EU eases 2035 car emissions rules, ICE survives

December 17, 2025

The European Commission has unveiled a major shift in its automotive climate policy, announcing that car manufacturers operating in the European Union will now be required to cut carbon dioxide emissions by 90% by 2035, instead of meeting a full zero-emissions mandate as previously set out in EU law.

The move effectively rolls back the controversial de facto ban on internal combustion engine (ICE) vehicles adopted in March 2023, offering carmakers greater flexibility in how they meet long-term climate targets.

How automakers can offset remaining emissions

Under the revised framework, manufacturers will be permitted to account for the remaining 10% of emissions by adopting alternative climate-friendly measures. These include the use of low-carbon steel produced within the EU as well as sustainable fuels, such as e-fuels and biofuels.

This approach enables continued production of a wider range of vehicle technologies beyond 2035, including plug-in hybrids, mild hybrids, range extenders, and traditional ICE vehicles.

Electric and hydrogen vehicles still encouraged

Despite the added flexibility, the Commission reaffirmed its support for battery electric vehicles (EVs) and hydrogen-powered cars. Automakers producing small, affordable electric vehicles within the EU27 will be eligible for so-called “super credits”, designed to boost domestic manufacturing and competitiveness.

Climate Action Commissioner Wopke Hoekstra described the policy shift as a balanced solution.

“We remain firmly committed to zero-emissions mobility while giving manufacturers cost-effective ways to achieve their CO₂ targets,” Hoekstra said.

According to the Commission, the updated automotive package will strengthen Europe’s position as a lead market for clean steel, while giving industry players room to adapt.

Political support for a more flexible approach

EU Transport Commissioner Apostolos Tzitzikostas welcomed the decision, calling it a “significant and positive step.”

“This sends a clear message that technologies beyond battery electric vehicles will still have a place after 2035,” he said, emphasizing consumer freedom of choice.

The announcement follows intense pressure from the automotive sector, which has warned that European carmakers face mounting competition from China and the United States. Many manufacturers argue that high energy prices, supply chain disruptions—particularly in battery production—and weak consumer demand for EVs are threatening the industry’s survival.

Member states push back against ICE ban

Several EU countries, including Germany, Italy, Poland, Hungary, the Czech Republic, Slovakia, and Bulgaria, have lobbied Brussels to reconsider the outright ICE ban and allow hybrid vehicles under future regulations.

By contrast, France and Spain supported maintaining the ban but urged stronger EU support for domestic vehicle production.

Concerns have intensified following reports that Volkswagen may halt vehicle production at its Dresden plant, marking the first factory closure in Germany in the company’s 88-year history.

Can climate goals and industrial flexibility coexist?

Veteran European People’s Party (EPP) lawmaker Peter Liese praised the Commission’s decision, arguing that technological neutrality and climate neutrality are not mutually exclusive.

“Electromobility is the future, but we must also invest heavily in charging infrastructure and allow space for innovation,” Liese said.

The European Automobile Manufacturers’ Association (ACEA) echoed this view. Secretary-General Sigfried de Vries said the industry urgently needs flexibility while remaining committed to decarbonisation.

“Automakers have invested hundreds of billions of euros and launched more than 300 electrified models. Our commitment to climate goals is beyond question,” he said.

However, the decision drew criticism from E-mobility Europe, which warned that the revised targets could undermine investor confidence.

“The future of transport is electric,” said Secretary General Chris Heron. “Mixed signals risk slowing down investment in batteries, manufacturing, and grid infrastructure.”

Political Winds Shift After 2024 EU Elections

The change in policy reflects broader political shifts following the 2024 European Parliament elections, which saw significant losses for Green parties and growing influence from the centre-right EPP and far-right groups.

EPP leader Manfred Weber has repeatedly argued that the 2035 ICE ban was premature, warning of job losses and industrial disruption.

“Opening up the law sends a crucial signal to the automotive sector and protects tens of thousands of jobs,” Weber said recently.

What happens next?

The proposal will now enter negotiations between the European Parliament and the European Council. Talks are expected to begin under the Cypriot EU Presidency in January 2026, with lawmakers also assessing how the revised rules align with the EU’s 2040 climate targets.

As the debate continues, Europe faces a defining question: can industrial resilience and climate ambition move forward together?