On December 16, 2025, the European Union officially softened its previously planned ban on the sale of new internal combustion engine (ICE) vehicles from 2035. The revised policy now allows carmakers to continue producing ICE and plug-in hybrid vehicles, provided they compensate for additional emissions through the use of low-carbon fuels. The decision comes amid an economic downturn that has hit the European automotive industry hard.
The automotive sector in Europe sustains around 14 million jobs, accounting for about 7% of employment in the Eurozone. Over the past year, companies like Volkswagen, Audi, and Mercedes have announced mass layoffs to cut costs. Without regulatory easing, manufacturers could have faced fines of up to tens of billions of euros for failing to meet CO2 emissions targets.
The new target for 2035 is a 90% reduction in emissions, rather than complete elimination. This gives manufacturers more flexibility and allows the market to adjust to new technologies naturally. Demand for electric vehicles has fallen short of expectations: in 2024, their average price was 22% higher than comparable gasoline cars, prompting buyers to opt for hybrids, whose sales grew nearly a third.
Critics, particularly environmentalists, argue that the decision slows the transition to greener transport. At the same time, supporters contend that unattainable idealistic goals can lead to job losses and economic decline.
The decision still requires approval from the European Parliament and member states’ governments, but the direction toward economic pragmatism in automotive policy is now set. Europe chooses to preserve its industrial base as a foundation for further green transition.
