Europe’s auto industry is likely to remain on a long-term path toward electrification despite the European Commission’s proposal to abandon a 2035 deadline for a full transition to electric-only driving, analysts and industry experts said to Reuters. The policy shift gives legacy carmakers additional time to sell hybrids and other transitional technologies, but does not alter the broader trajectory toward electric vehicles across the region.
On Dec. 16, the European Commission released plans that would effectively drop the 2035 ban on new combustion-engine car sales, following sustained lobbying from Europe’s automotive sector. Under the proposal, plug-in hybrids, range-extended electric vehicles that use a small combustion engine to recharge batteries, and even conventional internal combustion engines would remain legal beyond 2035. The move is intended to ease pressure on European manufacturers as they compete with faster-moving Chinese rivals.
Brussels also proposed creating a new category of small electric vehicles, with additional regulatory credits for models built in Europe. Analysts said this measure reflects key industry demands aimed at improving cost competitiveness. “The Commission has allowed Europe’s car industry to make choices and have a chance to compete,” said Phil Dunne, managing director at consultancy Grant Thornton Stax. “Hopefully it allows Europe’s industry to catch up with the Chinese,” he added, referring to lower-cost electric vehicles produced by Chinese manufacturers.
The revised framework is expected to benefit different automakers in distinct ways. Premium manufacturers such as Mercedes-Benz and BMW would gain more time to sell plug-in hybrid models before transitioning fully to battery-electric vehicles. Mass-market producers with strong small-car portfolios, including Stellantis and Renault, are positioned to benefit from the proposed subsidized category of compact EVs aimed at urban consumers, with models such as the Fiat 500 and Renault Clio cited by analysts as examples well suited to the new scheme.
The European Union’s approach contrasts sharply with policy direction in the United States, where President Donald Trump has withdrawn federal support for electric vehicles. While the EU proposal eases near-term regulatory pressure, experts noted it does not reverse emissions targets or long-term climate objectives, which continue to favor electrification as the dominant technology.
Industry observers said the additional flexibility may help European manufacturers manage investment cycles, protect margins, and scale EV production more gradually. At the same time, they cautioned that delaying full electrification does not remove the need for sustained investment in batteries, software, and supply chains. As global competition intensifies, particularly from China, Europe’s ability to translate regulatory relief into competitive electric models will be central to the sector’s future performance.