Representative photo (AP)
Europe’s auto industry is braced for a major announcement from the EU on December 10, which could see significant changes made to the European Commission’s proposed 2035 combustion engine phase-out.However, amid pressure from carmakers and other affected sectors such as car rental and car leasing companies, the announcement may now be pushed back until January.”We are still working on it,” EU Commissioner for Sustainable Transport and Tourism Apostolos Tzitzikostas told the German business newspaper Handelsblatt this week. “We want to present an automotive package that is truly comprehensive and covers all the necessary aspects.”Multiple media reports in recent weeks have suggested the EU Commission plans to force the electrification of rental, leasing and company-car markets by 2030, while significantly relaxing the wider 2035 ban on all internal combustion engines and allowing alternatives to electric vehicles (EVs).An executive with a major car rental company told DW that, based on their discussions with the EU, they expect the EU to propose strict electric vehicle quotas for what are known as fleet operators. They said the discussions suggested that car rental, car leasing and company-car operators could face a quota of up to 90% or higher by 2030.”The Commission is not looking for dialogue or discussion, that’s our impression,” the executive said.The EU Commission said it had no comment to add regarding the negotiations. A spokesperson told DW that preparations for the upcoming package were “ongoing.”
Pleading for concessions
Back in 2022, the EU’s 27 member states reached a deal to effectively ban sales of new combustion engine cars by agreeing to stop new registrations of vehicles that emit CO2 by 2035. The aim was to bring down the car sector’s high emissions, as part of the bloc’s strategy to become climate-neutral by 2050.However, Europe’s car sector has been beleaguered by a range of problems in recent years, struggling with the technological challenge of the shift to electrification and with drastically ramped-up competition from China.German Chancellor Friedrich Merz has been among those urging to EU to soften the 2035 cut-off date. He has asked Brussels for exemptions for various technologies including plug-in hybrids, battery hybrids and some range-extended electric systems which use a petrol-powered generator to charge the battery.”It is much more opportune and pragmatic to invest more effort and money in the development of efficient, hybrid systems that will combine the best of the world of internal combustion engines on the one hand and electric mobility on the other,” Merz said.Europe’s major carmakers support the German government’s move.”The EU Commission is ignoring market realities and risking employment and competitiveness in one of its key industries,” premium carmaker BMW said in a statement provided to DW. “It is crucial that the CO2 regulations are redesigned promptly.”The company expects the EU Commission to seriously consider the German proposal before making its announcement. “We are convinced that all drive systems can and must contribute,” the statement said. “Effective climate protection requires ambitious yet realistic guidelines, not targets that are detached from the market.”German brands such as BMW are particularly dominant when it comes to plug-in hybrids. Along with Mercedes, Volkswagen and Audi, they accounted for more than 41% of all plug-in hybrid sales in the EU in the first ten months of the year. A relaxing of the 2035 ban in favor of plug-in hybrids would significantly benefit them.
Commercial fleet operators deeply concerned
Yet, carmakers remain worried that any softening of the 2035 ban will be offset by the possible quotas on commercial fleets, which comprise around 60% of all new car registrations in Europe. Car rental firms are especially worried.Sixt, one of the largest European car rental companies, has been vocal about its opposition to the reported EU plans.It says a chronic lack of charging infrastructure for electric vehicles across Europe undermines any push towards electrification.”The regulation under discussion would affect more than 60% of all new registrations in Europe and would effectively bring forward the combustion engine ban by around eight years,” a company spokesperson told DW.Sixt argues “premature quotas” would deepen Europe’s existing dependency on China for batteries and mineral production vital to the automotive sector.”A transformation that increases dependency and reduces employment is heading in the wrong direction,” the spokesperson said. “Any regulatory framework must be aligned with real-world conditions — charging infrastructure, grid capacity, vehicle availability and customer demand.”Andrew Mountstephens, general counsel for Sixt, told DW that the company remains committed to emissions-free mobility. However, customer preference still tended strongly towards diesel and petrol cars.”We just had to realize that many customers were not yet prepared to go the same pace as we wanted to go,” he said, adding that the lack of charging infrastructure across Europe was a central reason for this.
Slow EV adoption weighs on profits
Several car rental and car sharing companies have invested in electric models, only to see heavy losses due to lack of customer interest.Hertz reported a massive $2.9 billion (€2.49 billion) loss in 2024 largely due to a failed investment in tens of thousands of Tesla cars, which were expensive to maintain and which customers largely shunned.The problems with charging infrastructure and customer demand are widespread and have capped previously high expectations over how quickly Europeans would take to electric driving.While new registrations of electic vehicles in the EU rose dramatically from 2017 to 2023,there was a decline in 2024 and only 17% of cars registered in 2025 are expected to be fully electric.Patrick Schaufuss, the head of the Center for Future Mobility at consulting firm McKinsey, says he would expect the EU Commission to “take those realities into account” in whatever update it’ll come up with.”The speed of the transition is maybe not as fast as we have wished for or had planned,” he told DW, adding it’s vital that any policy platform considers both decarbonization and economic success as “part of a holistic approach.”Underscoring that long-term electrification will be the future, Schaufuss however noted that markets were “decoupling” and different regions move at different speeds. “So this transition period is crucial, and maintaining economic success throughout this period is absolutely crucial.” Go to Source
