Europe’s ambitious climate agenda, particularly the mandate to phase out new internal combustion engine vehicles by 2035, is encountering significant resistance from the continent’s leading automotive manufacturers. This clash highlights a growing chasm between political directives and the economic realities confronting an industry central to Europe’s industrial strength. Major carmakers are now openly challenging the feasibility of this transition, citing a confluence of market challenges and competitive pressures.
Key players such as Volkswagen, Mercedes-Benz, and Stellantis have intensified their lobbying efforts against the 2035 deadline. Volkswagen CEO Oliver Blume has underscored the necessity of “reality checks,” asserting that expecting 100% electric vehicles by 2035 is “unrealistic.” Similarly, Mercedes-Benz CEO Ola Källenius conveyed to Bloomberg the urgent need for an “inventory of what in the policymaking has worked, and what needs to be adjusted,” while Stellantis executive Jean-Philippe Imparato flatly declared the deadline “not achievable.”
Economic Headwinds and Competitive Pressures
The industry’s pushback is driven by several critical factors. Europe’s car market is experiencing stagnation, coupled with an uneven and sometimes shaky demand for electric vehicles. This internal challenge is compounded by the rapid expansion of Chinese competitors, notably BYD, which are aggressively entering the European market with more affordable EV models that local manufacturers struggle to match on price. Automakers argue that accelerating the phaseout without adequate market readiness risks ceding significant market share to these foreign players.
To navigate these challenges, manufacturers are advocating for greater flexibility in policy. Their proposals include extending the operational life of “range extenders”—small gasoline engines that charge a car’s battery—and allowing more time for the adoption of hybrid technologies. They also seek continued subsidies for EVs and less stringent safety regulations for smaller vehicles. Manufacturers contend that these adjustments are not about abandoning climate goals but rather about providing Europe with the necessary time to adapt without collapsing its vital automotive sector or inadvertently handing market dominance to overseas rivals.
Regulatory Stalemate and Broader Implications
Conversely, EU regulators and environmental organizations remain firm, arguing that any dilution of the 2035 target would severely undermine Europe’s credibility on climate action. Such a move, they warn, could send mixed signals to investors, decelerate clean-tech innovation, and jeopardize the continent’s commitment to decarbonization. The automotive sector is viewed as a pivotal battleground in the EU’s broader strategy to reduce reliance on fossil fuels, with the transition impacting millions of jobs and complex supply chains across Germany, France, and Italy. A premature shift, they acknowledge, could disrupt these supply chains, yet delays risk Europe falling further behind in the global green technology race.
The European Commission is currently reviewing its 2030 and 2035 climate targets for the auto sector, with potential amendments slated for next year. An upcoming meeting in Brussels between European Commission President Ursula von der Leyen and industry leaders is anticipated to be tense, as automakers and component suppliers are poised to demand more time, flexibility, and reduced regulatory burdens. This automotive debate is unfolding within a larger, contentious discussion on Europe’s overall climate strategy, including a proposed 90% emissions cut by 2040, which has already encountered diverse opinions and demands for concessions from member states like France and Italy.
Ultimately, despite public pronouncements of commitment to electrification, Europe’s automotive titans are intensifying their efforts behind the scenes to temper the pace of the combustion engine phaseout. This dynamic has set the stage for a high-stakes lobbying conflict between some of Europe’s most powerful industrial entities and its regulatory framework, with significant economic and environmental consequences hanging in the balance.
Jonathan Reed received his MA in Journalism from Columbia University and has reported on corporate governance and leadership for major business magazines. His coverage focuses on executive decision-making, startup innovation, and the evolving role of technology in driving business growth.