European Automakers Challenge Feasibility of Combustion Engine Ban
Europe's prominent car manufacturers are raising significant concerns about the practicality of the European Union's ambitious plan to discontinue internal combustion engines. They contend that the stringent environmental regulations, particularly the CO2 emission targets for 2030 and 2035, are not viable under current global industrial and geopolitical conditions. Industry leaders emphasize the need for a revised strategy that balances climate objectives with the protection of Europe's industrial competitiveness, social stability, and the resilience of its supply chains, while also considering various powertrain technologies beyond solely electric vehicles.
In a joint communique, the heads of the European Automobile Manufacturers' Association (ACEA) and the European Association of Automotive Suppliers (CLEPA) conveyed their apprehensions directly to European Commission President Ursula von der Leyen. They highlighted that the European automotive sector is being asked to undergo a profound transformation with significant disadvantages. Key issues cited include escalating production expenses, almost complete dependence on Asian nations for battery components, and the uneven rollout of electric vehicle charging facilities across the continent. Furthermore, the industry points to external factors, such as former U.S. President Trump's tariff policies on imported automobiles, as contributing to their challenging predicament.
Ola Källenius, CEO of Mercedes and President of ACEA, alongside Matthias Zink, an executive at Schaeffler and President of CLEPA, articulated in their letter that Europe's automotive transformation blueprint must move beyond theoretical ideals and instead acknowledge current industrial and geopolitical realities. They asserted that meeting the rigid CO2 targets for cars and vans by 2030 and 2035 is simply unattainable in the present climate. Their recommendation is to recalibrate the existing CO2 reduction pathway for road transportation, ensuring it aligns with the EU's climate objectives while simultaneously safeguarding the continent's industrial strength, social cohesion, and the strategic robustness of its supply chains.
A critical mismatch exists between Europe's environmental aspirations and the difficulties faced by its largest manufacturing sector. Similar to their North American counterparts, most European carmakers rely heavily on their internal combustion engine vehicle sales for revenue, making a rapid shift to new technologies a significant hurdle. While some European automotive giants, including Mercedes under Ola Källenius's leadership, have launched electric models, the letter notes that only a small percentage of vehicles on European roads are currently battery-powered: approximately 15% of passenger cars, 9% of vans, and 3.5% of trucks, with adoption rates varying widely across member states.
Industry executives further pointed out that despite some European markets showing increasing adoption of battery-powered vehicles, a substantial portion of consumers remains hesitant to transition to alternative powertrains. They proposed that "more ambitious, long-term, and consistent demand-side incentives" are necessary. Additionally, promoting a diverse range of drivetrain technologies, including hybrid and plug-in hybrid options, alongside fully electric vehicles, could effectively help the EU achieve its environmental goals.
The emphasis on technology neutrality as a core regulatory principle is crucial, according to the automotive associations, as it would ensure that all available technologies can contribute to decarbonization efforts. While electric vehicles are expected to lead the transition, they stress the importance of allowing space for plug-in hybrids, range-extended vehicles, highly efficient internal combustion engine vehicles, hydrogen-powered vehicles, and those utilizing decarbonized fuels. They believe that better utilization of transitional technologies, such as plug-in hybrid electric vehicles, will be vital for meeting decarbonization objectives, engaging consumers in the green transformation, and catering to export markets where demand for these technologies is projected to remain strong.
This appeal from the automotive sector follows a recent amendment by the European Commission to the 2025 CO2 emission reduction targets on May 8, granting carmakers additional time to comply. This decision has drawn criticism from environmental groups like the International Council on Clean Transportation (ICCT). ICCT Europe Director Peter Mock commented that such ad-hoc target adjustments create uncertainty among industry stakeholders and convey a negative message to consumers, potentially hindering the accelerating electric car market. However, a major underlying motivation for automakers' resistance to this framework is financial, as evidenced by significant profit declines reported by companies such as the Volkswagen Group in Q2 2025, despite increased sales, highlighting the economic strain of the current transition.