In the short term, Europe’s car industry gains breathing space. In the longer term, Europe’s climate policy and electric-mobility leadership risk losing clarity and momentum, despite mounting evidence that the electric car is already the technologically and economically superior option.
That is the uncomfortable trade-off at the heart of the European Commission’s new automotive action plan, which quietly but decisively softens the planned 2035 ban on new combustion-engine cars.
What was once a clear, binary rule — no new petrol or diesel cars from 2035 — has become a softer and more ambiguous 90 per cent CO₂-reduction target, leaving room for combustion engines to survive if manufacturers can “compensate” their remaining emissions.
The Commission presents this as a matter of realism and technology neutrality. For many in the mobility and climate communities, it appears to be a retreat at precisely the moment electrification needs certainty, not flexibility.
“This may sound technical,” a Brussels-based transport analyst notes, “but in practice it reintroduces doubt into a transition that was finally becoming predictable.”
A weaker signal
The immediate impact of the Commission’s move is political and psychological rather than technical. By abandoning a hard stop for combustion engines, Brussels weakens its most powerful instrument: a precise end date that forced investment decisions.
That matters particularly in the Benelux, where EV uptake is already relatively advanced, especially in company fleets. Belgium and the Netherlands have relied heavily on predictable EU rules to justify far-reaching company-car tax reforms, large-scale charging roll-outs, and public procurement strategies.
Luxembourg has similarly built its mobility policy around rapid fleet electrification and cross-border commuting. Once the end date becomes conditional, those national choices become harder to defend. Why accelerate charging or tighten fiscal incentives if combustion engines might still qualify as ‘compliant’ beyond 2035?
A self-fulfilling prophecy
The policy shift did not happen in a vacuum. It was preceded — and arguably enabled — by a steadily darkening public narrative around electric vehicles. Over the past two years, the debate moved from how to accelerate electrification to whether it was viable at all.
Slower sales growth in some markets, infrastructure gaps, and subsidy fatigue were amplified into a broader story of EV failure, creating political space to question timelines that had previously been considered settled.
That narrative is now starting to function as a self-fulfilling prophecy. By responding to doubts rather than actively countering them, the Commission risks reinforcing the very uncertainty it sought to manage.
Weaker regulatory clarity feeds hesitation among investors, fleet operators, and public authorities, which in turn slows EV deployment — seemingly confirming the original scepticism.
What began as a perception problem risks becoming a structural one, not because electrification no longer works, but because confidence in it is being eroded from the top down.
What makes this erosion of confidence all the more problematic is that it is increasingly disconnected from the underlying technological and economic reality.
EVs: the reality check
What makes the current hesitation especially difficult to justify is that the electric car is no longer a technological gamble. It is widely recognised — including within the automotive industry itself — as the structurally superior drivetrain: mechanically simpler, less prone to failure and, over its lifetime, increasingly cheaper than combustion alternatives.
With far fewer moving parts, no exhaust aftertreatment, and lower maintenance needs, battery-electric vehicles already outperform ICE cars in high-mileage fleet use, where total cost of ownership matters most.
Battery prices continue to fall, while the complexity—and cost—of keeping combustion engines compliant with emissions rules continue to rise.
Even former automotive leaders who once defended the ICE have changed their tune. Ex-Daimler CEO Dieter Zetsche has publicly called the electric drivetrain “the better technology”, and similar admissions have come from other current and former industry executives who now concede that electrification is not just inevitable, but economically rational.
From a climate perspective, the conclusion is equally stark. Whatever transitional role hybrids or alternative fuels may play, only electrification offers a scalable path to deep emissions cuts in road transport.
Seen in that light, Europe’s renewed doubt about EVs looks less like a sober reassessment of technology and more like institutional reluctance to confront the speed and consequences of a transition already underway.
Why Brussels blinked
The Commission’s motivations are easy to trace. Europe’s car industry is under pressure from Chinese manufacturers scaling faster and more cheaply, US subsidies that are pulling battery investment across the Atlantic, and slowing private EV demand in price-sensitive markets.
“We cannot regulate Europe into industrial decline,” Commission president Ursula von der Leyen said when presenting the plan, arguing that flexibility is needed to protect jobs and competitiveness.
That logic resonates strongly in Germany and Italy, where governments and manufacturers have long resisted a hard cut-off date for combustion engines. It resonates less in frontrunner countries where electrification is already working and where the economic case for EVs is becoming stronger, not weaker.
Help, at a price
To offset the diluted emissions target, the Commission has bundled in industrial support. Battery manufacturing will receive €1.8 billion in EU backing, regulatory burdens for manufacturers are set to be reduced, and corporate fleets will face stronger decarbonisation obligations.
A new category for small, affordable electric cars could help urban mobility in dense regions such as Flanders, the Randstad and Luxembourg. These measures are welcome and, in some cases, overdue.
But they do not replace the power of a firm regulatory endpoint. Subsidies can accelerate markets; deadlines force transformation. As one Benelux-based fleet leasing executive puts it, “With a fixed ban, we optimise for EVs. With flexibility, we optimise for risk.”
Who gains, who loses
In the short term, the winners are clear. Plug-in hybrids and other transitional powertrains gain time, allowing manufacturers to stretch existing platforms and protect margins.
Large OEMs with diversified portfolios are well positioned to navigate this new flexibility. The long-term losers are less visible but more consequential.
EV-only strategies face diluted signals, supplier ecosystems betting on scale risk, slower ramp-up, and public authorities that aligned taxation and infrastructure with a full phase-out of combustion engines face renewed political resistance.
The climate cost will not appear overnight. It will surface gradually, through slower fleet turnover, delayed investments, and prolonged fossil lock-in. The danger is not collapse, but drift.
From the finish line to the review date
Globally, the EU’s original 2035 ICE ban was more than a regulation; it was leadership. By softening it, Europe risks weakening its influence just as China accelerates electrification and the US doubles down on clean-tech subsidies.
In the short term, Brussels may stabilise parts of its car industry. In the long term, it risks turning a clear transition into a prolonged balancing act, where climate ambition is constantly renegotiated against industrial anxiety.
The real danger is that 2035 quietly stops being a finish line and becomes just another review date. Once that happens, hesitation becomes rational, delay becomes defensible, and momentum is lost.
Europe still speaks the language of electrification, but by weakening its strongest signal, it risks undermining the confidence needed to make the transition irreversible — especially in regions that were already doing the heavy lifting.
