A crucial EU decision on car emissions could define the future of the European automotive sector. At the center is the 2035 all-electric sales target, a policy many consider essential for long-term competitiveness. But political pressure to allow combustion engines after 2035 — marketed as “technology neutrality” — has created one of the most heated industrial debates in years.
Next week, EU officials are expected to reveal whether they will stand firm or soften the target, a move that could reshape jobs, supply chains, and global market positioning for decades.
Why Carmakers Want a Neutrality Loophole
Industry leaders argue that technology neutrality would let manufacturers keep selling biofuel and plug-in hybrid vehicles after 2035 instead of moving fully to electric. They say this flexibility protects consumers, gives them choice, and buys time for transition.
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But critics see it as an escape route from full electrification.
European brands are already under pressure: they are losing ground in China and facing intense EV competition from local brands with faster scaling and lower costs. Some automakers see neutrality as insurance in case electrification proves more complicated than expected.
Still, energy analysts point out that almost every major innovation curve — solar, wind, batteries — reached efficiency much faster once a clear regulatory target locked in scale and investment.
The Real Crisis Isn’t the 2035 Target
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The industry insists regulation is hurting sales.
But car sales across Europe did not drop because of the EV deadline. Today, three million fewer cars are sold than in 2019, largely because manufacturers pushed prices higher and prioritized profits over volume.
Between 2018 and 2024, the average price of a mass-market vehicle rose from €22,000 to €30,700 — a jump of 40%. That means many European households simply can’t afford a new car, regardless of whether it’s combustion or electric.
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That’s a demand crisis, not a policy crisis.
Manufacturers posted record profits through that period. Those decisions satisfied shareholders but left European car buyers locked out. In parallel, Chinese EV brands focused on volume, not margin — gaining speed, market share and production efficiency.
Why Technology Neutrality Hurts Long-Term Competitiveness
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Neutrality might offer a short-term cushion. But it risks stranding billions in legacy investments, weakening Europe’s place in the global EV market, and confusing the industry’s direction.
Clear targets help supply chains, investors, and energy providers align confidently. If the 2035 objective weakens, business certainty weakens too.
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Capital hates uncertainty.
More than 200 CEOs and industrial leaders have urged EU officials not to water down the target. They argue that the shift to battery electric is not just a policy change — it’s an industrial strategy. Batteries, power electronics, semiconductors, charging, software, recycling — all depend on scaling early.
Affordability Comes From Commitment, Not Delay
Electric vehicles are already the cheapest cars to operate, with lower fueling and maintenance costs. The remaining affordability problem is purchase price, which continues dropping as EV production scales. Weakening the target slows that scale, meaning prices fall slower.
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Neutrality delays cost reduction when Europe needs faster progress.
If combustion cars remain legal after 2035, production lines stay split: engineering teams maintain two parallel systems instead of one — combustion overhead plus electric development — increasing total cost.
Stronger EV clarity makes a single supply chain more efficient, which is how China built massive price advantages.
Global Competition Is the Real Battlefield
European brands face sharp pressure in China, where domestic EV makers are producing vehicles at scale with competitive pricing, powerful in-house software, and aggressive export strategies.
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Europe cannot win that race halfway.
If EU policy allows divided technology planning, European automakers will end up chasing efficiency slower than Chinese or U.S. competitors fully committed to electric.
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The future market rewards scale, not hesitation.
The Neutrality Pitch Creates a False Comfort
Pro-neutrality voices claim that biofuels and plug-in hybrids will protect jobs and preserve local engineering expertise. But critics note that no global market is scaling hybrids after 2035 — especially as fuel prices and emissions liabilities become harder to manage.
Biofuels face capacity issues and sustainability questions. Plug-in hybrids depend on consumer charging discipline that has historically been inconsistent. Both solutions generate incremental emissions rather than eliminating them.
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Neutrality keeps the past alive without solving the future.
The risk is that European brands cling to transitional technologies while rivals reduce costs and improve EV design relentlessly.
EV Targets as Industrial Policy, Not Climate Symbolism
The 2035 ban is not merely a climate regulation — it is a manufacturing strategy. It sets the compass for long-term industrial investment: batteries, critical minerals, electric drive trains, chips, gigafactories, rare-earth magnet suppliers, and grid-connected charging networks.
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Backtracking sends a signal that Europe doubts its own competitiveness.
If global investors sense hesitation, they will shift funding to U.S. or Chinese markets where electrification is already scaling with more certainty. That means Europe risks losing supply-chain leadership, jobs, and domestic capability.
