The European Union has revised its plan to effectively ban the sale of new gasoline-powered cars by 2035, now allowing for 10% of new vehicle sales to be hybrids or other non-zero-emission options if manufacturers purchase carbon offsets. This shift, part of the broader ‘Automotive Package,’ aims to balance environmental goals with the economic pressures facing established European automakers.
The change is a direct response to lobbying from traditional car companies struggling to compete with Tesla and the growing influx of affordable electric vehicles (EVs) from China. However, this decision has triggered deep division within the EV startup community, which fears losing ground in a critical global industry.
Why it matters: The EU’s automotive sector employs 6.1% of the bloc’s total workforce, making it a politically sensitive area. Delaying the full transition to EVs protects jobs in the short term but risks ceding long-term leadership in a fast-evolving market.
Startup Concerns Over Competitiveness
Leaders from European climate venture firms and EV startups warn that weakening the 2035 target will hand further advantage to China, which already dominates EV manufacturing. Craig Douglas of World Fund argues that without strong policy signals, Europe risks losing out on the economic benefits of leading the EV transition. A coalition of companies, including Cabify and EDF, signed an open letter urging EU President Ursula von der Leyen to maintain the original ban.
The debate is not just about deadlines; it’s about industrial strategy. Some manufacturers, like Volvo, had no issue meeting the original 2035 deadline and would have preferred increased investment in charging infrastructure instead of weakened mandates. Others worry that delaying the ban will discourage the necessary scale and learning curves for electrification.
The Infrastructure Question
The EU’s ‘Battery Booster’ initiative — a €1.8 billion investment in European battery supply chains — is meant to address some concerns. Companies like Verkor, a French battery cell producer, see this as a vital step toward securing local production. However, critics argue that the Booster alone won’t offset the negative signaling from the softened EV ban.
Traditional automakers are already raising concerns that carbon offset requirements could increase car prices, undermining the policy change’s intended goal of competitiveness. Meanwhile, the United Kingdom’s position remains unclear, with no tariffs yet imposed on Chinese EVs despite growing market share.
The bigger picture: This policy shift underscores the tension between short-term economic realities and the urgency of long-term climate goals. Europe’s decision will significantly impact its position in the global EV market, determining whether it leads or lags in this critical transition.
Ultimately, weakening the 2035 ban represents a compromise that prioritizes immediate economic concerns over aggressive decarbonization. The long-term consequences for European leadership in the EV industry remain to be seen.
