The European Union has quietly executed one of its most dramatic climate policy pivots, stepping back from a flagship plan to end sales of new combustion engine cars in 2035. Instead of a hard cutoff for internal combustion, the bloc is preparing a looser regime that keeps hybrids and some fuel-burning engines on the road well into the 2040s, reshaping the trajectory of the global auto transition.
The reversal reflects a power struggle between industrial heavyweights, climate ambition and consumer anxiety, with Germany and Italy leading a coalition that pushed Brussels to reopen a deal many thought was settled. It now raises a sharper question for governments and carmakers alike: how to keep credibility on net zero while telling drivers that gasoline and diesel are not going away as fast as promised.
How a landmark phaseout unraveled
For years, the EU’s 2035 target for ending sales of new fossil fuel cars was held up as proof that Europe would lead the global race to decarbonize transport. The plan sat within a broader push to phase out fossil fuel vehicles, where the bloc had signaled that sales and registration of all new light-duty vehicles with internal combustion engines should effectively be completed by 2040, locking in a long term shift away from oil. That ambition was always politically fragile, but it gave regulators, investors and automakers a clear direction of travel.
The political fault lines were visible early. On 22 June 2022, German Finance Minister Christian Lindner stated that his government would refuse to agree on the ban, and, as that source notes with a blunt “But,” Berlin later shifted under pressure, allowing the law to move forward. That uneasy compromise left a residue of mistrust among carmaking nations that never fully accepted a one way bet on battery electric vehicles, and it set the stage for the current climbdown once economic headwinds and electoral politics made the 2035 line look less immovable.
Germany, Italy and the combustion engine bloc
The decisive push against the original 2035 plan came from a group of member states that see combustion engines as strategic industrial assets. Germany, Italy and six other countries argued that a rigid ban would sacrifice hundreds of thousands of jobs tied to engines, transmissions and fuel systems before alternative industries were ready to absorb the shock. Their pressure campaign framed the issue not as climate obstruction, but as a demand for “technological openness” that would keep options like synthetic fuels and advanced hybrids on the table.
In that debate, Germany’s political leadership played an outsized role. Reporting on the internal negotiations describes how Germany, Italy and six other member states convinced the European Union to soften its plan to ban the combustion engine, a move that critics say risks ceding ground in the race to dominate the clean technologies that define the future. That same analysis highlights how European People’s Party leader Manfred Weber became a key political champion of this shift, turning what began as a technical regulation into a broader ideological fight over industrial strategy and voter sentiment.
The European Commission’s formal U-turn
Once the political dam broke, the institutional response in Brussels moved quickly. The European Commission is now preparing to scrap the core of the 2035 combustion engine ban, replacing it with a more flexible framework that allows continued sales of certain internal combustion models under stricter emissions rules. For automakers that had spent years warning about the cost and complexity of a hard cutoff, the new approach looks like a vindication of their lobbying and a reprieve for legacy product lines.
According to detailed accounts of the shift, The European Commission plans to scrap the 2035 combustion engine ban outright, a decision that has been described as a big win for Automakers who had argued for more time and flexibility. Senior figures in Brussels have framed the change as a pragmatic adjustment rather than a retreat, but the substance is clear: the EU is no longer on a straight path to ending new combustion car sales by the mid 2030s, and the legal architecture is being rebuilt to reflect that reality.
Hybrids and the new 2040s horizon
The most immediate beneficiaries of the policy rethink are hybrid vehicles, which blend combustion engines with electric motors and batteries. Instead of being swept up in a blanket 2035 prohibition, hybrids are now in line for a grace period that could keep them in showrooms well into the next decade. That shift not only changes the product mix on European roads, it also alters investment decisions for suppliers that had been bracing for a rapid collapse in demand for engine components.
Draft plans circulating in Brussels indicate that The European Commission is due to unveil changes that would grant a five year respite from the combustion ban for hybrids, allowing some models to be sold until 2040 and to be used after that date under specific conditions. Parallel reporting on the political deal notes that the EU will allow certain combustion engines to be produced and sold after 2035, provided they meet tighter emissions standards and, in some cases, run on approved low carbon fuels. Together, these carve outs transform what was once a cliff edge into a long, sloping off ramp for fossil fuel technology.
Weber, Merz and the politics behind the pivot
Personalities and party politics have been central to the EU’s change of course. Manfred Weber, as a leading figure in the European People’s Party, used his platform to argue that the 2035 ban was out of step with voters in car dependent regions and with the industrial interests of Germany, the bloc’s top economy. His comments that the EU would abandon plans for a strict 2035 cutoff marked a turning point, signaling that the largest political family in the European Parliament was no longer fully aligned with the original Green Deal timetable.
National leaders reinforced that message. Weber‘s comments were described as a key victory for Germany in its efforts to protect its most important industry, and they dovetailed with the stance of German Chancellor Friedrich Merz, who has been explicit about the limits of an all electric push. In one account of the policy reversal, German Chancellor Friedrich Merz admitted that electric vehicles alone could not carry the entire burden of decarbonizing transport, a line that resonated with voters wary of high EV prices and patchy charging networks. Together, these interventions helped reframe the debate from a technical regulation into a broader referendum on how fast Europe should move away from combustion.
Automakers’ long campaign pays off
For the car industry, the EU’s retreat is the culmination of a lobbying effort that has stretched over several legislative cycles. Major manufacturers argued that while they were investing heavily in electric platforms, a fixed 2035 cutoff for combustion engines would force them to abandon profitable models prematurely and risk plant closures in regions with few alternative employers. Suppliers that specialize in engines, exhaust systems and fuel injection warned of a wave of redundancies if the transition moved faster than retraining and new investment could absorb.
Industry friendly voices now describe the new policy as a long overdue correction. One detailed account notes that For years, EU officials had seemed unwilling to give in to automaker demands to walk back its planned ban of internal combustion engines, but that the bloc is now effectively waving the white flag by allowing some gasoline engines to be sold after 2035. Another report on the shift opens with the blunt assessment that The European Commission is giving up on the 2035 Internal Combustion Engine Ban, casting the decision as a major victory for legacy powertrains and a setback for those who wanted a rapid, EV only future.
Dealers, consumers and the retail side of the shift
The change in direction is not only about factories and Brussels committees, it also reshapes the landscape for dealers and drivers. Car retailers had been caught between regulatory pressure to push electric models and consumer hesitation over price, range and charging. A softer phaseout gives them more room to keep selling familiar combustion and hybrid models, but it also extends a period of uncertainty in which they must juggle multiple technologies and evolving rules on emissions and fuel types.
Dealer groups have already been flexing their muscles in related regulatory fights. A recent decision on distribution rules was hailed by one major association as a turning point, with the group stating that This decision marks a significant victory for automotive dealers and sets an important precedent in addressing unfair manufacturer practices across Europe. That same assertiveness is now visible in the combustion engine debate, where retailers argue that a more gradual transition better reflects what customers are actually willing and able to buy, especially in rural areas and lower income markets where EV infrastructure lags.
Climate credibility and green backlash
The EU’s retreat from a hard 2035 cutoff has triggered a fierce response from environmental groups and climate policy experts. For them, the original ban was not just a symbolic line in the sand, it was a necessary step to align transport emissions with the bloc’s broader net zero commitments. Diluting that measure risks locking in higher emissions for years, especially if hybrids and low carbon fuels are used to justify continued investment in combustion technology rather than accelerating the shift to fully electric drivetrains.
Critics warn that the new flexibility could become a loophole that undermines the bloc’s climate ambition. One detailed briefing on the expected changes notes that Nonetheless the expected change is not without controversy, and that environmental groups fear new loopholes will undermine Europe’s climate ambition by allowing more combustion powered vehicles to stay on the road for longer. That concern is amplified by the fact that transport emissions have been stubbornly hard to cut, and that every additional year of high fossil fuel use in cars makes it harder to hit mid century climate targets.
Industrial strategy: short term relief, long term risk
Supporters of the policy shift argue that it protects Europe’s industrial base at a time of intense global competition, especially from Chinese EV makers and battery suppliers. By keeping combustion and hybrid options alive, they say, the EU buys time for its own companies to scale up electric production, secure raw materials and build charging networks without sacrificing current jobs and profits. In this view, a more flexible timeline is a pragmatic way to manage a complex transition rather than a capitulation to fossil fuel interests.
Yet there is a growing chorus warning that the short term relief could come at a long term cost. A detailed analysis of the political deal argues that Germany’s combustion engine win risks EU industrial loss by slowing investment in the technologies that define the future, from batteries and software to charging and grid integration. If companies and governments interpret the softer rules as a signal to lean back on combustion for longer, Europe could find itself outpaced by regions that commit more decisively to electrification, with consequences for export competitiveness and technological leadership.
Policy whiplash and business uncertainty
Beyond the immediate climate and industrial stakes, the EU’s reversal highlights a broader problem for companies trying to plan in an era of volatile regulation. Automakers, suppliers and infrastructure providers had already sunk billions into EV platforms, battery plants and charging networks based on the assumption that the 2035 ban was locked in. Reopening that deal now forces them to revisit product roadmaps, capital spending plans and workforce strategies, adding another layer of uncertainty to an already complex transition.
That kind of policy whiplash is not unique to Europe. In the United States, for example, sustainable business groups have warned that rolling back emissions laws will introduce more uncertainty for companies that need stable rules to justify long term investments. One assessment of those moves notes that Sustainable business groups say the move will introduce more uncertainty for companies, a warning that applies just as much to Europe’s shifting stance on combustion engines. When governments send mixed signals about the pace and direction of decarbonization, the risk is that capital sits on the sidelines or flows to regions where the policy horizon looks clearer.
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