Europe’s 2035 Auto CO2 Plans Now Look Like An ICE Defeat

Europe’s 2035 Auto CO2 Plans Now Look Like An ICE Defeat.

The European Union’s proposal for CO2 emissions after 2035 ended the planned monopoly on electric vehicle sales and was initially portrayed as a sop to the auto industry, but as the dust settles, it appears to be a defeat for combustion power. 

 The measure will now have to be approved by politicians in the European Parliament, and if the proposals remain close to those published Tuesday, it will be a clear victory for the EV purists.

Schmidt Automotive Research founder Matt Schmidt put it this way.

“A few Porsches, Lamborghinis and Ferraris will still be allowed, but in reality, normal consumers, if they purchase, lease, or rent a new car from 2035, will be seated behind the wheel of an EV,” Schmidt said.

The Commission proposed automakers cut emissions by 90% by 2035, not 100%, compared with the base year 2021. This would allow a limited number of pure internal combustion engines, as well as hybrids, plug-in hybrids, extended-range electric vehicles and hydrogen-based ICE. The 90% CO2 concession was dependent on using green steel. Other measures included incentives to build small, cheap EVs.

Schmidt said new ICE customers will be limited to the privileged few because prices will be raised hugely by the cost of green steel and renewable fuel.

“ICE models will become the Haute couture Swiss watches of the motor industry, while everyone else goes Casio,” Schmidt said.

Environmental groups had declared the Commission proposals as a major concession to the auto industry. Not so, said Stuart Masson, Editorial Director of “The Car Expert”.

Reaction wildly overblown
“Some of the reaction to the EU’s revised 2035 target has been wildly overblown. This is not a U-turn, an abandonment of electrification, or the death of electric car. It is a modest 10% reduction in a long-term target, not a fundamental change of direction,” Masson said.

“Under the revised proposals, the EU has eased its 2035 requirement from 100% zero-emission new-car sales to 90%. That is hardly an about-face, despite how it has been portrayed in some headlines, and it still means the vast majority of new cars sold from that point must be electric,” Masson said.

Masson said the remaining 10% will mean it will become a minor market unattractive to the more than 50 possible ICE manufacturers.

“The handful of vehicles that survive are likely to be niche products, either serving specialist use cases where EVs remain impractical, or aimed at a small group of buyers who simply refuse to switch under any circumstances,” he said.

Brussels-based green lobby group Transport & Environment initially reacted to the proposals with a statement headlined “EU 2035 reversal: playing for time won’t make European carmakers great again…..Clinging to combustion engines won’t make European automakers great again,” T&E had said.

Steve Greenfield, general partner at Automotive Ventures agreed that when details of the Commission’s plans became clearer, the auto industry soured on the deal.

“The softening of the 2035 ban was meant to be a hard-won victory for carmakers after months of intense lobbying. Although it was initially welcomed by some carmakers, many companies said the offsets would be too challenging to bring in since the required use of green steel and “made in Europe” content in vehicles would be complex and expensive,” Greenfield said in an LinkedIn posting. 

EPP reacts
The European People’s Party, the biggest political grouping in the European Parliament, is composed of national center-right parties such as Germany’s Christian Democrats and Spain’s Popular Party. The EPP was positive initially about the Commission’s proposals, saying they were realistic and progressed towards technology-neutrality. It took climate protection and industrial competitiveness into account in equal measure.

The EPP was asked to comment. 

 The International Council on Clean Transportation believed the Commission’s proposals would delay EV progress in Europe, although it didn’t say by how much.

“The Automotive Package signals that the European Commission remains committed to car electrification, as the corporate fleets and small affordable electric car initiatives show. But the proposed changes to the CO₂ standards are risky concessions that will delay necessary transformations,” said Jan Dornoff, ICCT’s Research Lead. 

“Europe’s automotive industry and consumers need technology clarity, not confusion. Even with the best political intentions, clinging to outdated, inefficient, car technologies is not a viable path to tackle the challenges of the fast-paced global transition to electromobility,” Dornoff said in a statement.

Investment researcher Jefferies didn’t think there would be much negative impact on EV sales. 

“The question for investors to consider is the degree to which the EU’s autos measures will lead to more, new ICEs from (manufacturers) being sold in the EU in 2035. Contrary to media reports and public perception, EV sales are expanding globally today. In November, 38.5% of all new vehicles sold were electric, with growth in Europe and China more than offsetting U.S. declines,” Jefferies said in a report.

Chinese inroads won’t be slowed
Given the huge inroads expected in the European market from Chinese competition was the main reason for the Commission’s proposals, would they work? The Car Expert’s Masson didn’t think so.

“This will certainly not slow the expansion of Chinese manufacturers into Europe, either. If anything, it plays to their strengths. China can ramp up production of petrol (gasoline) or hybrid models far faster, and far more cheaply, than European brands. If regulations allow a higher proportion of non-EVs, Chinese manufacturers will simply supply more of them,” Masson said.