Europe has proposed to roll back its 2035 all-electric target, instead replacing it with a softer 90% reduction in automakers’ fleet CO₂ emissions, in what will be a major blow to the European auto industry’s global competitiveness which they, for some reason, are celebrating.

Back in 2021, Europe announced a target to phase out new gas car sales by 2035, in order to meet an overall goal of 55% emissions reductions by 2030 and full climate neutrality by 2050.

These goals are important given the climate crisis the world is currently in the throes of, and how negatively it will continue to affect all living things on Earth until humans act to solve the problem we are causing. Those effects cannot be negotiated away by governments – they are a matter of physics.

This crisis has been driven largely by overuse of resources by the Western world, though Europe has made some progress at reducing the rate at which it pumps deadly emissions into the atmosphere. And the faster we solve it, the easier it will be to solve.

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Cars are a major contributor to this crisis – in rich countries, transportation is the largest-emitting sector, and the majority of transportation emissions come from personal gas-powered vehicles. So this means they are also among the most important things to regulate, given their outsized effect.

Taking stock: the status of Europe’s EV market

At the time the goal was announced, we wondered why Europe was picking such a late target as 2035, and we still do. Cars don’t just stop emitting when they leave the factory gate, they continue on roads putting out pollution for a decade or more after they are produced. Therefore, to reduce climate emissions, you need to stop the sale of new polluting vehicles well before you intend to stop the pollution of existing vehicles.

We had the same reaction to California’s 2035 target, which also should be sooner. Since then, republicans have illegally attempted to reverse California’s policy, despite that they do not have the authority to do so.

Europe is ahead of the US on EV sales – with both California and Europe in the low/mid-20s percent market share for EVs in 2025, and the US languishing at around 10% (with a likely temporary drop due to republican policy actions focused on raising costs and pollution for Americans). Europe is well-equipped for EVs, and EV sales are only getting stronger there – currently, at a faster rate than the other “big three” regions (China, US).

Notably, gas car sales continue to be down from their global 2017 peak, and will never reach that level again, while EV sales continue to rise contrary to lies planted in the media by automakers themselves. So any companies or countries focusing on supplying gas vehicles will face diminishing demand – not typically the sort of product segment you want to increase your focus on.

But, speaking of China, that country has made significant progress on electrification in recent years. While Europe is currently beating China in monthly YoY EV growth, that hasn’t been the case for the last few years.

In particular, export growth has ballooned coming from China, with Chinese EV manufacturers providing affordable high-tech vehicles to every region of the world (well, except the US). This includes the developing world, where China has found a rapidly rising customer base, edging out legacy automakers.

Chinese EV imports have doubled in the last year in Europe, despite big tariffs (that were never going to work and just resulted in more-polluting PHEVs). This has been a challenge for European manufacturers, which haven’t moved as quickly as Chinese ones to ramp their EV efforts, and need to pick up the pace to compete. Had they listened to EV advocates earlier (*cough*), they would perhaps be more ready to confront this challenge.

So, let’s take stock:

• Climate change is happening, and is the most important and largest problem humanity has ever caused and confronted.
• The faster we solve climate change, the easier it will be to solve.
• Transportation is the largest contributor to climate change in rich countries, particularly gas-powered cars, which pollute for a long time after they’re made.
• EVs drastically reduce lifecycle emissions as compared to gas cars.
• The EV market is growing, and gas car sales are down.
• Sales of Chinese EVs are growing more rapidly in Europe than those of domestic manufacturers.
• Europe had a clear policy goal for four years now.
• That policy goal aligned with the interests of domestic manufacturers which need to get their act together and start making better EVs to catch up to foreign competition.

Given all of this, the rules seemed to align with reality and with the current challenge the industry is seeing. And, auto companies like to plan on long schedules, and often complain about changing the rules mid-stream. So, should be settled, right?

Automakers lobby to hand industry to China

Well, apparently not, as Europe’s plan has been subject to intense lobbying by automakers, most of whom seem to support the idea of handing over their industry to China.

This lobbying effort has included a lot of the same sort of disinformation that is commonly used, including automakers lying about their own sales numbers and even changing plans based on those false numbers.

When begging for this rollback, many automakers even explicitly called out the threat from China. Everybody acknowledges that rising competition from a fast-moving new entrant is disruptive to the industry, and everybody acknowledges that China is able to provide cars that are both affordable and advanced and that European offerings are having difficulty keeping up.

But their answer to being behind a faster-moving competitor is to beg to move more slowly. It makes no sense whatsoever.

For example, Ford CEO Jim Farley wrote an opinion piece in the Financial Times saying “Europe is risking the future of its auto industry.” But rather than recognizing the risk of relenting to faster-moving Chinese opposition, Farley made a confused argument which seemed to ask for rollbacks… including asking Europe to set a ten-year plan when it already had a ten-year plan to stop the sale of new gas cars (what’s ten years after 2025, Jim?).

Countries also stepped into the debate, with Germany and Italy pushing for rollbacks despite the harm it will do to the industry that has been so key to those countries over the last century, and Spain correctly calling for Europe to maintain the targets.

A few entities in the industry understand the problem and have been shouting from the rooftops begging regulators to maintain the targets.

Volvo and Polestar, both owned by Chinese auto giant Geely (and thus, they recognize that China will not relent in the face of the West’s floundering), have told the EU to maintain these targets for the health of the industry. Polestar CEO Michael Lohscheller said “moving from a clear 100% zero-emissions target to 90% may seem small, but if we backtrack now, we won’t just hurt the climate. We’ll hurt Europe’s ability to compete.”

And clean transport organization T&E, who we have covered many times, similarly noted that Europe is dawdling while China will continue at full steam.

And some from the traditional auto industry even see the truth. Audi CEO Gernot Döllner said “the electric car is simply the better technology” and that the sort of bickering the auto industry has done for the last couple years has been “counterproductive and unsettle[s] customers.”

It looked for a while that Europe would stand firm on its targets, but today’s announcement is a retreat from the bloc’s previous signals. Indeed, the begging seems to have worked, and Europe has softened that ten year plan, removing the regulatory certainty that industry claims it wants.

Today’s proposal: Automakers get another rollback, harming themselves in the long term

Today, Europe announced a new proposal for auto emissions regulations which rolls back the 2035 all-EV target and instead replaces it with a fleet emissions reduction target.

The fleet emissions reduction target is still significant. The proposal centers around a new 90% fleet emissions reduction target by 2035, down from 100%, which will still require a heavy amount of EV adoption.

The remaining polluting vehicles will need to be produced with “green steel” made domestically in Europe (despite that manufacturing emissions make up a tiny percentage of the lifecycle emissions of a gas car). Those cars will need to use biofuels or so-called “e-fuels.”

E-fuels is the name for synthetic gasoline created from renewable electricity which are carbon-neutral, but still inherently wasteful, and will merely serve to extend the life of the polluting, outdated combustion engine. And since capacity doesn’t exist to produce these at scale, that will need to be built up – expensively – instead of just plugging cars into the electricity infrastructure Europe already has.

Also, there is opportunity for further watering-down of targets based on how Europe accounts for vehicle emissions. One method would be to adjust the “capacity factor” for plug-in hybrids (PHEVs). PHEVs have consistently been shown to be dirtier than we thought, including by the European Commission itself (and by the aforementioned T&E).

That capacity factor has recently been adjusted, but if Europe maintains or rolls back capacity factors to falsely underestimate PHEV emissions, automakers could claim low pollution on paper, but that pollution would still make its way into the air, heating the climate and harming health.

That said, one strength of focusing on a strict emissions target rather than a “ban” is that the targets are then “technology-neutral,” which is to say that they can be met with whatever clean car methods come around. And a 90% reduction, if held, would still require a very high share of non-polluting vehicles anyway.

Other details of the proposal include plans to increase corporate fleet EV usage, and individual country targets related to GDP per capita, with richer companies having stricter rules. The Commission also wants to make an additional category for small EVs produced domestically, giving automakers more credits for each small EV sold.

The proposal is not yet finalized, and will have to gain approval from EU governments and European Parliament. That said, most of these plans do end up going through, having been crafted with consultation from governments and industry.

Today’s rollback comes in addition to another rollback just a few months ago, where Europe gave automakers “breathing room” by rolling back short-term emissions targets. Similarly, today’s proposal rolls back mid-term emissions targets, letting automakers meet the 55% 2030 target in 2032 instead, and lowering the commercial emissions reduction target to 40% instead of 50%.

Ironically, this “breathing room” given to automakers means less “breathing room” for actual people with actual lungs, who will be forced to breathe more of the poison that polluting vehicles put out as a result of their failure to meet eminently achievable pollution reduction goals. And yet, despite that, automakers still begged to poison us more.

Rollbacks make government’s job more difficult in the future

Which brings up the point: why make regulations if you’re just going to roll them back when an industry which isn’t even trying says it can’t meet them?

Automakers have consistently dragged their feet, intentionally so in order to influence regulations. They got what they wanted today, and Europe only gave itself more difficulty in bringing them to heel in the future.

Because when you set a goal 14 years early, and then give up with 10 years left to go, doesn’t that send a signal that nobody should take your goals seriously in the future?

Benchmark Minerals Intelligence said it well: “If manufacturers are given too much license to pull back from plans immediately, demand will suffer before 2030. The knock-on effect will also make it harder to achieve a less ambitious goal in 2035, and we will be in the same position again in five years.”

In short, by pushing back the goal, you only make further rollbacks more likely in the future. The best method to meet a goal is to hold firm, and send a clear signal that everyone needs to work together to meet it.

It could also threaten goals in other countries. The UK has an impressive 2030 goal, which was originally set to 2040 and then improved multiple times by both Tories and Labour. (Though Labour just introduced a poorly-thought-out mileage tax for EVs, sending mixed signals).

But recently, a right-wing UK paper made the argument that if EU is pushing back its targets, the UK should as well – which would mean this European rollback will result in further harm even outside the EU’s borders. Thankfully, UK sounds like it’s sticking with its targets, so far.

Other ambitious goals have been met

Besides, it’s not like places haven’t been able to meet goals before. Norway set an ambitious target to have 100% EV sales by 2025, and succeeded. It never pushed back its goal, it held firm and everyone got there (and in fact, it reached 90%+ three years early).

China had a similar situation, where it announced stricter 2023 emissions rules in 2016, then foreign automakers ignored those rules and EV sales trends and ended up with a huge glut of unsellable ICE cars and begged for a rollback.

They got a slight reprieve of a few months to sell some excess inventory, but the country continued implementation and is now selling more NEVs than ICE-only vehicles. That’s quick acceleration from a country that as recently as 2020 was behind California in EV adoption, and is now competing with the Nordic countries for the highest EV market share.

That’s the sort of acceleration you can see with consistent policy signals and follow-through on those goals from every level of society, business and government.

But if, as a society, you send signals that you can get away with a lack of effort if you just whine a little bit even when you fail to do something easy, then you end up with a society that fails to do anything at all.

But automakers incessantly act like spoiled children

The problem, here, is that automakers don’t know what’s good for themselves. They have an addiction to fighting against any regulation, no matter how important it might be to maintain the health of their industry.

This sort of behavior is common in many industries. Companies very often want to do the absolute minimum effort required of them by government, and then compulsively lobby governments to let them do even less.

They do this even when it’s easy to see that this will cause problems. For example, when President Obama implemented historic auto efficiency standards that harmonized US federal and California emissions laws, it was a big boon for the auto industry – they’d no longer have to play by two sets of rules, something they’d asked for for a long time.

Then, after Obama’s term was over, they lobbied to blow up those standards, got what they wanted, and now have fractured standards again, with California and the US asking separate things of them. The auto industry hasn’t stopped complaining about this since, even though they’re the ones who asked for it in the first place (GM CEO Mary Barra mentioned it just two weeks ago, the same day as another rollback she lobbied for was announced, which compounds the problem of fractured regulatory regimes even further).

And so, with the auto industry acting like ignorant children who don’t know what’s good for them as usual, adults need to enter the room and teach them how to behave. That’s the value in reasonable regulations. And yet, the adults in the room have decided to let the children stick their finger in the light socket in this case.

Just like in real life, there are limits to how much freedom you should give to children to harm themselves. While there might be value in letting them learn some simple lessons by doing, some of those lessons can be lethal. And in this case, European government has failed to teach the auto industry a lesson that it apparently can’t learn by itself – and just like letting your child stick their finger in the light socket, it may lead to permanent or even mortal harm.

So the European government has failed in its duty of care. The auto industry doesn’t know how to care for itself, has been begging to do harmful things, and Europe has shrugged and let it do so.

Normally, you’d call child protective services and take the child away from a parent who acts so irresponsibly. There’s no entity out there to do that – so instead Europe’s bad parenting will leave the child to languish, and a child that has been raised more responsibly will stand successful in the place of the continent that invented the automobile.

But hey, maybe it’s not too late. Given Europe has shown that it can change its mind every 9 months on regulations that were supposed to last for 14 years, maybe 9 months from now it can go back to the initial regulations that should have stuck around anyway. We’re sure the babies in the auto industry will complain again if they do, but they have shown that they were always going to complain anyway, so might as well try to teach them something, as parents should.

But is this change really all that bad?

We have been pretty harsh on this change above, even though it’s not that big of a change. A 90% emissions reduction isn’t far off from a 100% emissions reduction, and given EVs still have some upstream emissions from power generation, if those were counted then this target could still require effectively total ZEV sales.

But T&E’s analysis suggests that the change could result in a ~25% reduction of BEV market share due to the structure of green steel and alternative fuel credits. That’s a lot worse than the 10% reduction in emissions Europe is headlining.

But today’s changes may not matter all that much for another reason: EVs are still popular and gaining popularity as their inherent superiority as a powertrain choice gets found out by more and more drivers. They will continue to grow regardless.

Automakers may do everything they can to try to stop them (and their lobbying and painting a false picture of falling EV sales are examples of that), but those automakers that take them seriously will reap the benefits instead. So this sort of behavior will boost EV startups and Chinese EV makers, sales of which will result in many permanently lost customers for intransigent legacy brands.

And targets may end up getting met anyway – genuinely, who in their right mind would be crazy enough to buy a brand new gas car a decade from now, when EVs are already the better choice today and only getting better as time moves on (and as gas stations get replaced).

Whether we get there or not, this sends all the wrong signals

But the danger is less in the regulation itself, and more in terms of how it could be abused, by opening the door for other tweaks to regulations regarding e-fuels or PHEVs, for example. This could lead to more polluting vehicles on the road, which then put out pollution well into the latter part of this century.

It also makes governments seem unserious, allowing manufacturers to get changes as soon as they invent the slightest sign of difficulty (and it is invented – EV sales are rising, gas car sales are dropping). This then opens the doors for future rollbacks.

So our negativity on this change isn’t with the status of the rules themselves – in a vacuum, 90% reduction by 2035 might have been laudable if it was the first proposal made (though we would have advocated for stronger). The negativity is rather because these rules are moving in the wrong direction, and shouldn’t be moving at all if we want them to seem serious in the first place.

To add salt to the wound, the continent is grappling with an active war in Ukraine which is now in its third year. The invading country, Russia, already went unpunished for a 2014 invasion of Ukraine due to Europe’s addiction to Russia’s oil resources, and pushed further with a 2022 invasion which is still ongoing.

This was enough to get Europe to try to get off Russian gas, but this led to huge energy price spikes in the region as Europe had not prepared for such a sudden change (hmm, perhaps it would have been nice to have more vehicles that don’t need to burn oil?).

With today’s change, Europe signals that it doesn’t mind using oil for a bit longer. And despite that Europe has drastically reduced its oil imports from Russia, where that oil comes from is immaterial in a global oil industry where demand anywhere buoys prices everywhere. Thus, every gallon Europe burns still funds the Russian war effort.

And even worse, this rollback was announced mere days after the 10th anniversary of the Paris Agreement, the landmark climate law where all countries agreed to lower emissions.

This sends another signal that Europe, the bloc responsible for more total emissions than any other entity except the US, is not as serious as it should be about solving the problem it has been so instrumental in causing – despite that so many of the effects of the problem will be disproportionately felt by the parts of the world that it ruined with its colonial past.

For these reasons, even though this change is being marketed as a minor one, it is still unacceptable.

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