The future may be electric, but that future is being postponed. The European Commission, citing the need for flexibility, has softened its ambitious plan to ban the sale of gas-powered cars by 2035. Instead of requiring all new cars to be zero-emission vehicles by that date, the revised plan would allow ten percent of new car sales to be hybrids or other vehicles, as long as manufacturers purchase carbon offsets to compensate. This change is part of a broader Automotive Package designed to help the European car industry become both clean and competitive.
If the European Parliament approves this shift, it would likely satisfy traditional European carmakers that have been asking for more time to move beyond hybrid vehicles. These companies are struggling to compete with Tesla and the surge of affordable electric vehicles coming from China. However, the policy change has created division among EV startups and their investors.
China already dominates EV manufacturing. As Craig Douglas, a partner at the European climate-focused venture capital firm World Fund, stated, if Europe does not compete with clear, ambitious policy signals, it will lose leadership of another globally important industry and all the economic benefits that come with it. Douglas was among the signatories of an open letter to European Commission President Ursula von der Leyen published in September. Senior executives from numerous companies and EV-related startups signed the letter, exhorting the Commission to stand firm on the original 2035 zero-emission target.
Their appeal was not enough to counter pressure from the traditional automobile industry, which represents a significant portion of total European Union employment. This continuing pressure has sparked debate within the startup community and beyond about the best path for Europe to remain competitive during the energy transition.
Even within the auto industry, opinions differ. In a statement to Swedish media, a Volvo press officer warned that backing down on long-term commitments in favor of short-term gains risks undermining Europe’s competitiveness for many years to come. Unlike some other manufacturers, Volvo had no concerns about meeting the 2035 ban. The company would have preferred to see increased investment in expanding charging infrastructure, something critics fear the new policy could actually discourage.
Issam Tidjani, CEO of Cariqa, a Berlin-based EV charging marketplace startup, echoed these concerns. He cautioned that weakening the 2035 zero-emission mandate could harm electrification progress overall. History shows that this kind of flexibility has never worked out well, said Tidjani. It delays scale, weakens learning curves, and ultimately costs industrial leadership rather than preserving it.
To be fair, the Commission has not completely ignored infrastructure and supply chain issues. As part of its Automotive Package, it introduced the Battery Booster, a strategy that would invest billions into developing a fully European-made battery supply chain. The goal is to strengthen local production and ensure supply security.
The plan received positive feedback from Verkor, a French startup that produces lithium-ion battery cells for electric vehicles. The company, which recently opened a large-scale battery factory in Northern France, called the Booster initiative a necessary step to scale up Europe’s battery industry.
Still, many question whether the Battery Booster is enough to offset what they see as negative signaling about the EU’s commitment to using decarbonization as an economic growth driver. Already, traditional carmakers have begun complaining that the carbon offset requirements could make cars more expensive for consumers, potentially undermining the very competitiveness the policy change was meant to protect.
Another uncertainty involves the United Kingdom. It is unclear whether the UK will follow the EU’s lead and modify its own 2035 combustion engine ban. Unlike both the European Union and the United States, the UK has not yet imposed tariffs on Chinese electric vehicles, despite their rapidly increasing sales in the British market raising concerns among domestic manufacturers.
The debate highlights ongoing tensions in climate policy between balancing the economic realities facing existing industries and the urgency of transitioning to cleaner technology. As Europe tries to thread this needle, the decisions made now will invariably impact whether the continent leads or lags in the global EV market.