credits” under which each qualifying model counts as 1.3 vehicles toward compliance.

Additional measures include binding electrification targets for corporate fleets—covering roughly 60 percent of new car sales EU-wide, with lower thresholds for lower-income member states—as well as expanded support for battery manufacturing and charging infrastructure.

Industry Pressure And Political Shift

The policy reversal follows sustained lobbying from major European automakers such as Volkswagen, Stellantis, and Mercedes-Benz.

Companies warned that slowing EV demand, high production costs, patchy charging networks, and aggressive competition from Chinese manufacturers like BYD were undermining the feasibility of a full ban.

Economic concerns also weighed heavily. The European auto sector employs around 14 million people and accounts for roughly 7 percent of EU GDP.

German manufacturers, facing weak demand in China and at home, were among the strongest advocates for a more “technology-neutral” approach. Politically, the push was led by the European People’s Party, with backing from Germany, Italy, Hungary, Poland, and others.

Divided Reactions And Global Context

Industry groups and several governments welcomed the change. Volkswagen described it as “pragmatic and in line with market conditions,” while Italian officials said it could protect about 70,000 domestic jobs.

Environmental groups reacted sharply.

Transport & Environment warned the move would delay electrification and reward laggards, while Volvo Cars argued it weakens Europe’s competitiveness against China.

France and Spain signaled opposition and may seek to curb the proposal during negotiations.

Analysts note that the shift mirrors a broader global reset: EV sales growth slowed to about 6 percent globally in November 2025, the United States has relaxed some emissions rules, and automakers such as Ford have scaled back EV investments.

Even so, most forecasts still point to zero-emission vehicles capturing roughly 65–70 percent of EU new car sales by 2035 under the revised framework.