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The European Union retreated Tuesday from its landmark plan to eliminate sales of new gasoline and diesel vehicles by 2035, relaxing emission standards in response to mounting pressure from an auto industry grappling with Chinese competition and sluggish electric vehicle adoption.
Under the revised framework, carmakers must reduce exhaust emissions from new vehicles by 90 percent compared to 2021 benchmarks, rather than the total elimination previously mandated. The remaining 10 percent can be offset through a system of carbon credits, effectively allowing manufacturers to continue selling limited numbers of combustion-engine vehicles beyond the deadline.
The European Commission framed the overhaul as a pragmatic compromise that preserves environmental goals while supporting an industry vital to the bloc's economy. "The European Commission has chosen an approach that is both pragmatic and consistent with its climate objectives," EU industry chief Stephane Sejourne told AFP.
Environmental advocates condemned the reversal as a capitulation to industry demands that undermines Europe's climate leadership and could hamper the transition to cleaner transportation.
The original combustion-engine prohibition, celebrated as a watershed moment in climate policy when adopted in 2023, became a flashpoint as Europe's automakers faced simultaneous challenges from overseas rivals and cooling consumer enthusiasm for battery-powered vehicles.
The sector, which employs nearly 14 million workers and generates approximately seven percent of the EU's economic output, spent the past year lobbying Brussels for relief. Manufacturers argued that high vehicle costs and inadequate charging infrastructure across the 27-member union had dampened consumer interest, with battery-electric models comprising just over 16 percent of new vehicle sales in the first nine months of 2025.
A wave of factory closures and workforce reductions across European production facilities heightened industry warnings that the 2035 target had become unattainable under current market conditions.
The revised policy establishes two mechanisms through which automakers can offset emissions from internal combustion vehicles sold after 2035. Manufacturers will earn carbon credits by incorporating low-carbon steel produced within Europe into vehicle construction, keeping control of this pathway within their operations.
A second credit category depends on energy companies' distribution of e-fuels and biofuels in the European market each year, placing this portion of the offset system outside automakers' direct influence. The plan permits continued sales of plug-in hybrid vehicles and diesel-powered cars in limited quantities, provided emissions are balanced through these credit programs.
Manfred Weber, who leads the European Parliament's largest conservative bloc, endorsed the modifications, arguing that "forbidding technologies" would energize far-right political movements.
Several member states, including Spain, France and Nordic nations, opposed scaling back the prohibition, cautioning that the retreat could decelerate electrification efforts, compromise the EU's broader environmental commitments and discourage investment in battery technology.
Neil Makaroff, director at Strategic Perspectives think tank, sharply criticized the policy shift. "To claim that tomorrow's jobs and innovations still lie in diesel or petrol engines, when the rest of the world has embarked on an industrial race towards batteries and electric vehicles, is to condemn the French and European automotive industry to decline," he said.
The weakening of emission standards represents the most substantial outcome yet of a broader EU pivot toward business-friendly policies that has seen the rollback of multiple environmental regulations this year, with officials citing concerns about economic growth.
The Commission unveiled accompanying measures designed to bolster European manufacturers against foreign competition, all requiring approval from the European Parliament and member states.
Before 2035, automakers will receive enhanced accounting benefits for producing affordable electric vehicles within the EU. Sales of battery-powered cars shorter than 4.2 meters will count as 1.3 vehicles toward emission compliance calculations, artificially inflating the proportion of zero-emission models in manufacturer fleets.
The Commission also proposed reducing the interim 2030 emission reduction target for vans from 50 to 40 percent and extending compliance deadlines for truck manufacturers meeting their own 2030 benchmarks.
To stimulate electric vehicle demand, medium and large corporations will face mandates to transition their fleets, which currently represent roughly 60 percent of new car purchases in Europe. Companies must ensure at least 30 percent of newly acquired vehicles produce zero or low emissions, with specific targets varying by country based on economic capacity.
The package includes 1.5 billion euros in interest-free loans to support European battery manufacturers.
Road transportation generates approximately 20 percent of Europe's total greenhouse gas emissions, with passenger cars accounting for 61 percent of that sector's output, according to EU data.
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