In an extensive reaction to the EU Commission’s watering down of the 2035 environmental targets for mobility and transport, the NGO Transport & Environment (T&E) urgently warns that Europe risks falling even further behind on EVs compared to global competition.

“If the EU automotive industry doesn’t transform fast, it will lose its international competition, with consequences for the workers and the EU sovereignty,” warns T&E.

On December 16, 2025, the European Commission proposed significant changes to the EU’s car CO₂ emission standards, weakening the 2035 zero-emission target to a 90% reduction target. “This review comes amid intense lobbying from automotive and fuel industries, despite evidence that the electric vehicle transition is succeeding,” notes T&E.

“Backtracking on these standards poses serious risks to Europe’s competitiveness, climate goals, consumer costs, and employment,” T&E warns. “Overall, reversing the EU’s 2035 phase-out of combustion engine sales sends a confusing signal at a time when European manufacturers urgently need to catch up with Chinese EV-makers.

The flaws of the EU proposal

T&E has analyzed the EU proposal and sees several major flaws. First, the weakening of the 2035 CO₂ reduction target from 100% to 90% is expected to reduce the share of BEVs by 15%, from 85% to 70%. “However, the proposal also introduces high uncertainty as BEV sales would fall between 50% and 95%, depending on the powertrain mix strategy adopted,” adds T&E.

Secondly, the 2030 target would be weakened by a 3-year averaging period (2030-2032) and by super-credits for small BEVs made in Europe. This implies a 10 percentage-point reduction in the BEV share in 2030, from 57% to 47%.

Thirdly, under the proposal, cars would emit an additional 720 million tons of CO₂ (MtCO₂e) between 2025 and 2050, equivalent to eight years of emissions from the entire German car fleet.

EU automotive industry in transition

Since the Covid-19 pandemic, automotive sales volumes in Europe have declined significantly, by around 3 million units, with no return to pre-pandemic levels. “This decline stems primarily from manufacturers’ own strategic choices, not climate policy,” T&E points out.

“Automakers deliberately prioritized profits over volumes, shifting production toward larger, more expensive models like SUVs and premium vehicles—the result: fewer cars sold, but higher profits per vehicle.

As a consequence, the segment of small cars has been shrinking (-1.6 million units since 2019, according to the European Commission), making it more difficult for citizens to buy new affordable vehicles,” T&E adds.

Employment rates also took a toll. Between 2019 and 2024, employment in the automotive sector fell by 25% in France, by 9% in Italy, and by 7% in Germany, according to Eurostat.

“Meanwhile, the electric transition is progressing successfully. According to the ACEA market registration data published in January 2026, the market share of battery-electric cars (BEV) reached 17.4%, up from 13.6% last year. In terms of volume, 1.8 million new BEVs were registered, a 30% increase compared to 2024,” stipulates T&E.

“Supporting this momentum, charging infrastructure is also expanding rapidly across Europe, with nearly 1.14 million public charging points installed in Europe by the end of 2025, the NGo adds.

Is Europe falling behind?

According to T&E, the EU risks losing ground in the global EV race and falling behind global competition. While the EU is discussing the 2035 target, global markets are going electric fast: Turkey (18% EVs) has caught up with the EU, while some markets have already surpassed the EU in the first half of 2025: Thailand (24%), China (30%), and Vietnam (42%).

“If the EU automotive industry doesn’t transform fast, it will lose to its international competition, with consequences for the workers and the EU sovereignty,” T&E warns.

This has consequences in many fields: it would increase CO2 emissions amid global climate urgency, raise costs for consumers, and put investments and jobs at risk.

“Allowing plug-in hybrids and cars running on biofuels and e-fuels to be sold after 2035 is also bad news for consumers: a slower uptake of electric cars will delay the purchase price parity point (when electric cars get cheaper than conventional models) and lock drivers into more expensive mobility,” T&E points out.

Over 200 CEOs and business leaders from tomorrow’s electric mobility industry have called on the EU to preserve the 2035 target to protect their investment and provide the much-needed guarantee of market certainty for technology deployment (‘Take Charge’ coalition).

“This call is supported by T&E analysis, which shows that Europe must urgently establish global electric car leadership to sustain economic value and create new jobs across its automotive value chain and surrounding industries, such as batteries and charging,” T&E urges.

T&E’s recommendations

To protect Europe’s electric transition, T&E makes several recommendations:

– Remove the fuel credit mechanism and reject any mechanism that rewards biofuels under the car CO₂ law.

– Remove the 3-year average, or at a minimum, introduce a limit to borrowing.

– Low-carbon credits should be limited, well-designed, based on robust and effective methodologies and definitions. The focus should clearly be on delivering ‘Made-In-EU’green (fossil fuel-free) steel.

– Limit small EU BEV credits to cars under 4.1 meters, with a 1.2 multiplier and a cumulative cap of 5 g CO₂/km over 2030-2034. Use strict ‘Made-in-Europe’ definitions.

– Car labelling: real-world information has to be used to empower consumers. Provide real-world info (for both electric and ICE) in addition to laboratory test values (WLTP).

T&E, finally, promotes a stronger Made-in-Europe approach to build Europe’s economic resilience, safeguard jobs, and advance its climate and security objectives.

The EU should ensure a significant and increasing share of the EV electric technology stack – batteries and their key components, electronics, e-motors, chips, software – is produced in Europe, including by non-European firms that onshore supply chains and enter genuine value-creating partnerships.