EU Accelerates 2035 Vehicle Emission Targets Review

The European Commission is accelerating its review of the 2035 target for 100% reduction of CO2 emissions from new cars and vans, moving the timeline from 2026 to the end of 2025. This target, which effectively means ending internal combustion engine sales for new vehicles in the EU, faces challenges from the automotive industry, particularly due to the low market share of electric vans and concerns about feasibility. The Commission is considering new proposals that may include CO2-neutral fuels like biofuels, allowances for plug-in hybrids or range extenders, and the creation of a new regulatory category for small electric vehicles that could benefit from lower taxes and contribute more toward emission goals. Despite industry concerns and increasing competition from non-European manufacturers, the Commission remains confident that largely climate-neutral mobility by 2035 is achievable, supported by rising electric vehicle sales, which now hold a 17% market share for cars. Additionally, the EU is focusing on promoting local content in battery and vehicle production and ensuring investment conditions favor European manufacturing amid global competition. The automotive industry is simultaneously dealing with sluggish demand and shrinking profit margins while receiving regulatory flexibility to meet 2025 climate targets.