Just four years ago, the European continent bet on an electric car revolution that was believed to be both environmentally friendly and profitable. European Union political leaders then proposed banning the sale of new petrol and diesel cars by 2035, citing a „generational task” to save the planet. Now they have a big problem.
The transition from internal combustion engines to electric ones is unfolding more chaotically and with more compromises than Europe expected. The European auto industry is cutting jobs and struggling to compete with China, whose companies can produce electric vehicles at lower costs, writes Washington Post.
While some blame falls on the decisions of auto company boards, right-wing politicians and auto industry lobbyists in Europe are increasingly directing their anger toward the EU regulation on auto emissions. They say that if Europe maintains its goal of eco-friendly cars, it risks job losses, the closure of many factories, and deep dependence on Beijing, which dominates the electric vehicle supply chain.
"We need flexibility regarding the 2035 target. We don't want to destroy the industry," said Jens Gieseke, a German MEP from the European People's Party, the main center-right group.
This development is emblematic of a change taking place in Europe and beyond - from a triumphalist wave of ambitious commitments a few years ago to a more heated debate about how far and how fast climate action can realistically go, notes the American newspaper.
Clients are not getting what they want
The auto industry represents the most exciting tier of this debate, as it accounts for 7% of the EU's GDP and because European carmakers - including Volkswagen, Mercedes-Benz, BMW, and Renault - are a celebrated part of the European identity.
However, since mid-2021, the combined market value of its top five automakers has dropped from $364 billion to $197 billion. Their problem has recently intensified due to Donald Trump's decision to impose 25% tariffs on imported cars in the United States.
The 2035 target to phase out internal combustion engine cars is being closely scrutinized due to the upcoming EU review period that could pave the way for changes.
Julia Poliscanova, a senior director at the Brussels-based Transport & Environment group, said there is a high chance this target will be changed. One possibility, she said, would be a review allowing the sale of plug-in hybrids after 2035. As these vehicles use both batteries and internal combustion engines, it would essentially extend the era of fuel in Europe.
EU Climate Commissioner Wopke Hoekstra has promised to support the 2035 plan. But Italian Prime Minister Giorgia Meloni has called this target an example of "ideological madness" and said she will make efforts to modify it.
In the European Parliament, which shifted to the right in last year's elections, lawmakers described the target during a recent session as "a disaster" that does not align with what customers want.
"The transition is not going as planned. The idea that if you simply make some rules, everything will happen as such is simplistic," said Sigrid de Vries, general director of the European Automobile Manufacturers' Association.
Like in the boardroom at Nokia when the iPhone appeared
Europe is not the only place where the regulation of petrol cars is being debated. Last month, the UK slightly relaxed its ambitious vehicle rules, allowing the sale of hybrid cars until 2035, not just until 2030. And in the US, House representatives recently voted to prevent California from enforcing a rule that would ban the sale of new petrol vehicles until 2035, so the fate of the plan will be determined by the Senate.
In Europe, left-wing politicians and climate goal supporters say that European states should quickly install electric charging stations and introduce more incentives for consumers - steps that are boosting the electric vehicle market. They agree that auto manufacturers are agitated but believe that resistance to an inevitable transition will only leave them further behind, both in Europe and other markets.
"Today, I feel like I'm in the boardroom at Nokia when the iPhone was just launched," said Mohammed Chahim, a Dutch parliament member, in March, after hearing fellow politicians take a stand against the EU plan. "Nostalgia is good... but not if it blocks innovation, not if it blocks change," he added.
EU customers buy about 10 million cars each year, and in 2024, approximately 13.6% of these vehicles were fully electric. This is more than the 9% share in 2021, the year the EU target was proposed.
However, Europe's current goal depends on a steep increase in electric vehicle sales. And one of the main obstacles so far to faster growth is cost. A European electric vehicle sells, on average, for €46,000 or $52,000.
Chinese invasion wreaks havoc
Even companies that started planning the transition years ago are struggling to produce more affordable models.
European carmakers needed to transform their existing huge operations. This meant reconfiguring factories, retraining workers, losing decades of optimization, and, in many cases, buying batteries, the most expensive component, from elsewhere.
Given these obstacles, European car manufacturers have tried to boost their profits by focusing on gasoline models, which have higher margins, and emphasizing premium electric vehicles.
But this strategy has put them in crisis. This is because affordable electric vehicles are already being mass-produced, just not by them. Armed with battery expertise, state subsidies, and a stranglehold on essential minerals, China has emerged as the new superpower in the auto world. Its car manufacturers have taken over the domestic Chinese market, dominated by Volkswagen, reducing the profits of European auto production. And now Chinese brands, such as BYD, which were slow to enter Europe, are opening factories on the continent.
The new CEO of Volkswagen, Oliver Blume, said in a recent interview with a German newspaper that any decision on banning internal combustion engines should be based on "how quickly electric mobility is actually spreading."
Michael Bloss, a German Green Party parliamentarian, said that European car manufacturers "are not as clear in their strategy as they were three years ago." Their confused approach, along with the "cultural war against electric cars," has created even greater uncertainty - for customers who are now thinking twice before buying an electric vehicle and for investors who are crucial in building Europe's supply chain.
"Normally, you need the political sphere to provide more certainty to the markets. But now there is uncertainty from the political sphere," said Bloss.
What the EU is doing
This year, two Chinese companies, CATL and BYD, caught the industry's attention with a new battery charging technology that would make recharging an electric vehicle as fast as refueling a traditional car at a gas station.
Meanwhile, Europe is struggling with trying to produce batteries domestically: a well-funded Swedish company, Northvolt, declared bankruptcy in March. Another European effort named ACC - a joint venture between Stellantis and Mercedes-Benz, among others - is ramping up production at its first gigafactory in France. But it has also halted plans for other factories in Italy and Germany.
De Vries, from the automobile manufacturers' association, said that Europe needs "some kind of master plan" to make the transition to electric vehicles easier. In March, the EU unveiled a set of steps aimed at helping, including increased funding for battery development efforts.
The EU has also proposed additional leeway for car companies, giving them three years instead of one to meet carbon emission targets.
Ursula von der Leyen, President of the European Commission, said the goal is "to ensure the future of the European auto industry without any doubt." "We cannot let electric vehicles become more expensive. But we also cannot afford to create new dependencies," she emphasized.
T.D.