Mercedes-Benz CEO Ola Källenius has earned a reputation as an unwavering optimist in an industry that often oscillates between innovation and uncertainty—a stance that appears well-founded. Over the past several years, he has persistently urged the European Union to reconsider and moderate its lofty ambition to completely phase out the sale of new internal combustion engine (ICE) vehicles. Källenius frames this request not as a rejection of Europe’s environmental aspirations, but rather as a practical recalibration: a call for realism intended to secure both ecological progress and industrial stability. His argument rests on the premise that adjusting the framework does not equate to surrendering to climate skeptics; instead, it represents a rational evolution of Europe’s green policy that better aligns with economic, infrastructural, and social realities.
Recent developments suggest his campaign is gaining momentum. In a candid interview with *The Verge*, Källenius acknowledged that the strict timetable envisioning a complete transition away from combustion engine vehicles by 2035 is increasingly unworkable. The reasons, he explained, lie in Europe’s lagging charging infrastructure and the slower-than-anticipated pace at which consumers are embracing electric mobility. To safeguard employment, sustain competitiveness, and allow automakers sufficient financial breathing room to fund the transition effectively, a more flexible approach is necessary. Defending this shift, Källenius insisted that adjusting the policy timeline should be viewed not as a retreat but as what he called “an upgrade to a smarter strategy”—one that harmonizes Europe’s aspirations for sustainability with a pragmatic roadmap capable of delivering tangible success.
This nuanced stance reflects the wider mood within Europe. During times of economic confidence, with strong job creation and robust growth, Europeans overwhelmingly supported ambitious climate initiatives. However, as economic hardship deepens—exemplified by sluggish GDP performance and the loss of tens of thousands of manufacturing jobs—the public mood has shifted. Policymakers now find themselves juggling environmental idealism with economic realism. Källenius argues that automakers have proven their dedication to carbon reduction through a decade marked by enormous capital outlays: constructing battery plants, developing efficient electric drivetrains, and pursuing climate-neutral production processes. In his view, adopting a pragmatic approach does not mean softening environmental commitments; rather, it could render them more achievable. The long-term goal—EU-wide carbon neutrality by 2050—remains untouched, though, as he notes, the route toward that destination may need to adapt to emerging circumstances.
Legally, the European Union still mandates a complete ban on new ICE vehicle sales after 2035. Altering that path would require the European Commission and member states either to repeal or substantially amend the regulation, potentially introducing specific exceptions that extend the production of conventional engines under defined conditions. At an October summit, EU leaders pressed the Commission to reexamine the ICE ban and propose new measures before year’s end that could temper what was once a rapid, uncompromising march toward a zero-carbon transport landscape. Preliminary indications suggest that Brussels may adopt a more “technology-neutral” posture. Analysts interpret this phrase as potentially opening the door to vehicles powered by biofuels or synthetic e-fuels, as well as new generations of plug-in hybrids that emit less carbon than traditional engines. For years, automotive lobbies have championed this concept, arguing that these innovations should be classified as zero-emission technologies, thereby qualifying for regulatory relief beyond the 2035 deadline.
Environmental organizations, however, voice strong objections. Lucien Mathieu of Transport & Environment, a leading Brussels-based advocacy group, argued that transforming such a cornerstone of European climate policy into what he metaphorically described as “Swiss cheese”—riddled with loopholes—would erode the competitive strength of the continent’s industry rather than restore it. He warned that capitulating to industry demands would undermine both the spirit and structure of the EU’s environmental regulations and risk ceding even greater market share to ascendant Chinese automakers.
Källenius countered with data underscoring the persistence of legacy technology. Even after 2035, he observed, Europe’s roads will still host more than 200 million conventionally powered cars. Without new ICE models adapted for cleaner fuels, these aging fleets could linger far longer, creating what he describes as a “Havana effect”—a reference to Cuba’s decades-old car population—where vehicles become progressively older and dirtier, harming both climate objectives and economic vitality. Germany, the EU’s automotive powerhouse, is at the forefront of lobbying for extended transition timelines. The rationale is clear: after enduring back-to-back recessions and facing decades of steady production decline since its 1998 peak, Germany’s car industry—employing nearly 800,000 people—finds itself squeezed between domestic constraints and intense competition from more affordable Chinese brands. As political anxieties mount over rising unemployment and the growing appeal of right-wing populism, Berlin’s leaders are eager to preserve jobs and industrial strength by softening the pace of environmental transformation. Chancellor Friedrich Merz symbolically assured business leaders that “there will be no hard cut in 2035.”
The debate over alternative fuels and hybrid models illustrates a strategic balancing act. A slower EV rollout offers automakers vital time to harvest profits from their most lucrative ICE and hybrid lines, which, in turn, sustain their financial capacity to invest in cleaner technologies. However, there is a parallel risk that this delay could jeopardize the massive investments Europe has already made in electrification: the network of gigafactories, charging infrastructure, and research facilities now under construction may face diminished demand if political momentum falters. French President Emmanuel Macron has warned explicitly that abandoning or even watering down the 2035 objective could undercut those investments. He reminded his European peers that the current wave of battery factory projects was triggered by the credibility of the existing timeline. Macron therefore advocates a compromise—flexibility within the law’s wording to accommodate alternative fuels and hybrids, rather than a wholesale retreat.
For policymakers, the proposed compromise has several dimensions. Beyond permitting continued sales of low-emission fuel vehicles and hybrids, there is growing interest in expanding incentives for European-made electric vehicles—particularly affordable models to appeal to mass-market buyers. Simultaneously, new requirements could mandate a higher proportion of locally manufactured components for EVs to qualify for subsidies, thereby strengthening domestic supply chains and protecting jobs. Despite these initiatives, the challenges remain formidable. Recent data from the European Automobile Manufacturers Association (ACEA) indicate that while electric and hybrid vehicles are responsible for modest growth, total new car sales across Europe rose only 0.9 percent in the first nine months of the year. Fully electric vehicles accounted for roughly 16 percent of new registrations—about 1.3 million units—but their growing share has not compensated for the steep decline in conventional car sales.
Not every industry leader believes the Commission’s ongoing reforms are sufficient. BMW CEO Oliver Zipse has argued that existing EU regulatory frameworks unfairly emphasize exhaust emissions without considering a vehicle’s entire life-cycle carbon footprint. According to Zipse, automakers that invest heavily in carbon-neutral steel, low-emission manufacturing sites, and sustainable logistics see no acknowledgment of these achievements under the present rulebook. “We are not asking for lower targets—we are asking for a different regulatory regime,” he stated. His point underscores an emerging tension: how to holistically measure environmental progress without stifling innovation.
Green watchdogs, meanwhile, remain wary of renewed enthusiasm for plug-in hybrids. A recent study by Transport & Environment concluded that plug-in hybrid electric vehicles (PHEVs) emit nearly five times more CO₂ under real-world conditions than in laboratory tests, largely because their combustion engines engage more frequently—during acceleration or uphill driving—than consumers realize. The organization’s findings also exposed a financial penalty for drivers: fuel and charging costs are approximately €500 per year higher than official specifications suggest, and the average 2025 sticker price for PHEVs is projected to exceed that of fully electric cars by over €15,000. Consequently, critics describe PHEVs as a costly detour, not a bridge, in the electrification pathway. Supporting this view, Peter Mock of the International Council on Clean Transportation contends that buyers who switch to full battery-electric models rarely revert to combustion vehicles, whereas many plug-in hybrid owners eventually do. He points to Denmark, where EVs make up around 70 percent of new car sales, and Belgium, at about 40 percent, as evidence that coherent policy—combining EU-level carbon standards with national taxation schemes that disincentivize ICE cars—can accelerate adoption. Mock dismisses e-fuels as inefficient and prohibitively expensive for road transport, categorically describing electrification as the only tenable large-scale solution.
However, the broader global context exerts mounting pressure. The EU’s climate initiatives over the past decade have drawn enormous private investment from new entrants—pure electric manufacturers, battery producers, and software providers. Consequently, many of these companies now demand regulatory consistency to secure returns. More than 200 business leaders have publicly urged the European Commission not to succumb to political wavering, appealing: “Stand firm, don’t step back.” Among them is Michael Lohscheller, CEO of Polestar, who warned that any dilution of the 2035 ban would penalize companies that have structured their business models entirely around electrification. Years of complex negotiations, he emphasized, had produced the current legal framework with input from both legacy and new-generation automakers; revisiting it now would undermine long-term certainty. Even if short-term demand appears volatile, Lohscheller insisted that the direction of travel remains clear and irreversible—consumer appetite for electric models continues to strengthen across Europe.
He and others caution that Europe risks losing its technological edge if it retreats from its commitments. “The rest of the world will not stand still,” Lohscheller warned, noting that competitors—especially in Asia and North America—are pressing forward with advancements in battery efficiency, software integration, and sustainable production. Lawrence Hamilton, president of Lucid Motors Europe, echoed these concerns. Reopening the 2035 debate, he argued, sends mixed signals to consumers and slows adoption by fostering the perception that they can postpone their switch to electric vehicles indefinitely. Given that the average car ownership cycle stretches seven years or more, Hamilton stressed that encouraging early adoption is essential to achieving long-term goals. He pointed out that EV technology has reached the point where purchase costs are nearing parity with internal combustion models and that ownership expenses are often already lower when fuel, maintenance, and tax savings are considered.
Industry strategist Andy Palmer further observed that if European automakers are serious about restoring competitiveness—particularly against fast-moving Chinese firms—they must accelerate the transition, not delay it. This means closing the cost gap in battery production, integrating artificial intelligence and software-driven manufacturing, and reviving entrepreneurial agility often stifled by bureaucracy and legacy structures. Europe, he concluded, retains immense engineering capability, but it must shed complacency and act decisively before the momentum shifts irreversibly abroad. The battle over the 2035 ban is therefore more than a dispute over dates—it is a defining test of Europe’s economic adaptability, technological leadership, and environmental integrity.
Sourse: https://www.theverge.com/transportation/820398/eu-gas-car-ban-2035-weaken-climate
