Europe Won’t Ban Gas Cars By 2035 After All. Now Mercedes Is Worried
European automakers are facing renewed uncertainty as the European Union revises its plans for phasing out combustion engine vehicles. While many manufacturers initially lobbied for a softening of the original 2035 ban on new gas car sales, the resulting changes are now creating a complex landscape that could impact investment and market stability.
EU Revisions Spark Concern
Mercedes-Benz CEO Ola Källenius expressed concern that the EU’s revised approach – shifting from a complete ban to a 90% CO2 reduction target – risks shrinking the market. This statement is particularly notable given that Mercedes-Benz had previously urged Brussels for a “reality check” on its all-electric goals. The proposed changes are still subject to the EU’s legislative process, meaning further adjustments are possible.
The Challenge of Uncertainty
The core issue, according to Källenius, is the uncertainty created by a rulebook that is still being rewritten. A firm 2035 deadline, while ambitious, provided a clear target for automakers to plan around. The new, more nuanced approach forces companies to reassess their strategies without a definitive endpoint in sight.
Investment Implications
The revisions are prompting automakers to renew investment in both combustion engine technology and electric power. European manufacturers had already begun adapting to a future without combustion engines, but the softened targets require further course corrections. This means funds previously allocated to battery, motor, and software development are now being redirected back to engine research – a potentially costly shift.
This renewed investment in combustion engines is further complicated by the upcoming Euro 7 emissions standard, set to take effect at the end of November, which will make engine development more complex and expensive.
The Hybrid and Range Extender Factor
Automakers are likely to increase production of plug-in hybrids and range extenders, as these vehicles offer lower on-paper emissions. However, the actual emissions reduction depends on how frequently these vehicles are charged.
Potential Market Scenarios
According to clean transport advocacy group Transport & Environment, approximately 85% of new cars sold in the EU after 2035 are still expected to be fully electric. However, this figure could fall to as low as 5% if plug-in hybrids and range extenders remain popular. Conversely, if fully electric vehicles dominate the market, the share of combustion engine vehicles could reach 50%.
Mercedes-Benz is responding to these shifts by launching a new lineup of electric vehicles with more conventional designs, aiming to appeal to a broader range of customers. Other manufacturers, like Porsche, are even reconsidering previous commitments to fully electric models, announcing plans to develop combustion-powered replacements for existing vehicles.
Frequently Asked Questions
What is the EU’s new target for reducing CO2 emissions?
The European Commission is proposing a 90% CO2 reduction target relative to 2021 levels, rather than a complete ban on the sale of new combustion engine cars by 2035.
Why is Mercedes-Benz concerned about the revised EU rules?
Mercedes-Benz CEO Ola Källenius believes the revisions create uncertainty and could potentially shrink the market, making long-term planning more difficult for automakers.
What impact will the changes have on investment in engine technology?
The revisions are prompting automakers to renew investment in combustion engine development, as they need to prepare for a scenario where these vehicles may remain on sale after 2035.
As the automotive industry navigates these evolving regulations, how will automakers balance the need for long-term planning with the increasing uncertainty surrounding the future of combustion engine vehicles?