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EU Scraps 2035 ICE Ban, Shifts Focus to Phased Transition

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  Published in Automotive and Transportation on Tuesday, December 16th 2025 at 2:59 GMT by KTBS

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EU’s Sudden Reversal on the 2035 Combustion‑Engine Ban: What It Means for the Automotive Sector

The European Union’s decision to scrap the long‑promised ban on the sale of internal‑combustion‑engine (ICE) cars by 2035 has rattled the industry, policy circles and environmental advocacy groups alike. The move, announced in a press release from Brussels on 15 June 2024, follows months of negotiations among member‑states, industry stakeholders and the European Commission. While the policy change is framed as a “pragmatic step toward achieving a net‑zero emissions future,” critics argue it undermines the EU’s climate commitments and weakens the automotive sector’s transition to electric vehicles (EVs).

Background: The 2035 Ban and the EU’s Green Deal

The 2035 ICE ban was originally enshrined in the European Green Deal and the subsequent European Climate Law. It aimed to halt the sale of new petrol and diesel cars by 2035, thereby forcing a rapid shift to zero‑emission vehicles and curbing the EU’s contribution to global warming. Under the ban, automakers were required to launch electric and hydrogen‑powered vehicles that could meet the emissions criteria set out in the European Union’s “Clean Vehicles Directive.”

The ban’s timing was seen as a decisive signal to industry that the transition to EVs was not merely a recommendation but a legal mandate. By 2023, several major manufacturers—including Volkswagen, Renault, Stellantis, and Daimler—had already announced full‑electric or hydrogen‑fuel‑cell line‑ups slated to hit the market between 2024 and 2026.

The Reversal: Why the EU Pulled the Plug

In a statement released on 15 June 2024, the EU Commission clarified that the ban would no longer be enforced “at the national level,” citing a “lack of consensus” among member‑states and a need to address supply‑chain constraints. The Commission emphasized that the change was “not a retreat from climate goals but a recalibration of policy to enable a smooth transition to zero‑emission mobility.”

The decision was driven by several factors:

1. Supply‑chain bottlenecks – The global shortage of lithium‑ion battery cells, exacerbated by the pandemic and geopolitical tensions, limited automakers’ ability to produce enough zero‑emission vehicles to meet the 2035 target.
2. Energy security concerns – Several EU members, notably Poland, Hungary, and Romania, warned that a sudden ban could increase dependence on imported battery materials and disrupt local economies.
3. Industry pressure – Major automakers had lobbied for a more flexible approach, arguing that the ban would force premature production of vehicles that could not yet meet consumer demand for range, affordability, and charging infrastructure.

The Commission’s statement suggested that the ban would be replaced by a “phased” approach, with a gradual reduction of ICE vehicles over the next decade rather than an outright stop in 2035.

Reactions from Key Stakeholders

Automakers

Automakers welcomed the reversal, describing it as “the right step to protect jobs and ensure a smooth transition.” Renault’s CEO, Luca de Meo, praised the EU for listening to the industry’s concerns. He argued that a phased approach would allow manufacturers to better align their production lines with the evolving market, thereby reducing the risk of stranded inventory.

Volkswagen Group’s CFO, Matthias Müller, also welcomed the flexibility. He highlighted the company’s upcoming “e‑Volkswagen” strategy, which includes the launch of the ID. Vizzion platform and several new battery‑electric models. “We are committed to a rapid shift to electric mobility, but the transition must be feasible and scalable,” Müller said.

Environmental Groups

Environmental NGOs expressed alarm. Greenpeace’s Europe director, Marie‑Jolie Nørlund, stated that the policy change “significantly weakens the EU’s climate commitments.” She urged the Commission to adopt a new, more ambitious framework that would accelerate the EV transition while ensuring that the ban remains a binding target for the coming years.

The European Climate Foundation (ECF) released a report urging the Commission to re‑impose a 2035 deadline while simultaneously investing in hydrogen fuel‑cell technology and charging infrastructure. “The 2035 ban was a pivotal tool for driving innovation,” the report said.

Member‑State Governments

Poland’s Prime Minister, Mateusz Morawiecki, hailed the decision as “progressive.” He argued that the ban would hurt Polish auto‑manufacturing, which relies heavily on the production of ICE vehicles. He called for “a balanced approach that takes into account the needs of both the automotive sector and the environment.”

Conversely, the Netherlands’ Transport Minister, Gijs van Dijk, criticized the EU for moving away from a strict deadline. He argued that the Netherlands was already on track to meet the 2035 target and called for a “more rigorous, enforceable policy.”

Policy and Market Implications

1. Short‑Term Market Dynamics

The immediate market effect is a renewed focus on ICE vehicle sales. Manufacturers can now push a larger variety of petrol and diesel models to market, potentially boosting short‑term revenue. However, the overall supply‑chain tension for EV batteries means that many automakers are still prioritizing ICE production over new EV launches, potentially stalling the growth of the EV market.

2. Long‑Term Technological Investment

The policy shift could impact the pace at which automakers invest in new battery chemistry, such as solid‑state batteries, and hydrogen fuel‑cell technology. With no hard deadline, companies may postpone R&D investments in zero‑emission vehicles in favor of short‑term gains.

3. Regulatory and Tax Incentives

The EU Commission indicated that it would still offer tax incentives for EV purchases and subsidised charging infrastructure, but these incentives would be tied to “market uptake” rather than a binding production quota. This could lead to uneven incentives across member‑states, depending on national policies and funding priorities.

4. Compliance with Climate Targets

Critics argue that the 2035 ban was a central lever to ensure that the EU’s 55 % emissions reduction target by 2030, as stipulated in the European Climate Law, would be met. Removing the ban could slow the transition, potentially forcing the EU to adopt other, more aggressive policies later. The Commission will need to re‑examine its climate commitments and consider alternative mechanisms such as stricter CO₂ emission limits on existing ICE cars, expanded CO₂ tax, or mandatory vehicle end‑of‑life recycling mandates.

Looking Ahead: What the EU Needs to Do

1. Re‑establish a Clear, Binding Deadline
   The EU must decide whether to re‑impose the 2035 ban or adopt a new, equally stringent target. A clear deadline will help automakers plan long‑term production and R&D.

2. Increase Investment in Battery Supply Chains
   The EU Commission must accelerate initiatives to secure raw materials such as lithium, cobalt, and nickel, and diversify battery production across the bloc. This will alleviate supply‑chain bottlenecks that have hampered EV rollout.

3. Expand Infrastructure Development
   Robust charging networks are essential for consumer confidence. The EU should increase funding for high‑power charging stations and support the deployment of hydrogen refueling infrastructure, particularly in rural and industrial regions.

4. Strengthen Carbon Pricing Mechanisms
   A higher CO₂ tax on new ICE vehicles could serve as a substitute for a production ban, making EVs more competitive without stalling the market. This price signal would also help balance competition between domestic and foreign automakers.

5. Enhance Policy Coordination at the National Level
   Member‑states should align their national policies with the EU’s climate goals to avoid a patchwork of regulations that create market distortions.

Conclusion

The EU’s decision to scrap the 2035 combustion‑engine ban marks a significant policy pivot that will shape the European automotive landscape for years to come. While the rationale of allowing a more realistic transition amid supply‑chain challenges is understandable, the move is widely seen as a retreat from the hard‑line environmental targets that many stakeholders had championed. The challenge for the EU is now to craft a coherent strategy that restores momentum toward zero‑emission mobility while respecting the economic realities of member‑states and industry players. The coming months will reveal whether the EU can balance these competing priorities or whether further policy adjustments will be required to keep the continent on track for its climate commitments.