A new analysis by Transport & Environment of the European Commission’s proposed revision to the 2035 CO₂ rules warns that the target rollback will reduce EV sales, boost fossil fuel use and emissions, and send a damaging signal to investors at a time when China is gaining ground in the battery car market.
The European Commission’s December plan to ease the 2035 zero-emission vehicle mandate risks reshaping Europe’s auto industry for the worse. That’s the bottom line of a data analysis from Transport & Environment.
The lobby group warns that a 10% allowance for combustion-engine cars under the new target will reduce the battery-electric vehicle sales share to 85%, leaving 15% below the all-electric goal set in 2022.
Bolstering affordability
The policy shift follows lobbying by carmakers and includes controversial flexibilities, such as fuel credits and CO₂ allowances for low-carbon steel, as well as relaxed short-term 2030 targets. Depending on how manufacturers balance their powertrain mix, BEV sales could range from 50% to 95% in 2035.
Several mainstream traditional carmakers have welcomed the softened target. Volkswagen described the updated standard as sensible and acknowledged current market conditions, while Renault noted support for provisions aimed at bolstering small and affordable electric vehicle segments.
The European Automobile Manufacturers’ Association (ACEA) touted the so‑called Automotive Package as a step toward aligning decarbonisation with industrial realities.
ACEA leadership calls it a necessary balance between emissions cuts and economic resilience, as carmakers struggle to drive mass adoption of electric mobility and recoup their initial investment.
73% by 2050
But according to the T&E analysis, the revised framework would allow millions of combustion cars to remain on roads well into the second half of the century, resulting in an estimated 720 million additional tons of CO₂ between 2025 and 2050. That’s equivalent to nearly a decade of emissions from Germany’s passenger car fleet.
The Commission’s own impact assessment reveals that even with full zero-emission sales in 2035, not the complete fleet, but 83%, would be electric by 2050. With combustion sales permitted under the new plan, that figure is expected to drop to 73% or lower.
The report also highlights systemic inefficiencies: ICE vehicles require more fuel and incur higher running costs. At the same time, the promise of fuel credits is undermined by real-world shortages of sustainable biofuels, which are already needed by aviation and shipping.
Limping battery sector
Perhaps most critically, the proposed regulatory flexibility risks undercutting Europe’s battery sector, which relies on scaling to reduce costs and stay competitive globally. Weaker EV demand erodes the return on battery investment and sends the wrong message to automakers, suppliers, and consumers.
The intermediate 2030 target has also been weakened. Instead of a firm requirement, carmakers can average emissions performance over three years, enabling them to delay compliance and slow BEV rollout during the most crucial ramp-up phase. The result: projected BEV market share falls from 57% to 47%.
And then there are the supercredits for small European-made BEVs. Acting as multipliers, these can further dilute the numbers, according to T&E, allowing automakers to hit targets while selling fewer actual EVs.
Scrap the most distorting flexibilities
As a response, T&E doesn’t recommend returning to the earlier proposal, but scrapping the most distorting flexibilities: fuel credits and the three-year averaging scheme. It also calls for stricter limits on vehicle sizes and tighter definitions for locally produced models.
T&E is releasing its findings ahead of the upcoming debate in the European Parliament and Council, which must determine whether the Commission’s proposal marks a pause in EV momentum or a decisive step back.
For now, the Commission appears to be betting on a more ‘flexible’ approach. But critics argue that what’s being lost is Europe’s chance to lead the global transition to clean mobility.
