The European Parliament has backed a further relaxation of planned emissions requirements, reflecting growing concern over manufacturing competitiveness, Chinese competition and the economic consequences of Europe’s transition to electric vehicles.
Europe’s long-standing ambition to phase out sales of new petrol and diesel cars by 2035 has undergone another substantial revision, after European Parliament lawmakers backed a compromise that would allow combustion-engine technology to remain part of the automotive market beyond that date.
The decision represents more than an adjustment to emissions legislation. It reflects a changing political calculation in Brussels, where concerns about industrial competitiveness, employment and the financial pressures facing European manufacturers are increasingly influencing climate policy.
On Wednesday, the European Parliament’s environment committee voted to reduce the proposed emissions-cutting requirement for new cars from 100 per cent to 87.5 per cent by 2035.
Under the compromise, manufacturers could obtain additional credits worth 7.5 percentage points through the use of European-produced low-carbon steel, creating an alternative means of meeting part of their obligations.
The proposed arrangement goes further in granting flexibility than the European Commission’s earlier automotive package, which envisaged reducing the emissions requirement to 90 per cent.
The committee’s decision is not yet law. The legislation must still secure approval from the full European Parliament and be negotiated with EU member states.
Nevertheless, Wednesday’s vote demonstrates that the political coalition supporting a strict transition to zero-emission vehicles has changed.
A compromise driven by industrial concerns
The new proposal emerged from negotiations between the centre-right European People’s Party, the Socialists and Democrats, and the centrist Renew Europe group.
Their agreement reflects an increasingly influential argument that European manufacturers require greater technological flexibility to remain competitive.
The automotive industry has struggled with high production costs, expensive energy, uneven electric vehicle demand and intensifying competition from Chinese manufacturers.
European car production remains considerably below its pre-pandemic levels, while manufacturers face substantial costs associated with developing electric platforms, batteries and charging technologies.
The EPP has been particularly active in demanding changes to the original 2035 framework.
Following Wednesday’s vote, Italian MEP Massimiliano Salini, one of the leading negotiators, described the agreement as a means of supporting European employment and giving manufacturers greater freedom in choosing technologies.
The argument is that regulatory requirements should encourage emissions reductions without necessarily determining which propulsion systems manufacturers may use.
The German and French dilemma
Germany and France illustrate the economic difficulties confronting policymakers.
Germany’s automotive industry remains a major employer and export sector, with manufacturing supply chains extending across Central and Eastern Europe.
France has invested heavily in electrification and battery production but also faces pressure to protect domestic vehicle manufacturing.
Both countries must reconcile the financial realities of industrial restructuring with the longer-term objective of reducing transport emissions.
The proposed rules could permit certain plug-in hybrids, range-extender vehicles and combustion-engine models using eligible low-carbon fuels to remain available beyond 2035.
However, the commercialy, production costs and the final details of the legislation
The changes also introduce another industrial-policy objective: supporting Europe’s steel industry.
This effectively links automotive regulation to the wider effort to decarbonise European heavy industry.
Carmakers remain unconvinced
The European Automobile Manufacturers’ Association welcomed the additional flexibility but cautioned that the proposals remained insufficient to address the industry’s difficulties.
Its response illustrates the limits of the compromise.
Manufacturers have invested heavily in electric vehicle production and cannot simply reverse those commitments without substantial costs.
At the same time, companies must continue supplying markets where charging infrastructure, consumer purchasing power and electricity prices vary considerably.
For automotive executives, uncertainty over the final regulatory framework may therefore prove nearly as important as the eventual numerical emissions target.
A difficult argument over China’s advantage
Environmental organisations have questioned whether relaxing the rules would ultimately weaken European competitiveness.
Transport and Environment has warned that retaining a larger market for combustion-engine technologies could divert investment away from electrification.
Chinese manufacturers already possess considerable advantages in battery production, manufacturing scale and electric vehicle supply chains.
European companies therefore face a strategic choice.
Slowing the transition could preserve existing industrial capabilities and employment in the short term. But it could also delay investment in technologies increasingly important to international automotive markets.
Conversely, maintaining strict requirements without sufficient charging infrastructure, affordable electricity or competitive domestic battery production carries its own economic risks.
The disagreement concerns not only the pace of decarbonisation, but also which industrial strategy offers Europe the strongest position in the global market.
What happens next?
The full European Parliament is expected to consider the automotive package in December, after which negotiations with EU governments will determine the legislation’s final form.
France and Germany have advanced their own approach, including a proposed 90 per cent emissions reduction, indicating that further differences must be resolved.
The original 2035 requirement was designed to provide manufacturers with a clear long-term investment signal.
The present debate shows how difficult it has become to preserve that certainty as industrial conditions and political priorities change.
Europe’s automotive transition will continue, but the route towards it is no longer as firmly defined as lawmakers once intended.
The final agreement will have consequences not only for car manufacturers and motorists, but also for the continent’s battery producers, steelmakers, energy companies and industrial competitiveness.
