Chinese manufacturers also continue to benefit from the current regulatory framework. Plug-in hybrid vehicles imported from China are not subject to tariffs, and several Chinese brands still sell internal combustion engine models in European markets where EV adoption remains limited, such as Poland.
Prior to Tuesday’s announcement, consultancy AlixPartners had forecast that fully electric vehicles would account for just 62% of Europe’s new car sales by 2035, citing doubts over whether the EU’s original combustion engine ban could be fully enforced. According to partner Nick Parker, the latest policy shift is unlikely to materially change that outlook.
A slower transition to full electrification could, however, give markets more time to deploy charging infrastructure, one of the structural bottlenecks behind the uneven uptake of electric vehicles across Europe.
Industry data show that EU battery-electric car sales rose 25.7% year-on-year through October, reaching 16.4% of total vehicle sales. Yet EVs still represent a marginal share of the market in southern and eastern Europe, highlighting persistent regional disparities.
Carmakers invested billions in electrification
The policy adjustment represents a setback for automakers and suppliers that have invested tens of billions of euros in electric vehicle development and factory expansion, based on EU legislation that only entered into force in 2023.
At the same time, greater technological flexibility could encourage new partnerships focused on affordable EVs, such as the recently announced collaboration between Ford and Renault to develop small electric models for the European market.
Just one day before the EU’s announcement, Ford disclosed a $19.5 billion writedown and plans to cancel several electric vehicle programmes.
“This will ultimately drive more cooperation and platform-sharing across the industry,” said Joe Stevenson, CEO of UK-based startup Anaphite, which is developing dry-coating technology for battery electrodes aimed at reducing EV costs.
Industry calls for regulatory certainty
Ahead of the policy shift, Ford CEO Jim Farley publicly urged Brussels to provide regulatory clarity, warning that frequent changes undermine long-term investment planning. As recently as March, the European Commission had already given automakers “breathing space” by allowing compliance with 2025 emissions targets to be spread over three years, followed by further adjustments nine months later.
“That’s not how you plan long-term capital investment,” Farley said. “We need certainty.”
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