It was the crown jewel of a climate agenda that defined Ursula von der Leyen’s first term as Commission president. But a little over two years after it was enacted, the European Union’s 2035 ban on gasoline-powered cars is dead. Its killers: Germany, home of Europe’s largest car industry, and the center-right European People’s Party, the pro-business political family to which von der Leyen and German Chancellor Friedrich Merz belong. It was their pressure that forced the Commission’s hand, after Berlin went from potentially abstaining on a vote to undercutting the entire combustion engine ban — all within three weeks.  Under the new proposal, the ban would be replaced by a target to reduce emissions by 90 percent in all cars sold after 2035. That means a range of vehicles will be part of the mix long past 2035, including pure combustion engines and plug-in hybrids that have both a combustion engine and an electric motor —  as long as they are offset with made-in-EU green steel and alternative fuels derived from non-fossil sources. Germany and the EPP argued the outright ban constrained the ability of European automakers to compete and took the freedom of choice away from consumers.  “Six months ago, it was unthinkable that the Commission would make this course correction,” an EU diplomat said, calling Germany’s “decisive intervention” a game changer in the fate of the law. “The ideology of pure electric is ending.”  After winning the majority of seats in the European Parliament in 2024, EPP chief Manfred Weber, also from Germany, said overturning the ban would be his top priority in the new era.  Weber claimed victory on Tuesday, calling the reformed legislation cutting the 2035 emissions target from 100 percent to 90 percent a “massive reduction.”   “We only can win the fight against climate change if we combine it with an economically reasonable approach. The combustion engine is allowed to be sold in the European Union after 2035,” he told a Tuesday press conference ahead of the announcement.  Cars account for 16 percent of EU emissions, making the ban an important — and certainly the most visible — pillar of the EU’s climate policy of reducing net greenhouse gas emissions to zero by 2050. By the Commission’s own calculations, dropping the emissions target to 90 percent means that 25 percent of the cars sold after 2035 would emit CO2, equivalent to roughly 2.6 million vehicles. The new targets are part of a broader automotive package put forward by the European Commission on Tuesday that included a new regulation mandating zero-emissions corporate fleet targets for each EU country, a battery booster to increase supply, and a regulatory red-tape cutting measure that introduces a new small-car initiative.  German Chancellor Merz, who also advocated reversing the ban in his bid for office, took a more measured tone, calling the revised ban “a clear signal” that it is the right way to “better align climate targets, market realities, companies and jobs.| Kay Nietfeld/Getty Images) The combined measures are meant to boost Europe’s automakers, which are facing a trade war courtesy of U.S. President Donald Trump, stiff competition from Chinese incumbents with high-tech electric vehicles, and stagnant sales across the bloc.  German Chancellor Merz, who also advocated reversing the ban in his bid for office, took a more measured tone, calling the revised ban “a clear signal” that it is the right way to “better align climate targets, market realities, companies and jobs.” For months Merz had tried to corral his governing coalition — which combines the conservative Christian Democrats and the center-left Social Democrats — into a common position on the ban. While the CDU pushed hard for it to be overturned, the SPD wanted to hold the line. Ultimately the conservatives won, putting forward a request for regulation that walks a line between industrial competitiveness and protecting the climate. NO ONE’S HAPPY While the Commission calls it a balanced approach that still paves the way for electric vehicles to take over from CO2-emitting cars, political groups across the spectrum call it a disaster — albeit for different reasons.  The left says reversing the ban will deal a blow to the climate and yet fail to give Europe’s automakers a competitive boost.  “The real problem facing Europe’s car industry is not a law that takes effect in 10 years. It is the collapse of European car sales in China and the steady global decline of combustion-engine markets,” said German Greens MEP Michael Bloss. “Continuing to bet on combustion engines is not an industrial strategy — it is a failure of one.” For the far right, meanwhile, the measures don’t go far enough. MEP Volker Schnurrbusch, a member of Germany’s opposition AfD party, said in a debate in the Parliament that the real issue is the Commission “dictating” what form of transport consumers use. The European Conservatives and Reformists, meanwhile, called the reformed 2035 law a missed opportunity that “falls short of providing the bold actions” needed to make the sector more globally competitive. The differing views on the ban’s reversal will continue to be heard in negotiations among the EU’s institutions, particularly in the Council where EU capitals will battle it out with Cyprus — a small country with no automotive sector — acting as referee. Already, France is gearing up for a fight. “The negotiations are just beginning,” a Paris officials said, adding that allowing combustion engine cars to be sold past 2035 is a red line for the country, even as it gets its desired European preference requirements. Behind the scenes, the automotive sector will continue to lobby to undercut the regulation even more. “The announced measures to mandate the greening of corporate fleets risk running counter to the necessary market and incentive-based approach,” EU car lobby ACEA said in a statement.   Yet that is exactly what the Commission is hoping, with multiple industry officials telling POLITICO that the corporate fleets measure is meant to act as a backstop for the gutting of the combustion engine ban. Climate Commissioner Wopke Hoekstra admitted as much in his remarks before the Parliament Tuesday evening.   “Corporate fleets will steer the clean transition and will help the automakers meet their targets,” he said. The proposal must now be debated by member countries and in the European Parliament.

The European Commission on Tuesday reversed its flagship ban on producing new combustion engine cars by 2035, even as it vowed to meet its ambitious climate targets. In a major win for industry, the current requirement for automakers to reduce tailpipe emissions from new vehicles by 100 percent by 2035 is now gone. The reformed legislative proposal, published Tuesday, will now call on companies to lower these emissions by 90 percent from 2021 levels. “This will allow for plug-in hybrids, range extenders, mild hybrids, and internal combustion engine vehicles to still play a role beyond 2035, in addition to full electric and hydrogen vehicles,” the Commission said in a press release unveiling its automotive package on Tuesday afternoon. The package, which includes a new regulation on greening corporate fleets, a battery initiative and regulatory simplification measures, marks a major victory for the automotive industry and the center right, which had campaigned ahead of the 2024 European election on overturning the ban. European People’s Party chief Manfred Weber was elated by the changes, telling media on Tuesday morning that the 90 percent target was “clearly an EPP request. We were amending this also when the legislation was first time discussed in the Parliament four years ago. So we are coming back to our original EPP positioning.” For its part, the Commission staunchly maintains the ban is still in place but with added flexibilities for European automakers struggling with a U.S.-led trade war, lackluster car sales and stiff competition from Chinese incumbents with their glitzy electric vehicles. ALL ABOUT AVERAGES The Commission is also watering down its target of a 50 percent reduction in emissions by 2030 by allowing automakers to calculate average emissions over three years (2030 to 2032). The change mirrors an amendment signed into law earlier this year that averaged the 2025 emissions target over three years after intense lobbying from the industry and their political allies. Both the 2025 and 2030 targets are part of the overarching 2035 law that banned new CO2-emitting vehicles, with the interim targets intended as goalposts to keep automakers on track. The EU executive is also altering the 2030 emissions-reduction target for light-commercial vehicles, such as delivery vans, lowering it from a 50 percent reduction to 40 percent of 2021 levels. CREATING DEMAND The measure for greening corporate fleets — vehicles owned or leased by companies for business purposes — sets targets for what proportion of each EU country’s fleet should be zero- or low-emission, based on their GDP. It is hoped the regulation will create a second-hand market for EVs to foster a “swifter transition away from older combustion engine” cars, and act as a demand mechanism to complement the 2035 law. While the targets are binding, the Commission says it is giving discretion to the capitals on how the targets should be achieved. It anticipates most will incorporate favorable tax policies for companies, pointing to Belgium as an example, which has boosted its share of EVs on the road through tax breaks. Under the proposal, plug-in hybrids, range extenders and combustion engine vehicles would all count toward the target but with the same caveats. Under the reform, all powertrains will be available as part of the 10 percent, but the Commission is mandating that automakers offset the emissions with made-in-EU green steel and alternative fuels. Small and mid-sized companies will be exempt from the law, a Commission official said in a media briefing Tuesday ahead of the Parliament presentation. SMALLER IS BETTER The automotive omnibus — a regulatory red-tape cutting scheme — focuses on a small-car initiative that Commission President Ursula von der Leyen announced during her September State of the Union address. A small EV will be defined as measuring 4 meters and 20 centimeters in length, the size of a compact car. The cars have their own regulatory category in the legislation and have been given specific concessions like subsidies and reserved parking spaces. Companies that produce small cars would also get a coefficient of 1.3 in the emissions target calculations, meaning that if a carmaker sold 10 small EVs they would get emissions credits worth 13 cars. But the initiative will only be in place until 2034, the EU executive said. As with corporate fleets, manufacturers will have to comply with local content requirements when manufacturing small EVs in order to get the emissions credits. France has long demanded that any flexibilities around the ban be tied to local content requirements — a request it put forward in October alongside Spain.

The European Commission is set to water down the EU’s 2035 de facto combustion engine ban by requiring automakers to lower their emissions by 90 percent instead of the original 100 percent, multiple officials with knowledge of the discussions told POLITICO. The change effectively marks the end of the ban, giving the center-right political parties and the automotive sector a massive win after months of heavy lobbying. Under the deal, which is still being negotiated at the time of publication, automakers can sell plug-in hybrids and range extenders after 2035. But those flexibilities will be tied to automakers “offsetting” the 10 percent extra emissions by using green steel and alternative fuels. How the offsets will work and what percentage of fuels or steel will need to be consumed in production is still being negotiated. The industry argues the law banning the new sale of CO2-emitting vehicles cuts them off at the knees and makes them less able to compete against Chinese incumbents that are ahead of them on electric vehicles.  Automakers are facing further headwinds courtesy of a trade war launched by U.S. President Donald Trump and sluggish sales at home. Climate advocates say the Commission needs to stay the course.  “The EU is playing for time when the next game has already started. Every euro diverted into plug-in hybrids is a euro not spent on EVs while China races further ahead,” said William Todts, executive director of green NGO Transport & Environment. The deal mirrors one announced by Manfred Weber, head of the European People’s Party, on Dec. 11. He told German media that the combustion engine ban had been overturned, with the 2035 target of 100 percent CO2 reduction cut to only 90 percent. The Financial Times was the first to report the 10 percent reduction. New details are emerging, however, about what powertrains will be allowed after 2035. In the current plan, range extenders — small combustion engines that give batteries more range — will count for a further emissions reduction than plug-in hybrids, which have both a combustion engine and an electric motor. Essentially, the scheme would give automakers more emission credits for range extenders than plug-in hybrids because they emit less CO2 than the hybrids, two officials said. The 2035 reform is part of a broader automotive package being put forward by the Commission on Tuesday that will include a new regulation on greening corporate fleets — vehicles owned or leased by companies for business purposes — and an automotive omnibus that was obtained by POLITICO. Essentially, the scheme would give automakers more emission credits for range extenders than plug-in hybrids because they emit less CO2 than the hybrids, two officials said. | Lorenzo Di Cola | Getty Images For the 2035 legislation, automakers will be allowed to pool, meaning that a brand that doesn’t meet the 90 percent target can buy credits from an automaker that over delivers. The pooling scheme is a lucrative business for all-electric manufacturers like Tesla. A separate initiative will focus on boosting small electric vehicles — a demand put forward by Commission President Ursula von der Leyen in her State of the Union address in September. Companies that produce the small cars would get a coefficient of 1.3 in the target calculations. So if a carmaker sold 10 of the small EVs, they would get the emissions credit of 13 cars. Manufacturers will have to comply with yet-to-be-defined local content requirements when creating the small EVs in order for the automaker to get the emission credit. France has long demanded that any flexibilities around the ban be tied to local content requirements — a request it put forward in October alongside Spain. The draft marks the first step in a long, politically fraught journey to becoming law. It will now go to Parliament and the EU capitals, where political groups remain divided over how far the Commission should go to rescue the automotive sector. The EPP has pushed hard to overturn the ban and the far right has campaigned on the issue, too, which could prompt yet another alliance between the two in Parliament to push to further weaken the law. EU capitals also have competing ideas. Spain wants the target to remain unchanged, while Germany is balking at France’s push for “Buy European” requirements, over fears it will spark a global trade war with the U.S. and China.

BRUSSELS — Postponing the start of the EU’s new carbon levy for building and road transport emissions by one year to 2028 is going to cost European governments lots of money, according to a top Danish official. Denmark, for instance, is estimated to lose half a billion euros in future revenues from the delay of the new carbon market (known as ETS2), said Christian Stenberg, deputy permanent secretary of state at the Danish climate ministry, at POLITICO’s Sustainable Future Summit. “The delay will mean that we will lack that tool for one year,” he told a panel discussion. “It will cost us quite a bit of revenue that we could have gotten,” he added. “About €0.5 billion.” “For the Danish economy [it] is not little.” To bring more skeptical EU countries on board, like Poland, Italy and Romania, and reach a deal on the EU’s new climate target for 2040, environment ministers pushed the European Commission to agree to postpone the new carbon pricing mechanism by one year. Stenberg explained that, as the talks over the 2040 climate target stretched overnight, he “had to go back to my finance ministry in the middle of the night and say the compromise will cost us this in revenue.” But the ETS2, which has raised concerns in a majority of EU governments that it will increase energy bills, is “the most cost effective way of reaching our targets within transportation and buildings,” Stenberg argued. “And cost effectiveness, at the end of the day, is to the benefit of the economy.” Chiara Martinelli, director of the NGO Climate Action Network Europe, also said on the panel that the delay of the new carbon market is “problematic,” and called on the EU to ensure that social measures to support people in the green transition come with the ETS2.

Brussels wants to kill off the combustion engine. Instead, it’s supercharging Europe’s populists. Right-wing parties are running hard against the EU’s law that bans the sale of new gasoline and diesel cars from 2035. It’s happening in the Czech Republic, Italy, Germany, France, Poland and elsewhere. In response, centrist parties with a more established voice in Brussels are turning against the law to avoid losing traction to their far-right rivals. It’s far from the only issue for populist parties — most of which base a large part of their appeal on battling immigration — but the EU’s green car effort is one that speaks to many voters angry about Brussels threatening to take away their beloved combustion engine cars. In Prague, the far-right Motorist for Themselves party denounced “green fanatics” and made a breakthrough in the national election last month with almost 7 percent of the vote.   The vote-winner populist ANO party on Monday struck a coalition agreement with the Motorists and the far-right Freedom and Direct Democracy. That means the Czech Republic, which has one of the EU’s largest car industries as a percentage of the economy, will continue being one of the leading opponents of the 2035 measure, as the outgoing centrist government was also skeptical of the law. In Poland, Piotr Müller, a member of the European Parliament with the main opposition group, the nationalist Law and Justice party, said: “No one should be forced to change their car just because that’s what Brussels has decided.” “Stop the climate fanatics!” screams a poster from Poland’s fast-rising far-right Confederation party. Meanwhile, a party policy paper states, “We are dealing with an anti-car frenzy that has taken hold of Eurocrats, and the war against the automotive industry and drivers is raging on many fronts.” In Italy, League leader and Deputy Prime Minister Matteo Salvini denounced the 2035 measure as “ideological fundamentalism” and called it economic suicide that will hand over the bloc’s car industry to Chinese rivals. The Italian government is pressing hard for opt-outs from the 2035 biofuels law.  Germany’s far-right Alternative for Germany party campaigns strongly against 2035, but in the country with the continent’s largest car sector, the issue is also splitting the ruling coalition led by the conservative Christian Democrats in alliance with the center-left Social Democrats.  In France, Jordan Bardella, one of the leaders of the National Rally party, wants to repeal 2035. POLITICAL TARGET The populists have hit on a pain point for the EU. Although the bloc wants to slash greenhouse gas emissions from transport by 90 percent by 2050, that means upending one of the continent’s most powerful — and lucrative — industries and imposing a new technology on a reluctant public.  The combustion engine ban was the most unpopular policy among consumers, even as they expressed broader support for climate action, according to a survey of 15,000 people in Germany, France and Poland that focused on climate policy attitudes in the runup to the 2024 European election.  The far-right is capitalizing on this skepticism, “turning it into political gains or framing climate policies altogether as overly burdensome toward businesses, farmers or ordinary citizens,” said Jannik Jansen, a senior policy fellow at the Jacques Delors Centre, who helped conduct the study.   In France, Jordan Bardella, one of the leaders of the National Rally party, wants to repeal 2035. | Thomas Samson/Getty Images The automotive sector is facing a triple whammy of crises: tariffs from Donald Trump, threats from tech-savvy Chinese rivals and a car market that failed to bounce back after the pandemic.  To hear some parts of the industry tell it — especially those carmakers lagging on switching to electric vehicles — the solution is to back off the EU’s climate agenda and severely weaken the 2035 ban, if not overturn it entirely.  PUSHING BRUSSELS TO THE RIGHT They’re gaining political supporters as this Commission shifts its priorities from leading on climate to making Europe strategically autonomous and regaining its competitive edge.   Germany’s Christian Democrats campaigned in February’s federal election on overturning the 2035 ban — and were rewarded at the ballot box, as was their sister party, the European People’s Party, which won the most seats in last year’s European Parliament.  Rising skepticism from voters at home is giving center-right politicians license to push back against green efforts in Brussels. Europe’s mainstream parties “have become significantly more hesitant or reluctant to support ambitious climate policies,” said Jansen. Once one of the staunchest supporters of the 2035 law, France has backed off its earlier full-throated endorsement of the legislation. Now it wants assurances that the shift to battery-powered cars won’t cost jobs. President Emmanuel Macron is hanging on to power by the thinnest of threads, and the National Rally of Bardella and Marine Le Pen is way out in front in opinion polls. Paris “wishes to pursue the electrification of vehicles … as long as they are accompanied by very clear measures encouraging European preference that support industrial jobs in Europe,” the government said on Oct. 23. NATIONAL IMPACTS In Germany, the ruling coalition squabbled over the issue before the Social Democrats gave way and modified their position. They will now accept non-EV ways of meeting the 2035 law by using range extenders — small combustion engines that give electric cars more range — or plug-in hybrids, so long as green steel or e-fuels are used to offset the emissions.   But that’s not enough for the Christian Social Union of Bavaria, with premier Markus Söder refusing to budge on the issue.  “The EU’s 2035 ban endangers hundreds of thousands of jobs,” Söder said, warning of the looming “collapse” of Germany’s car industry. “Söder’s current stance fits neatly into his broader, opportunistic strategy of adopting far-right populist talking points and instrumentalizing ‘culture-war’ narratives, particularly against the Greens and what he frames as regulatory overreach,” said Jansen.   Other countries are getting in line. Poland’s centrist government is content to follow in Germany’s wake. Germany’s Christian Democrats campaigned in February’s federal election on overturning the 2035 ban. | Andreas Arnold/Getty Images “We’re happy that Germany is speaking with a Polish voice,” said Andrzej Halicki, a member of the European Parliament from Prime Minister Donald Tusk’s Civic Platform party. The Commission is responding to the pushback, with President Ursula von der Leyen set to put forward a proposal by the end of the year to reform the 2035 legislation. And the executive is clear about where it lays the blame for a slower-than-anticipated transition to electric vehicles. “The main reason Europe isn’t catching up is because the far-right discredited EVs to the middle class,” an official said. This article has been updated.

MUNICH, Germany — Europe’s automakers are walking a tightrope at this year’s Munich auto show: introducing cutting-edge EVs while pleading for leniency in transitioning from combustion engines.   Mercedes-Benz unveiled the all-electric version of its best-selling GLC SUV, which is slated to go on sale next year. BMW is touting its new electric iX3 SUV. Both have ranges of more than 720 kilometers and fast recharging times. They’re aimed at cutting off the Chinese EV-makers recording rapid gains in the European market. “I’m convinced we’re on a journey towards zero emission, hence why we’re investing massively into state-of-the-art electric technology in cars,” Mercedes CEO Ola Källenius told reporters at the show.  At the same time, car executives are begging the EU to have mercy on them over its rule banning the sale of new CO2-emitting cars from 2035. Industry wants Brussels to show greater leniency by allowing hybrid vehicles and alternative fuels to ensure at least a limited future for the combustion engine. It’s getting strong backing on that from conservative politicians, including the European People’s Party in the European Parliament. Executives will be making that argument on Friday when Commission President Ursula von der Leyen meets with the auto industry in yet another summit to figure out how to save the troubled sector. The Commission needs to take a “more market-oriented approach” in the 2035 regulation, Källenius said. The argument is not without merit. Car sales in Europe are lower than they were before the pandemic. Chinese automakers have the best tech and batteries, and European brands continue to lose market share in China, which was once a cash cow for them. On top of that, U.S. President Donald Trump has unleashed a global trade war that is costing the sector billions even after Brussels struck a trade deal with Washington.  Sales of electric vehicles are lower than expected, Källenius and his peers complain, and sticking to the emissions targets will make them less competitive. POLITICAL MANEUVERING  But those carmaker grumbles are far from sure to elicit any movement from the Commission, especially after von der Leyen broke her silence on the matter during her State of the European Union speech on Wednesday. “No matter what, we all know the future will be electric, and Europe will be a part of it,” she said while announcing the launch of the EU’s Small Affordable Cars Initiative.   The words were barely past her lips when MEPs erupted in a chorus of boos, particularly those in the EPP.  Although carmakers and their political backers were aghast, climate campaigners saw hope. “Von der Leyen’s clearest message today was that Europe’s future is electric,” Chris Heron, the secretary-general of E-Mobility Europe, said after the speech. “That’s a welcome sign the Commission wants to lock in investment certainty around the 2035 target.” In a media briefing Thursday, the Commission refused to give further details on the EV effort, saying there would be more information after the Friday summit. The industry was given a reprieve from this year’s tougher emissions targets following the last dialogue with von der Leyen, but the fate of the 2035 ban is a political discussion that will largely be determined by EU capitals. “Instead of looking at what [carmakers] say, we have to look at what countries say much more than we did before,” said Jean-Philippe Hermine, a director with the IDDRI French think tank. CHINA IN THE WINGS While EU carmakers lobby Brussels, their Chinese rivals are making headway in Europe despite the levy the bloc imposed on EV-makers as punishment for getting subsidies from Beijing. China’s electric car market is the world’s largest, and BYD has overtaken Tesla as the world’s leading EV producer. Chinese electric car producers were strutting their stuff in Munich, with brands including BYD, Changan, Xpeng and Leapmotor, which has a partnership with Italian-French-American automaker Stellantis, all displaying models. They were also clear that the EU’s duties are not dissuading them from entering Europe, though the taxes are shifting the types of models they’re importing.  Hybrids are not included in the duties, making them an attractive alternative to all-electric versions.   In each of their media pitches, the Chinese brands said they were dedicated to being “in Europe, for Europe.”   But for the most part, that means taking a model sold in China and tweaking the tech and components to abide by European regulations, rather than building models from the ground up with European audiences in mind, said Pedro Pacheco, an auto expert at consulting firm Gartner.  The real test of whether Chinese carmakers see Europe as a viable long-term market is if they create products designed for Europeans. That’s already starting to happen. BYD has announced that the first model to roll off production lines at its Hungarian factory next year will be the Dolphin Surf, an electric station wagon — a nod to European consumer preferences, given that station wagons are not popular in other markets.  “BYD is in Europe to stay,” said Stella Li, BYD’s executive vice president. 

MUNICH — German Chancellor Friedrich Merz opened the IAA auto show in Munich on Tuesday with a critique of the European Commission’s 2035 combustion engine ban. “We need more flexibility in regulation,” he said. “Unilateral political commitments to specific technologies are fundamentally the wrong economic policy approach.” The comments are a thinly veiled reference to the EU’s legislation, which forbids the sale of any new cars that emit CO2 from 2035, essentially banning the combustion engine — an unpopular move in Germany, home to some of the world’s biggest and most well-known car manufacturers. The CEOs of some of these companies — BMW, Mercedes-Benz and Volkswagen — sat in the front row, emphatically nodding and clapping at Merz’s remarks. The issue is a crucial one for Berlin. Cars account for about 5 percent of Germany’s GDP but the industry is facing a triple whammy: a steep decline in sales in China that had been crucial to the bottom lines of German carmakers; a stumbling transition to electric vehicles that is leaving an opening for Chinese companies to make an entry into the European market; and chaos caused by Donald Trump’s car tariffs. With the far-right Alternative for Germany neck-and-neck with the Christian Democrats in opinion polls, Merz is struggling to ensure a future for an industry that Germany has dominated for over a century, thanks to its engineering prowess. It’s a sector that also employs some 800,000 people in the country. The argument is that flexibility on the EU’s targets would allow some of the traditional car industry to survive for just that little bit longer. Days prior, the three German carmakers presented their latest models with a strong focus on electric vehicles as they look to compete with their Chinese peers that have so far had the upper hand with their tech-glitzed EVs. BMW’s new all-electric iX3 SUV has 800 kilometers of range, making range anxiety “a thing of the past,” CEO Oliver Zipse told POLITICO in an interview. Zipse and his fellow European executives are set to meet with Commission President Ursula von der Leyen on Friday for the next strategic dialogue for the sector, where they are expected to lobby for significant changes to the 2035 legislation. They have political allies in making the plea. Italian business minister Adolfo Urso is eager for the 2035 legislation to be overturned. The conservative European People’s Party in the European Parliament included reversing the ban in last year’s election platform. Merz has taken a softer stance as a result of the coalition between his conservative Christian Democrats, which want the ban reversed, and the center-left Social Democrats, which argue the legislation needs to remain in place as part of a broader effort to tackle climate change. But Merz had help in his plea from the other speakers on Tuesday, leaving no room for a different interpretation of his meaning. “This ban is wrong. We need to remove it,” Markus Söder, the conservative premier of Bavaria, said ahead of the chancellor. “The CO2 goals of 2035 need to be adjusted to reality.” Hildegard Müller, the head of Germany’s car lobby VDA, pushed for the group’s 10-point plan, which argues the 2035 legislation should change its target from 100 percent zero-emission vehicles to 90 percent and allow for other powertrains like hybrids and range extenders and make space for alternative fuels, the industry argues, also meet climate goals. Those options would give an additional lease on life to the combustion engine.

Climate groups, and even some automakers, denounced the German car lobby’s newest proposal aimed at weakening the EU’s 2035 ban on the sale of new CO2-emitting cars. Friday’s proposition from the German Association for the Automotive Industry (VDA) came just 10 days after the Council granted automakers leniency on this year’s emission targets. That was a response to pleas it would cost the sector billions in fines. Green groups said that shows the danger of giving any leeway on the vehicle emission rules adopted in 2023 following fraught negotiations. “Give them a finger and they’ll take the whole hand,” Julia Poliscanova, senior director for vehicles with green NGO Transport & Environment (T&E), said in a statement. The 2035 measure is a key part of the EU’s Green Deal aimed at making the bloc climate neutral by mid-century, but has come under growing political fire. The VDA now wants to shift from a full ban to a 90 percent CO2 reduction target for new vehicles by 2035. That means 10 percent of vehicles sold could be powered by internal combustion engines. The proposal caught some German lawmakers off guard. “The VDA’s position surprised us. We will adhere to the fleet emission limits as stipulated in the coalition agreement, and we expect the EU Commission to do the same,” said Isabel Cademartori, transport policy spokesperson for the Social Democratic Party, the junior partner in Germany’s ruling coalition. The Christian Democrats of Chancellor Friedrich Merz have been calling for a rethink of the 2035 rule. | Hannibal Hanschke/EPA The Christian Democrats of Chancellor Friedrich Merz have been calling for a rethink of the 2035 rule, and are backed by conservative lawmakers in the European Parliament as well as countries with important car industries like Poland and the Czech Republic. If the European Commission bows to the VDA demand, emissions would increase by up to 31 percent from the current target, according to a T&E analysis. Another critical component of the VDA proposal — and also of broader efforts to undercut the 2035 ban — are exceptions allowing e-fuels and biofuels that replace fossil fuels in conventional cars. They argue the fuels have a smaller climate impact than gasoline and diesel, although green groups point out they are very expensive and only available in limited quantities. “The reference to e-fuels and agricultural fuels is a fake solution that will be particularly expensive for consumers. Citizens are once again being cheated with questionable tricks,” said Michael Bloss, spokesperson for the Greens in the European Parliament. The VDA and some automakers also argue that combustion engineering is the continent’s competitive edge over Chinese carmakers, which are ahead in electric vehicle technology. But that contention splits the industry. German automaker Mercedes-Benz threw its support behind the VDA’s 10-point plan, saying “flexibility is a key aspect for the success of the transformation.” But not all automakers are in favor of a change. Volvo didn’t support the Commission granting automakers a reprieve on fines based on this year’s emission limits. It wants the 2035 legislation to remain the same — a position the brand reiterated following the VDA announcement. “Policy makers and stakeholders should focus their energy on people (jobs and skills), infrastructure and the value chain rather than on revising the legislation in place,” said a Volvo spokesperson. Although the VDA says the bloc is falling short on its EV transition goals, which is why the bloc should be more flexible, electric car sales are actually rising fast after a lackluster 2024. Overall EV sales have increased 26 percent this year in Europe, including a 43 percent year-on-year jump in Germany. Laura Hülsemann and Jürgen Klöckner contributed reporting from Berlin.

BRUSSELS — In a case of remarkably successful special pleading, Europe’s car industry has succeeded in watering down potentially very costly EU rules on CO2 emissions. The effort was approved by the European Parliament on Thursday. It’s yet another sign that the EU’s green efforts are running into growing resistance. The original idea had been to require European car manufacturers to reduce carbon emissions by 15 percent by 2025 compared to a 2021 baseline. Carmakers failing to hit the target would have to pay €95 for every gram of CO2 emitted above the limit per kilometer per non-compliant vehicle sold. The industry warned that could amount to an eye-watering €15 billion in fines. “It will cost resources, we’ll have to lower the price of electric cars and make discounts, destroying the [car’s] residual value,” Luca de Meo, CEO of Renault and former head of the ACEA carmaker lobby, warned last year. Climate campaigners insisted the industry grumbling was overdone and that carmakers would be able to meet the target. But the Commission buckled under the pressure as automakers complained that green rules, plus the cost of switching to electric cars and the rising threat posed by Chinese rivals, made it imperative to take steps to save the industry. The sector’s bottom line is now under even greater threat thanks to U.S. President Donald Trump’s car tariffs. In April, the executive put forward an amendment that would average automaker emissions over three years instead of basing them solely on 2025. The change makes the targets much easier to meet for laggards who haven’t sold enough EVs. The CO2 measure ended up passing easily, with 458 MEPs voting for the change, 101 against and 14 abstaining. The Parliament’s vote was the final hurdle and the amendment is now set to be put into law. On Wednesday, member countries also backed the change. “There’s no secret that my group has not been particularly fond of this proposal, but it is an urgent proposal,” said Mohammed Chahim of the Socialists and Democrats during a plenary debate earlier this week. “We cannot sit around and wait,” he added, citing pressure from the trade war with Washington. “It will cost resources, we’ll have to lower the price of electric cars and make discounts, destroying the [car’s] residual value,” Luca de Meo, CEO of Renault and former head of the ACEA carmaker lobby, warned last year. | Yoan Valat/EPA But green NGO Transport & Environment complained that the Parliament had agreed to the measure despite a surge in EV sales this year. “The boom is thanks to new, more affordable models that the carmakers launched to comply with the original EU target,” Lucien Mathieu, cars director at T&E, said in a statement. “This delay will allow the industry to take the foot off the gas for the EV roll-out while also slowing down investments.” EV sales across the bloc increased almost 24 percent in the first quarter of this year compared to the same period in 2024, according to ACEA.  HURTING ELON MUSK While some MEPs grumbled about the walk-back, there was one silver lining: The change may hurt Tesla CEO Elon Musk. The CO2 regulation allows automakers to pool their emissions, meaning a manufacturer that doesn’t meet its emissions goals can pay a carmaker that overshoots those targets. Such transactions have been particularly lucrative for Tesla — although its collapsing sales caused by Musk’s close association with Trump may make that provision less useful. “We definitely don’t want the money to go to the Chinese or to Elon Musk,” said MEP Peter Liese of the European People’s Party at a press conference on Wednesday. “That is more important than a few months ago — that we don’t make the richest man in the world who terrorizes the rest of the world even richer.” This is unlikely to be the last fight over greening the car sector. The emissions reduction measure is part of a broader effort leading to a ban on the sale of new combustion engine cars by 2035. Multiple brands and conservative lawmakers and national governments want the ban reversed, or so thoroughly weakened as to be meaningless. The Commission has already given some ground, agreeing to move forward the review of the legislation to the end of this year instead of 2026, but there is pressure to go even further. Before the ink on the CO2 amendment was dry, lobbyists were already at work undermining the 2035 legislation and calling for more. “This measure must not overshadow the broader structural shortcomings of the CO2 regulation, which affect the entire automotive sector,” automotive supplier lobby CLEPA said in a statement following the Parliament’s vote. “The current framework remains misaligned with market realities.”

DOUAI, France — The EU’s vision of ending sales of greenhouse-gas-spewing cars by 2035 is under fire. The idea was a key priority of the previous European Commission, which was dedicated to the fight against climate change. But war, a populist backlash, economic stagnation and a car industry hemorrhaging red ink are forcing Brussels to backtrack. Europe’s automakers scored a massive political win this week when Commission President Ursula von der Leyen gave in to their pleas for leniency on emission targets that went into force this year and for an earlier review of the 2035 legislation as part of her plan to rescue the troubled car industry. Buoyed by that success, automakers and their political backers want more. “Give the car industry an inch and they’ll take a mile. Before the ink was dry on the automotive plan, there were calls for technology openness,” said Julia Poliscanova, senior director for vehicles at green NGO Transport & Environment. “The Green Deal will suffer a death by a thousand cuts unless lawmakers stand up for it.” While the original measure was approved in 2023 by all member countries (despite last-minute resistance from Germany), it’s turned into a political punching bag. Over the last year, elections across the EU saw national governments, lobbyists and automakers pick up the call to weaken or reverse it. The European People’s Party — part of von der Leyen’s political family and the largest grouping in the European Parliament — promised to reverse the law. In Germany, angst over the auto sector’s decline helped fuel the winning campaign of Christian Democrat Friedrich Merz, whose party also has its sights set on undoing the legislation. Germany is keen for an exception for e-fuels — a synthetic alternative to gasoline, but one that is much more expensive than fossil fuels and not made in large quantities. Italy wants the law changed to make an exception for biofuels, despite worries about deforestation, biodiversity loss and soil erosion from using the fuel. Poland also backs that idea. POPPING CHAMPAGNE French policymakers — including Commission Vice President Stéphane Séjourné — went on a victory lap to a Renault factory on Wednesday. European Commission Vice President Stéphane Séjourné presented the EU’s plan to save the car industry in the Renault factory of Douai last week. | Giorgio Leali/POLITICO They were celebrating the Commission announcement that it would water down this year’s emissions targets after carmakers complained they could pay billions in fines for missing the target. Now, instead of the target being based on this year’s sales, it’ll be based on a three-year average, which makes it easier to hit for companies that have done less to clean up their fleets. “I have probably been the first one to raise the hand on this,” Renault CEO Luca De Meo told POLITICO at the Renault factory at Douai in northern France. As former president of EU car lobby ACEA, De Meo beat the drum for leniency on emission targets. De Meo also welcomed the Commission’s support for technological neutrality — meaning that not only battery-powered cars can meet green targets — although he insisted he doesn’t want to scrap the 2035 measure. “It opens a window on a logic that we have always supported. Tell us where you want us to go, but don’t tell us how,” he said, noting that “the enemy is not a technology rather than another — the enemy is CO2.” Yet, not every automaker was in a celebratory mood. Swedish brand Volvo, which was bought by Chinese firm Geely in 2010, wanted the targets to remain the same. “Those that have done their homework, should not be disadvantaged by last-minute changes to existing legislation, not least during the year in which they come into effect,” the company said in a statement. Renault’s CEO Luca De Meo, France’s Industry Minister Marc Ferracci and European Commission Vice President Stéphane Séjourné visiting the Renault factory of Douai. | Giorgio Leali/POLITICO Paris still defends the combustion engine ban but insists that softening this year’s emission targets will help carmakers to meet the 2035 deadline.  “It was paradoxical to ask manufacturers to pay fines and at the same time to support them,” Séjourné said in Douai. PILING ON The Commission also agreed to move up a review of the 2035 law from 2026 to this year — another key demand from carmakers that makes it easier to undermine the overall legislation. Opponents smell blood in the water. “We have forced the Commission to remove the fines trap and to anticipate the review of the CO2 regulation. Now we must immediately make a common front to overcome the madness of the Green Deal,” Italy’s Industry Minister Adolfo Urso said in a written statement. Czech MEP Filip Turek with the far-right Patriots for Europe grouping, said that Commission’s automotive plan marks the beginning of the end for the 2035 ban. Czech MEP Filip Turek with the far-right Patriots for Europe grouping, said that Commission’s automotive plan marks the beginning of the end for the 2035 ban. | European Parliament Germany’s newly elected Christian Democrats called the Commission’s announcement “half-hearted and unsatisfactory.” “I am convinced that the greatest threat to the European automotive market is no longer competitors from China, but the flood of European regulation,” said Thomas Bareiß, grouping’s transport spokesperson in the German Bundestag. “The emission targets could have been cancelled completely; so far nobody has been able to explain to me conclusively why we need emission targets at all for successful climate protection.” Maintaining the ban, he said, is creating uncertainty in the market and delaying the uptake of alternative fuels.  Bareiß and other opponents of the 2035 legislation are latching on to technological neutrality to further weaken the law, which some automakers and political groups say should allow hybrids and other types of vehicles that combine combustion engines and batteries. Hildegard Müller, president of German car lobby VDA, said more needs to be done to “implement technological openness. This also includes giving greater consideration to the role of plug-in hybrids beyond 2035.” Climate groups say that hybrids still emit CO2, violating the 2035 law. The law’s defenders are fighting a rear-guard battle to keep the legislation from being so watered down that it becomes useless. “The EU Commission is opening Pandora’s box, because the EPP wants to do more than just turn a few screws, it wants to completely overturn the combustion engine ban,” said Green MEP Michael Bloss. Socialist MEP François Kalfon approved the EU auto rescue package but fears the Commission’s review might turn into an effort to kill the 2035 ban. “It has to be a review clause, not a dropout clause, and that’s the risk,” he told POLITICO on a train back from the Renault factory. Gabriel Gavin and Nicolas Camut contributed to this report.