Study: phasing-out of gasoline and diesel crucial to EU’s car industry’s future

Is Europe’s ban on combustion engines a curse or a blessing for its industry? Dwindling profits, plant closures, and firm reliance on global outsourcing seem to point to the first, but a study from the University of Sussex claims the opposite. “Changing gears (or acting as Trump does in the US, ed.) would be a mistake.”

As Europe presses forward with its plan to phase out gasoline and diesel car sales by 2035, the debate over the future of the continent’s automotive industry has reached a fever pitch. Critics warn that such disruptive policies could cripple Europe’s already strained car industry.

Long-term competitiveness

However, a new policy briefing from the European Mobility Policy and Climate Initiative (EMPOCI) published by the University of Sussex UK suggests the opposite.

According to the study, authored by leading industry and policy experts from all over Europe, a strict phase-out of internal combustion engine vehicles is necessary to achieve environmental goals and maintain Europe’s long-term industrial competitiveness.

The automotive landscape is fundamentally transforming, with electric vehicles at the center of the industry’s future. The EMPOCI report argues that this transition is inevitable and that Europe must act decisively to maintain its status as an industrial leader. 

Major global competitors, particularly China, have already taken the lead in EV technology, and any hesitation from European policymakers could further erode the region’s competitive standing.

The report also refers to the US as a frontrunner but compiled its information and findings before Trump’s inauguration. Nevertheless, Texas-based Tesla remains the world’s second-largest EV maker after Chinese BYD.  

China’s sustained investment in battery technology and efficient supply chains has made it the dominant force in the EV sector. Meanwhile, previously backed by substantial government incentives, American carmakers continue expanding their electrification foothold. 

Becoming a laggard

The report warns that rolling back phase-out policies would undermine Europe’s credibility and risk, making it a laggard in the global race toward sustainable mobility.

“Reversing course on phase-out policies would be a mistake,” the brief states. “It would not only weaken Europe’s ability to compete but also disrupt long-term planning for automakers and suppliers.”

The EMPOCI report outlines several key reasons why maintaining a strict ICE phase-out timeline would strengthen Europe’s automotive industry.

First, it forces automakers to commit to next-generation technologies rather than relying on incremental improvements to legacy combustion engines. Second, it provides long-term regulatory certainty, enabling automakers and suppliers to plan investments confidently.

Third, it reduces the risk of stranded assets by discouraging investment in outdated technology. Finally, it ensures that all industry stakeholders – from manufacturers to infrastructure developers – work together, minimizing disruption and inefficiencies.

What about e-fuels?

Some industry players have pushed for e-fuels as an alternative to EVs, arguing that they could extend the viability of ICE vehicles. However, the EMPOCI report dismisses this approach as impractical, pointing out that e-fuels will likely remain expensive and inefficient compared to battery-electric technology.

“Keeping the door open for new ICE vehicles would only delay necessary innovation,” the report states. “E-fuels are not a scalable solution for mass-market transportation.”

While the report firmly backs the 2035 phase-out, it also stresses that additional policy measures are needed to ensure a smooth transition. These include more substantial incentives for EV adoption, increased investment in battery technology, and expanded charging infrastructure.

Worker retraining and regional economic support will also be crucial. As ICE production declines, thousands of jobs in Germany, France, and Central Europe could be at risk. The report urges policymakers to extend funding for job transition programs and economic diversification initiatives.