Europe’s flagship plan to end sales of new petrol and diesel cars has been dramatically scaled back after a fierce backlash from industry and key member states. Instead of a hard phaseout of combustion engines from 2035, Brussels is pivoting to a looser regime that keeps conventional powertrains alive under stricter emissions accounting and technology conditions. The reversal exposes a deep tension between climate ambition and industrial reality at a moment when the continent’s carmakers are under intense competitive pressure.
The new approach reflects months of lobbying by manufacturers, governments and unions who warned that an outright ban risked job losses, stranded investments and a consumer revolt. It also signals that the European Union is willing to trade regulatory purity for a more flexible path that still aims at climate neutrality but gives the automotive sector more time and more technological options.
The flagship ban that was never fully settled
For years, the 2035 cut-off for new combustion engine cars was held up as proof that the European Union was serious about decarbonising road transport. The measure was framed as a cornerstone of the bloc’s climate strategy, intended to force a rapid shift to battery electric vehicles and to lock in a trajectory toward climate neutrality by 2050. Yet even as the law was celebrated, it contained unresolved questions about how to treat plug-in hybrids, synthetic fuels and other transitional technologies that did not fit neatly into a simple “combustion versus electric” binary.
Those ambiguities created space for political and industrial pushback that never really went away. According to detailed accounts of the internal debate, the European Commission ultimately folded the combustion rules into a broader automotive package and, in that context, decided to scrap its own centrepiece restriction on traditional engines. One analysis described how the institution effectively killed its flagship ban as part of that package, replacing a clear prohibition with a more complex set of conditions.
What the new Commission proposal actually does
The reversal is not a simple free pass for petrol and diesel, but a re-engineering of the rules that govern them. In its latest proposal, the European Commission sets out a framework that would allow internal combustion engines to remain on the market as long as they meet tightening fleet-wide emissions targets and are compatible with low or zero carbon fuels. Rather than banning a specific technology, the Commission is shifting toward a system where the carbon footprint of vehicles is counted more comprehensively, including the energy they use and the fuels they burn.
Crucially, the proposal opens the door for plug-in hybrids, range extenders and other hybrid formats to keep playing a role in the transition. The Commission’s own outline makes clear that the new rules are designed to reverse the earlier 2035 prohibition while still ensuring that emissions from all vehicles are fully reflected in manufacturers’ targets. The document describing how the European Commission proposals would reverse the 2035 combustion engine prohibition stresses that emissions accounting will be tightened even as the outright ban is lifted.
Industry pressure and an ailing automotive sector
Behind the policy U-turn lies a sobering economic reality. Europe’s carmakers have been struggling with high energy costs, supply chain disruptions and a bruising price war in electric vehicles. Executives warned that forcing a rapid, one-way bet on battery-only cars risked undermining profitability at a time when they needed cash flow from existing models to fund the transition. The Commission’s retreat reflects a calculation that preserving some flexibility on combustion engines could help stabilise an industry that remains one of the continent’s biggest employers and exporters.
Reporting on the new package describes how the European Union pulled back from an effective ban in order to help an ailing industry after months of pressure from manufacturers and suppliers. A parallel account of the same shift notes that the bloc has eased the combustion engine restrictions specifically to help the automotive sector, underlining how economic concerns have been elevated alongside climate goals in the Commission’s thinking.
Germany’s decisive role in forcing a U-turn
No country shaped the outcome more than Germany, home to Volkswagen, BMW and Mercedes-Benz. Berlin had long signalled discomfort with a blanket ban that could hit its export-heavy car industry, and it pushed hard for carve-outs that would keep options open for advanced combustion technologies and synthetic fuels. The political weight of a country whose automotive sector underpins hundreds of thousands of jobs made it difficult for Brussels to ignore those demands.
German officials have openly welcomed the Commission’s change of course, framing it as a pragmatic correction rather than a retreat from climate ambition. One detailed account of the reaction in Berlin notes that the new framework will allow plug-in hybrids, range extenders, mild hybrids and conventional internal combustion engine vehicles to remain part of the mix, as long as they comply with the updated emissions regime. The same report on how Germany hails the U-turn also highlights that the Commission still insists the revised rules are compatible with its climate neutrality objective for 2050.
Southern Europe’s support and the SEAT perspective
The reversal is not just a victory for northern manufacturing powerhouses. In southern Europe, governments and carmakers that rely heavily on affordable compact models have also argued for a more gradual shift. In Spain, SEAT and its performance brand Cupra have been investing in electric platforms, but they remain deeply exposed to demand for small combustion and hybrid cars that are still cheaper for many buyers than full battery vehicles. For them, a rigid 2035 cut-off risked squeezing margins and alienating cost-conscious customers.
Executives at SEAT have publicly argued that keeping some combustion capacity alive could actually smooth the electric transition rather than derail it. They contend that allowing plug-in hybrids and efficient petrol models to coexist with new EVs will give consumers more choice and give manufacturers more time to scale up battery production and charging networks. One report on the company’s reaction notes that the EU’s reversal is seen as a key victory for The EU decision by Germany, home of Volkswagen, and that SEAT believes the change will help the EV transition rather than stall it.
Italy, China and the global competitive squeeze
Another powerful bloc behind the rethink comes from countries that fear losing ground in the global car market if Europe moves faster than its rivals. Italy, with its mix of mass-market brands and high performance marques, has been wary of rules that could disadvantage its manufacturers against competitors in regions with looser standards. Policymakers in Rome have argued that a more flexible European framework is needed to protect domestic industry while still pushing for emissions cuts.
At the same time, European carmakers are facing intense pressure from China, where state-backed manufacturers have rapidly scaled up production of affordable electric vehicles. The fear in European boardrooms is that a rigid ban on combustion engines could force them into a head-to-head race with Chinese EV makers before they are ready, eroding market share both at home and abroad. By softening the ban, Brussels is effectively giving its own industry more time to catch up technologically while still nudging it toward lower emissions.
How hybrids and PHEVs won a reprieve
One of the most immediate consequences of the policy shift is a reprieve for hybrid technologies that had been staring at a hard sunset. Plug-in hybrids, range extenders and mild hybrids were initially treated as stepping stones that would be phased out as pure battery cars took over. Now they are being recast as longer term tools in the decarbonisation toolkit, provided they meet stricter performance and usage criteria. That change reflects both consumer behaviour, where many drivers still prefer the familiarity and range security of combustion engines, and the lobbying strength of companies that have invested heavily in hybrid platforms.
German officials have been explicit that the new framework will allow plug-in hybrids, often abbreviated as PHEV, as well as range extenders, mild hybrids and conventional internal combustion engine vehicles to remain on sale under the revised rules. A separate account of the Commission’s internal deliberations notes that this flexibility was a central reason why the institution decided to fold back its flagship ban into a broader automotive package, rather than keep a rigid prohibition that would have sidelined these technologies.
Climate neutrality goals under strain
The obvious question is what this means for Europe’s climate commitments. The Commission insists that revising the combustion engine rules does not change the end goal of climate neutrality by 2050, but it does alter the path to get there. Allowing combustion engines to remain on the market, even under stricter emissions accounting, risks locking in more fossil fuel use unless the parallel rollout of low carbon fuels and electrification accelerates dramatically. Environmental groups argue that the reversal sends the wrong signal to investors and could slow the pace of innovation in zero emission technologies.
In its own justification, the Commission has stressed that the updated framework will still require manufacturers to meet ambitious fleet-wide targets and that the revision is compatible with the long term climate neutrality objective. The detailed explanation of the new package notes that the institution believes revising the combustion rules is necessary to keep the automotive sector on board while still aiming for climate neutrality by 2050. That argument is reflected in the same account that describes how the Commission said revising the rules is consistent with its climate neutrality target, even as it relaxes the earlier ban.
Backlash, relief and what comes next
The political reaction across Europe has been sharply divided. Environmental advocates and some member states see the reversal as a capitulation to industry that undermines the credibility of the bloc’s climate agenda. They argue that the original 2035 cut-off provided a clear signal that drove investment into electric vehicles and that watering it down will create uncertainty. On the other side, governments with large automotive sectors, trade unions and many manufacturers have greeted the change with relief, portraying it as a necessary correction that aligns climate policy with economic reality.
Inside Brussels, officials have framed the move as the outcome of an “intense dialogue” with stakeholders rather than a sudden change of heart. An internal discussion thread among industry watchers captured how insiders saw the shift coming, noting that there had been a heads up the previous week before the Commission confirmed the new line. The same commentary on how, after intense dialogue, the European Commission “sees the light” reflects a broader sense among critics of the original ban that the institution has finally acknowledged the practical limits of its earlier approach.
A more complicated, less symbolic future for car policy
The end of a simple combustion engine cut-off does not mean the end of regulation, but it does mark the end of a powerful symbol. Instead of a single date that defines the future of the car, Europe is moving toward a more intricate web of standards, credits and technology rules that will shape the market in subtler ways. That complexity may be harder to communicate to voters, but it arguably reflects the messy reality of decarbonising a sector that touches every household and every supply chain.
From my vantage point, the reversal underscores how climate policy is entering a more contested, incremental phase. The European Union is still tightening emissions rules and still talking about climate neutrality by 2050, yet it is also bending to the demands of an industry under strain and member states that fear losing ground to global rivals. The combustion engine may no longer be on a fixed countdown to extinction, but it is now operating under a tighter, more scrutinised regime that will keep the pressure on manufacturers to cut emissions, even as the political battle over how fast to move continues.
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