In a significant development for the European automotive and energy sectors, leading carmakers have declared that the European Union’s ambitious plan to ban combustion engine vehicles by 2035 is no longer realistic. This warning comes amid mounting challenges, including sluggish electric vehicle (EV) adoption, geopolitical tensions, and economic pressures that threaten the region’s auto industry and its extensive supply chain.
The announcement underscores a growing tension between environmental goals and practical market realities, with potential ripple effects on global oil demand and energy transitions.
The Call for Reassessment
The leaders of Europe’s primary automotive lobby groups, including the European Automobile Manufacturers’ Association (ACEA) and the European Association of Automotive Suppliers (CLEPA), have jointly urged European Commission President Ursula von der Leyen to revisit the EU’s CO2 emission targets for vehicles. These targets mandate a 55% reduction in CO2 emissions for new cars by 2030 and a full 100% cut by 2035, effectively phasing out sales of new petrol and diesel vehicles.
In a letter to von der Leyen, the groups highlighted that recent geopolitical and economic upheavals have rendered these goals “no longer feasible.”
Key factors cited include China’s overwhelming control of the EV supply chain, which has left European manufacturers at a competitive disadvantage, and emerging trade barriers from the US that could further isolate the EU market.
Additionally, infrastructure hurdles, such as insufficient charging networks, and unexpectedly low consumer demand for EVs have exacerbated the situation.
“The letter exposes a mismatch between Europe’s climate goals and the struggles behind the scenes,” noted industry observers, pointing to the risk of weakening the EU’s auto sector, which employs millions and contributes significantly to the economy.
Underlying Challenges and Market TrendsEuropean carmakers are grappling with a slowdown in EV sales, which have not met the optimistic projections that underpinned the 2035 ban. Factors such as high battery costs, range anxiety, and economic uncertainty have dampened consumer enthusiasm.
Meanwhile, China’s dominance in battery production and raw materials like lithium has created supply chain vulnerabilities, making it harder for EU firms to scale up EV manufacturing competitively.US tariffs on imported vehicles and components add another layer of complexity, potentially limiting export opportunities for European automakers and forcing them to rely more heavily on a domestic market that’s not yet ready for a full EV transition.
This comes at a time when the EU is already facing criticism for its green policies, with some stakeholders arguing that the rapid push toward electrification risks job losses in traditional manufacturing hubs.Energy analysts suggest this could have broader implications for oil and gas markets. If the ICE ban is delayed or softened, it might sustain higher demand for fossil fuels in transportation longer than anticipated, providing a buffer for producers amid global shifts to renewables.
Reactions and Broader Implications
The warning has sparked debate across the continent. Environmental groups have pushed back, emphasizing the urgency of climate action and warning that any rollback could undermine the EU’s net-zero ambitions by 2050. However, industry insiders, including figures like energy expert Anas Alhajji, have long predicted such pushback, noting in social media discussions that the targets were overly ambitious from the start.
Other commentators, such as James Melville, have linked this to wider skepticism about net-zero policies, arguing that the costs—estimated at staggering figures like £800 billion for the UK alone—outweigh the benefits without tangible global impact.
In the EU context, this could lead to policy revisions, potentially allowing hybrid technologies or e-fuels to bridge the gap. For the energy sector, this development underscores the interconnection between automotive policies and fuel markets. A delayed ICE phase-out might stabilize oil prices in the short term but could also slow investments in renewable energy infrastructure. As the European Commission considers its response, the outcome will be closely watched by global energy players.
Part of the problem is the simultaneous electrification of the grid and cars. Wind and Solar cannot meet demand on their own, and storage is not ready for prime time, with the current technology.
This story reflects the ongoing balancing act between environmental imperatives and economic viability, a theme central to the energy transition worldwide. Stay tuned to Energy News Beat for updates on how this unfolds.
Avoid Paying Taxes in 2025
Crude Oil, LNG, Jet Fuel price quote
ENB Top News
ENB
Energy Dashboard
ENB Podcast
ENB Substack