Carbon Dioxide Reduction Targets Challenged by European Automotive Associations
European automakers are increasingly at odds over the EU’s transition to electric vehicles (EV), with industry leaders warning that strict policy timelines risk undermining Europe’s competitiveness in internal combustion engines, reports 24brussels.
At the recent 2025 International Motor Show Germany (IAA Mobility) in Munich, which concluded earlier this month, several executives backed calls to postpone the EU’s planned 2035 ban on new petrol and diesel cars while simultaneously promoting their latest electric models. Analysts suggest that as competition heightens, automakers must delicately balance legislative climate targets with prevailing market realities.
The European Automobile Manufacturers Association and the European Association of Automotive Suppliers highlighted that the EU’s ambitious carbon dioxide reduction goals are now unfeasible. In a joint letter to European Commission President Ursula von der Leyen in August, they advocated for a more pragmatic approach that reflects both industrial and geopolitical constraints.
This issue took center stage at IAA Mobility, where German Chancellor Friedrich Merz expressed support for the automotive sector’s electrification initiatives but emphasized the necessity of regulatory flexibility. He cautioned against rigidly enforcing a single technological path and urged manufacturers to remain open to various technologies to maintain both competitiveness and environmental objectives.
Executives from major firms, including Mercedes-Benz, BMW, and Stellantis, criticized the EU’s planned 2035 ban, labeling it “unrealistic.” They called for ongoing investment in hybrid vehicles, range-extended EVs, and smaller combustion engines as part of their strategy moving forward.
The market’s performance has indicated challenges ahead. First-generation EVs, such as the Volkswagen ID series, Audi e-tron, and Mercedes EQ, have faced obstacles in consumer adoption due to limitations in driving range, lengthy charging times, design issues, and higher costs compared to traditional vehicles. As a consequence, numerous manufacturers are reassessing their strategic goals. Mercedes-Benz has postponed its target of achieving 50 percent EV sales by 2025 while committing to continue developing internal combustion engines over the next decade. Audi has delayed its goal of full electrification by 2032. Volkswagen Group Chairman Oliver Blume has voiced concerns over declining EV sales and advocated for adjustments to carbon dioxide targets, while former Renault CEO Luca de Meo has emphasized the need for more adaptable, market-driven timelines.
Europe is grappling with multiple challenges in its automotive transition. A significant setback occurred in late 2024 when Swedish startup Northvolt, previously backed by BMW and Volkswagen, declared bankruptcy, revealing critical gaps in Europe’s battery technology and domestic manufacturing capabilities. Additionally, the cessation of EV purchase subsidies in Germany in 2023 has weakened the continent’s largest automotive market.
The industry has reported declining profits, with approximately 51,500 jobs lost last year, or nearly 7 percent of the overall workforce. Structural issues further complicate the situation, including uneven charging infrastructure among EU member states, high electricity costs, rising production expenses, and U.S. tariffs impacting exports. Collectively, these factors have made a rapid shift to electrification increasingly challenging for European automakers.
Political pressures are escalating, with Italian Prime Minister Giorgia Meloni condemning the ban as “self-destructive” and warning of potential social and economic repercussions. Similar concerns have been raised by Poland and other nations. Experts suggest that the EU auto industry’s measured response reflects the difficult realities posed by competitive pressures, technological deficiencies, and employment worries.
Some manufacturers are advocating for a multi-technology approach. The European Automobile Manufacturers Association has proposed incentives, including subsidies, tax breaks, and reduced electricity rates, to enhance EV adoption. While EVs are anticipated to dominate in the long term, they stress the necessity of low-carbon alternatives during the transition phase.
Conversely, other companies, including Volvo and certain industrial manufacturers, support the EU’s 2035 ban, viewing it as vital for bolstering Europe’s global competitiveness. Kia Europe CEO Marc Hedrich cautioned against any policy reversals, highlighting that production of the EV4 has already commenced in Slovakia, with full compliance anticipated by 2035.
German automotive expert Ferdinand Dudenhoeffer has described the opposition to the ban as largely unwarranted, arguing that as EV prices align with those of combustion vehicles and carbon taxes come into play, the appeal of gasoline and diesel cars will decline. He predicts that price parity will be achieved by 2030, potentially alleviating much of the controversy surrounding the ban.
During a strategy dialogue on September 12, chaired by von der Leyen, manufacturers emphasized the need for greater flexibility regarding carbon dioxide targets, although the EU reaffirmed the timeline for the 2035 ban. In March, assessments for carbon emissions from new cars were postponed from 2025 to 2027, intended to provide a transitional buffer. Critics contend this extension may favor underperforming companies and compromise overall competitiveness.
Experts assert that the EU’s 2035 ban on the sale of new petrol and diesel cars serves not just as an industrial benchmark but also as a measure of the bloc’s climate leadership. Adhering to this goal could foster innovation, whereas compromises might alleviate immediate pressures while risking long-term objectives.