EU scraps 2035 combustion engine ban in move to increase ‘flexibility’

The European Commission has scrapped its 2035 ban on combustion engines to give car manufacturers more flexibility to comply with its emissions rules. 

Instead of having to sell only zero-emissions vehicles (either electric or hydrogen-fuelled), carmakers will now need to reduce tailpipe emissions by 90% and compensate the remaining 10%, either through the use of low-carbon steel made in the EU or through e-fuels and biofuels.

This means that a small number of new internal combustion engine (ICE) vehicles and plug-in hybrids will still be sold after 2035.

Before that date, car manufacturers will also be eligible to earn “super credits” for selling small affordable electric cars made in the European Union, with each of these cars counting as 1.3 cars towards their emissions targets. 

‘Banking and borrowing’ to continue until 2032

After introducing flexibility for manufacturers to meet their 2025 to 2027 emissions reductions obligations in May, the Commission is also proposing to allow the same ‘banking and borrowing’ system for 2030-2032 emissions targets. This means that carmakers will be allowed to exceed their target in 2030 if they compensate for the excess in following years.

An additional flexibility is also granted for the vans segment, with a reduction of the 2030 CO2 reduction target from 50% to 40%.

EU Commission President von der Leyen said: “Innovation. Clean mobility. Competitiveness. This year, these were top priorities in our intense dialogues with the automotive sector, civil society organisations and stakeholders. And today, we are addressing them all together. As technology rapidly transforms mobility and geopolitics reshapes global competition, Europe remains at the forefront of the global clean transition.” 

New EV mandate for corporate fleets

The so-called “automotive omnibus”, which is expected to save the industry approximately €706 million per year, also includes new mandatory EV targets to be set by Member States for large companies.

“Having more zero- and low-emission vehicles on the market, both first- and second-hand markets – will benefit all customers. As companies' cars cover higher yearly mileages, it also means more emission reductions. It will also make zero- or low- emissions and ‘Made in the EU’ a pre-requisite for vehicles benefitting from public financial support,” the Commission explained.

The package still needs to be approved by the European Parliament.

Reactions to the decision

Most EU-based automotive manufacturers and the trade associations representing welcomed the Commission’s decision – unsurprisingly, as many of them lobbied for months to make it happen. 

“Today’s proposals rightly recognise the need for more flexibility and technology neutrality to make the green transition a success. This constitutes a major change compared to the current law,” stated Sigrid de Vries, Director General of ACEA, the European Automobile Manufacturers’ Association.

Mercedes-Benz also called the move “a step in the right direction”, while BMW said "it is an important first step that the EU Commission no longer pursues technology bans as a guiding principle, but recognises the future viability of the combustion engine,” according to Reuters.

However, those most advanced in the EV transition warned that weakening the EU’s emissions mandate could undermine its competitiveness. Volvo Cars, for instance, said: "A consistent and ambitious policy framework, as well as investments in public infrastructure, is what will deliver real benefits for customers, for the climate, and for Europe’s industrial strength. Volvo Cars has built a complete EV portfolio in less than ten years and are ready to go full electric with a bridge of long-range hybrids. If we can do it, others can as well."