The European Union has taken a significant step back from its planned total ban on new petrol and diesel cars by 2035, proposing a more flexible target in response to mounting pressure from major car-producing nations and the automotive industry.
A Shift from 100% to 90% Emissions Reduction
On Tuesday, 16 December 2025, the EU's executive commission put forward a proposal to amend landmark 2023 legislation. The original law mandated that average emissions from new cars must reach zero by 2035, equivalent to a 100% reduction from 2021 levels. The new plan would instead require a 90% emissions reduction by that deadline.
In practical terms, this means the vast majority of new cars sold will still need to be zero-emission battery-electric vehicles. However, it creates crucial space for a limited number of new internal combustion engine (ICE) cars to remain on the market. Carmakers utilising this flexibility would be required to compensate for the extra emissions through specific measures.
These include using European steel manufactured with lower-carbon processes and incorporating climate-neutral fuels. These fuels encompass e-fuels made from renewable electricity and captured carbon dioxide, as well as sustainable biofuels.
Industry Pressure and Market Realities Prompt Change
The policy adjustment follows intense lobbying from governments like Germany and Italy, which host major automotive manufacturers and were deeply concerned about the economic and employment impact of a strict phase-out. Industry bodies had argued that the transition needed more flexibility, citing several headwinds.
A primary concern is that charging infrastructure is not being built out quickly enough to convince mass-market consumers to switch from familiar petrol and diesel models. Other factors slowing electric vehicle (EV) demand include the cancellation of purchase subsidies in key markets like Germany and the relatively high price of European-made electric cars.
Simultaneously, European automakers face a dual challenge: a car market that has not fully recovered to pre-pandemic size and intense pressure from affordable Chinese EV imports. EU officials maintain that altering the emissions limit will not derail the bloc's overarching goal of achieving a climate-neutral economy by 2050.
Reactions and the Global Context
The proposal, which requires approval from EU member governments and the European Parliament, has drawn criticism from environmental groups. Transport & Environment warned it sends "a confusing signal" to both automakers and consumers and could "divert investment away from electrification" when European manufacturers need to catch up with Chinese rivals.
The data shows a mixed picture for EVs in Europe. Sales of battery-only cars rose 26% in the first ten months of 2025 compared to the same period last year, claiming 16% of the new car market. Yet, adoption lags behind China, where battery vehicles made up 34% of the market in the third quarter.
This EU shift occurs against a backdrop of divergent global policies. Earlier in December, former US President Donald Trump announced plans to significantly relax fuel economy standards, a move applauded by industry. This contrasts with the stricter rules set under President Joe Biden, which aimed for a fleet average of around 50.4 miles per gallon by 2031.
The EU's revised approach aims to balance climate ambition with industrial pragmatism, acknowledging the complex realities of technology adoption, infrastructure rollout, and international competition.
