The future of combustion engine cars in the European Union The situation has been turned upside down again. What was just two years ago a virtually certain ban for 2035 is now undergoing a full political, technical, and industrial review. Amidst conflicting pressures, the European Commission is preparing a proposal that could significantly soften the initial veto, opening the door to longer lifespan for gasoline and diesel engines under certain conditions.
In this new scenario, Spain has positioned itself among the countries that are calling for maintaining high standards.While other automotive powerhouses like Germany and Italy are pushing in the opposite direction to give the sector more time, what's at stake is not only the decarbonization of road transport, but also the competitiveness of the European automotive industry, employment, and the EU's strategic weight vis-à-vis China and the United States.
From total ban to 90% reduction: this is how the European plan is changing…
The regulations agreed in 2022 stipulated that from 2035 onwards, new registrations of passenger cars and vans in the EU should reach a 100% reduction in CO2 emissions with respect to the reference levels, which in practice meant a ban on combustion engine cars, including hybridsThis approach was interpreted as the end of internal combustion engines in the sale of new vehicles within the European market.
However, the latest drafts circulating in Brussels point to a change of course: it is proposed that by 2035 a 90% reduction in average fleet emissionsallowing approximately one 10% of sales still correspond to vehicles that emit CO2According to various leaks, this flexibility would be extended at least until 2040, also ruling out the establishment of a 100% reduction target at that time.
The president of the European People's Party, Manfred weberHe has been one of the clearest spokespeople for this line of thought. As he explained to the German newspaper BILDwith this adjustment “A technological ban on combustion engines is ruled out.”, which means that Current engines could continue to be manufactured and sold beyond 2035, always within that permitted quota and complying with stricter efficiency standards.
Plug-in hybrids and extended-range electric vehicles are the big winners…
One of the main consequences of this review is the additional space it opens up for technologies considered transitional. Brussels is considering allowing part of that 10% of authorized sales in 2035 to correspond to plug-in hybrid vehicles (PHEV) and extended range electric vehicles (REEV or EREV)which combine an electric motor with a combustion engine used only as a generator.
These cars had been practically sidelined under the strictest interpretation of the 100% target, but the regulatory shift has given them a lifeline. In practice, PHEVs would be the big winnersbecause they have a much larger supply and higher sales than REEVs. In some markets, such as Spain, plug-in hybrid registrations are growing at very high rates and already represent more than 10% share of the market, compared to barely nominal figures for extended range vehicles.
At the same time, the Commission is studying how, in calculating fleet emissions, companies can count as “zero emissions” not only to pure electric vehicles, but also to certain PHEVs and REEVs that meet specific criteriaThis more relaxed accounting allows manufacturers to play with a mix of technologies to reach the 90% target without fully electrifying their entire range.
Synthetic fuels and “highly efficient” internal combustion engines
Another point that has strongly entered the debate is the role of the synthetic fuels (e-fuels) and other low-carbon fuelsSome countries, with Germany in the leadThey have asked the Commission to leave the door open to the marketing of “highly efficient heat engines” after 2035, provided they run on clean fuels that allow for a substantial reduction in emissions throughout their entire life cycle.
The underlying idea is that one should not be imposed rigid “technology ban”but rather that technological neutrality be maintained as long as the various solutions demonstrate that they can meet climate objectives. This is also stated in the letter signed by the prime ministers of Italy, Bulgaria, Czech Republic, Hungary, Poland and Slovakia, who warn of the risks of turning Europe into a “industrial desert” if the door is suddenly closed to combustion engines without allowing time for industrial reconversion.
In parallel, the Commission is considering allowing the use of low-carbon and renewable fuels in new cars from 2035 onwards as a complement to electrification, although its cost, availability, and actual carbon footprint remain unknown. This approach has the support of some industries and governments concerned about the impact of too abrupt a transition on employment and production.
Spain: maintain the 2035 target and halt the relaxation of regulations…
Faced with pressure to make the roadmap more flexible, Spain has clearly positioned itself among the most demanding.The Prime Minister, Pedro Sánchez, has sent several letters to the President of the European Commission. Ursula von der Leyen, in which he asks Do not move the date from 2035 and preserve the current level of climate ambition, even though the European Commission has already introduced some leeway in CO2 regulations.
Sánchez recalls that Brussels It already eased the application of the CAFE regulations in Marchwhich tightens the limits on CO2 emissions per kilometer for new cars. Instead of penalizing manufacturers who fail to meet the targets by 2025, they are allowed to measure their performance over the entire period. 2025-2027, delaying any potential sanctions until 2027. For the Spanish government, any other additional relaxation would imply a clear risk of slowing down modernization investments and prolong a phase of weak demand for electric vehicles.
In its letters, the Spanish Executive is unequivocal: “We reject the idea that combustion vehicles or other technologies without proven viability can continue to be marketed beyond 2035”He acknowledges that hybrids can play a transitional role until that date, but asks that the Plug-in hybrids are subject to production limits to accelerate the penetration of pure electric vehicles. This position links with the Spain Auto Plan 2030, which is committed to electrifying the entire value chain, from vehicle production to the battery gigafactories already announced.
Mandatory fleet electrification: the other major front…
While the outlook for individual customers is easing, the EU plans to significantly tighten requirements on... corporate and rental fleets, which suppose around 60% of new car registrations In Europe, the European Commission is working on regulations so that, within a few years, a large proportion of these vehicles will be electric.
According to information reported by German media, it is being studied that one out of every two company cars will be electric by 2027 and that around the 90% of these fleets will be by 2030Furthermore, a direct ban on combustion engines in company cars and rental vehicles from 2030 onwards, while private buyers would still be able to purchase new combustion engine cars if they fit within the set emissions limits.
Behind this approach is the idea that the Corporate vehicles end up fueling the second-hand market a few years later. If they are mandated to be primarily electric, it will generate a used stock of zero-emission vehicles more affordable, which would encourage the renewal of the private vehicle fleet without needing to ban older models. Spain, in fact, has requested that prices be set minimum targets for the electrification of corporate fleets as one of the key levers to accelerate the transition.
Spain and France, versus Germany and Italy…
The debate has created two opposing blocs within the European Union. On one side, Germany and ItalySupported by several other Central and Eastern European countries, they are pressing for permission to be granted. continue selling plug-in hybrids (PHEVs) and efficient combustion engines after 2035. Berlin has sent formal letters to the Commission advocating this approach, while Rome, along with Germany, has signed a Italian-German Action Plan with 24 points in which it calls for a review of the decarbonization timetable and the emissions trading system so as not to damage industrial competitiveness.
France, for its part, has shifted from a position very much aligned with Spain to a more nuanced stance. Although Paris signed a document with Madrid requesting do not relax the 2035 targetsA subsequent letter from several French ministers to the Commission declares itself open to introducing “specific flexibilities”, provided they are linked to mechanisms that reward production in Europe and the maintenance of industrial employment. The French government has even shown itself willing to accept that “Some” combustion engine cars will continue to be sold from 2035 onwards if at least 75% of their added value is generated in the EU.
Spain maintains a somewhat different stance: alongside defending the ban on combustion, the government demands that enforcement be required a minimum percentage of content produced in the EU in clean vehicles, the promotion of use of green steel and local scrap metal and a new category of “affordable small electric car”, inspired by the kei cars Japanese. This category could enjoy specific advantages—such as reserved access to parking and charging infrastructure— with the aim of democratize access to electric cars and strengthen local production of batteries and components.
Industry caught between climate pressure and the fear of an “industrial desert”
The 2035 calendar revision comes in a complex context for the European automobile industry, which represents around 7% of EU GDPThe sector faces competition from cheapest Chinese electric vehicles, to the United States tariffs already a Demand for electric vehicles is below expectations in some markets, which makes it difficult to recoup the heavy investments needed to electrify factories and supply chains.
Employers' associations such as ACEAThe European manufacturers' association, which represents European manufacturers, has been demanding for months from Brussels a a more pragmatic and technologically neutral approachAmong the ideas that have been put on the table are the CO2 credits for scrapping old cars, the partial recognition of Alternative fuels and a system that specifically rewards the sale of small electric vehicles produced within the EUThe president of Anfac, the Spanish manufacturers' association, himself has pointed out the importance of introducing local content criteria to stem the avalanche of models imported from China.
There is also concern within the components industry. Figures of between Between 60.000 and 80.000 jobs at risk In Europe, if the 2035 targets are not adjusted to allow for an orderly transition. Conversely, environmental organizations such as Transport & Environment they warn that reduce the reduction obligation to 90% would allow manufacturers to cover a good part of the target with plug-in hybridswithout making the definitive leap to pure electric vehicles. In the opinion of these groups, Europe is in danger of to lose another key technology race if regulations are relaxed in the midst of an offensive by Asian manufacturers.
Delays, negotiations, and a plan that will take time…
The European Commission has delayed the presentation of its emergency plan for the automotive industry.Initially scheduled for mid-December, the meeting was postponed due to the complexity of internal negotiations and pressure from various governments. The delay, first by a week and then until January, also reflects the difficulties associated with the development of new technologies already the definition of the future industrial policy linked to clean industries.
In January, Brussels will have to clarify whether it is maintaining the 2035 target. for the end of combustion engine cars with a 90% reduction in emissions, whether it will give more leeway to plug-in hybrids and REEVs, and how European production requirements, fleet electrification, and financial support for the sector will be structured. Meanwhile, the Commission has advanced other initiatives, such as the simplification of environmental regulations and the boost to investment in energy networks needed for mass electrification.
Meanwhile, European countries and cities continue to implement their own measures to reduce pollution, such as Low Emission Zones in Madrid or BarcelonaAlthough the exact timetable for the combustion ban is still under debate, the direction of European mobility policy is clear. A gradual reduction of internal combustion enginesThe debate reflects the delicate balance between climate objectives and the protection of an industry that is key to employment and the European economy, and its outcome will determine Europe's role in the new era of the automobile.