STRASBOURG (Business Emerge/Europe Desk): The European Commission has moved to revise the framework governing the EU combustion engines ban by adjusting the emissions reduction requirement for new passenger cars from 2035, opening a pathway for limited continued sales of non-electric vehicles under defined conditions.
The updated proposal, presented in Strasbourg, shifts the requirement for new vehicles sold from 2035 to achieve a 90 percent reduction in carbon dioxide emissions compared with 2021 levels. This replaces the earlier requirement of a full elimination of tailpipe emissions. The change allows certain vehicles that rely partly on combustion engines to remain eligible for sale if they operate using carbon-neutral fuels.
The proposal follows extended discussions involving EU institutions, national authorities, and automotive manufacturers. Germany and Italy were among the countries that raised concerns about the pace of transition. Vehicle producers across Europe also sought changes as they face slowing demand for electric vehicles and increasing competition from manufacturers based outside the region.
Under the revised structure, plug-in hybrid vehicles and range extender models may continue to be sold after 2035 if they meet the adjusted emissions threshold and use approved biofuels or synthetic fuels designed to be carbon neutral. The legal framework will still require approval from EU member states and the European Parliament before implementation.
The Commission indicated that the revised 90 percent threshold still represents a substantial reduction in emissions over current levels. Internal discussions reflected the view that the adjustment preserves progress toward lower transport emissions while addressing industrial and market constraints affecting manufacturers.
Data shared during the policy process shows that corporate vehicle fleets account for close to 60 percent of new car registrations across the European Union. As part of the same package, the Commission is expected to outline measures aimed at increasing electric vehicle adoption within these fleets. The exact design of these measures has not been finalized, though options under consideration include conditions related to local production content.
The automotive sector has faced a series of financial and operational pressures during the transition to electric mobility. A major U.S. carmaker recently announced a writedown of $19.5 billion and the cancellation of several electric vehicle models, citing policy shifts and weaker than expected demand. European manufacturers, including large multinational groups, have also reported slower sales growth in electric segments and have called for flexibility in emissions targets and associated penalties.
European producers have additionally pointed to competitive pressure from Chinese electric vehicle makers, particularly in the Chinese domestic market and through imports into Europe. While the EU has introduced tariffs on certain Chinese-built electric vehicles, manufacturers say these measures have provided only limited relief.
Industry representatives argue that the revised EU combustion engines ban framework could offer manufacturers additional time to manage investment cycles and production transitions. At the same time, electric vehicle producers and clean transport groups have raised concerns that easing targets could affect long-term investment certainty in battery technology, charging infrastructure, and supply chains.
As part of the broader regulatory update, the Commission is also considering the creation of a new vehicle category for small electric cars. These models could benefit from lower tax rates and generate additional regulatory credits toward compliance with emissions targets. Credits may also be awarded for sustainable manufacturing practices, including the use of low-carbon materials such as reduced-emissions steel.
Next steps include formal presentation of the legislative text, followed by negotiations among EU member states and lawmakers. Any final rules would apply uniformly across the bloc once adopted. The Commission is expected to provide further technical details on fuel eligibility, fleet requirements, and credit mechanisms during the approval process.
