Europe’s transition to electric mobility remains officially on track, but the destination now appears less certain. The European Commission has moved to defer its long-standing plan to phase out petrol and diesel car sales by 2035, prompting unease among electric vehicle startups and climate-focused investors.
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Under the revised approach, new cars would no longer need to be entirely zero-emission by 2035. Instead, manufacturers may sell a limited proportion, up to 10 per cent of hybrid or similar vehicles, provided they offset the associated emissions through carbon credits. The proposal forms part of a wider “Automotive Package” that Brussels says is intended to preserve both environmental goals and industrial competitiveness.
If endorsed by the European Parliament, the shift would mark a concession to Europe’s established carmakers, many of whom have argued that the original timeline left them struggling to keep pace with Tesla and a growing influx of low cost electric vehicles from China. However, the recalibration has exposed sharp divisions within the electric mobility ecosystem.
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Craig Douglas, a partner at climate-focused venture capital firm World Fund, warned that the softened target risks undermining Europe’s position in a strategically important industry. China already has a commanding lead in EV manufacturing, he believes. Without firm and ambitious policy signals, Europe risks surrendering leadership and the economic value that comes with it.
Douglas was among the backers of Take Charge Europe, an open letter addressed to European Commission President Ursula von der Leyen and published in September. Signed by senior figures from companies including Cabify, EDF, Einride and Iberdrola, alongside a number of EV startups, the letter urged the Commission to maintain the original zero-emissions deadline.
That intervention failed to override lobbying from the traditional automotive sector, which accounts for roughly 6.1 per cent of total EU employment. The resulting policy compromise has instead intensified debate over how Europe should manage the transition without losing industrial ground.
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Carmakers are divided over a softer 2035 deadline
Disagreement is not limited to startups. Within the automotive sector itself, manufacturers are split over whether easing the deadline strengthens or weakens Europe’s long-term prospects. Volvo, which has publicly committed to becoming fully electric, cautioned against what it sees as policy backtracking. A company spokesperson told Swedish media that retreating from long-term commitments in pursuit of short-term relief could damage competitiveness for years to come.
Unlike some rivals, Volvo has said it is confident of meeting the original 2035 ban. The company has argued that policy focus would be better directed towards expanding charging infrastructure, an area critics fear may receive less urgency if electrification targets appear negotiable.
Similar concerns were raised by Issam Tidjani, chief executive of Berlin-based EV charging marketplace Cariqa. He said loosening the mandate risks slowing the pace of electrification. “Flexibility of this kind has a poor track record,” Tidjani said, arguing that delays weaken economies of scale, slow technological learning and ultimately erode industrial leadership. He was also a signatory to the Take Charge Europe letter.
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Battery investment welcomed, but doubts persist
Alongside the revised emissions framework, the Commission unveiled measures aimed at strengthening Europe’s supply chains. Central among them is the “Battery Booster” initiative, which earmarks EUR 1.8 billion (USD 2.11 billion) to support the development of a fully European battery manufacturing ecosystem.
The plan was welcomed by Verkor, a French battery startup that this week opened its first large-scale lithium-ion cell factory in northern France. Seeking to succeed where Swedish firm Northvolt faltered, Verkor described the Battery Booster as a vital step towards scaling domestic battery production and securing supply resilience.
Even so, scepticism remains over whether targeted industrial support can counteract what some see as mixed messaging on Europe’s commitment to decarbonisation as a driver of growth. Established carmakers have already warned that mandatory carbon offsets could raise vehicle prices, potentially hurting consumers and undermining competitiveness, the very issue the policy revision was designed to address.
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Questions extend beyond the EU
The changes have also reignited uncertainty in the United Kingdom. It remains unclear whether the UK government will mirror the EU’s softer stance on its own 2035 ban on combustion engine vehicles. Unlike both the EU and the United States, Britain has yet to impose tariffs on Chinese electric vehicles, despite their rising presence in the domestic market and mounting concern among UK manufacturers.
As policymakers weigh industrial realities against climate urgency, the debate underscores the broader challenge facing Europe’s green transition. Decisions taken now, critics argue, will not only shape emissions outcomes but determine whether Europe emerges as a leader or a follower in the global electric vehicle race.
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