The European Commission meeting scheduled for December 10 to advance its Auto Package, likely to include changes to the plan to outlaw the sale of new combustion vehicles by 2035, has been delayed and is expected to be rescheduled early in January.
The postponement and rescheduling haven’t been officially announced, but industry sources said the meeting will now take place early in January.
The meeting was also expected to discuss Commission President Ursula von der Leyen’s Small Affordable Cars initiative.
“Millions of Europeans want to buy affordable European cars. We cannot let China and others conquer this market,” von der Leyen said in her State of the Union speech in September.
Germany and France disagree on important details on the route to ban new ICE cars by 2035, and the role of plug-in hybrids and so-called e-Fuels after 2035. The automotive industry and Germany want flexibility and a technology-neutral approach to carbon dioxide emissions rules. The industry says without changes, the industry will fall victim to competition from China.
T&E – enforce 2035 new ICE ban
The opposition includes France and green lobby groups like Transport & Environment. T&E says if the rules are changed it will undermine the industry because it craves consistency and predictability. T&E says the EU must enforce the 2035 ban and use other policies to encourage the uptake of zero-emission cars.
Chancellor Friedrich Merz of Germany has led the campaign for flexibility.
“This is above all about achieving good compatibility between competitiveness and the demands we place of climate protection,” Merz told a news conference reported by Automotive News Europe late last month.
Mercedes CEO Ola Kallenius, who also leads the European Automobile Manufacturers Association, has supported the campaign for changes in the rules.
Prime Minister of Italy Giorgia Meloni has said the 2035 plan represents a “self-destructive” target.
BMW said if the increase in the market share of EVs in Europe continues at the same pace it will reach 50% by 2035, not the 100% required.
“Technology neutrality is the only viable option to cater to customers without giving up market share and (profit) margins,” BMW CEO Oliver Zipse said.
France wants EVs sold in Europe to include 75% of locally sourced parts. BMW said this would be counter-productive.
UBS expects flexible outcome
Investment bank UBS expects the EU to eventually adopt a flexible approach.
“Despite the reported potential delay of the review result, we continue to expect more flexibility to be announced on the current 2035 ICE ban. Instead of a hard ban, we think the remaining negotiations will focus on the long-term powertrain mix, absolute CO2 targets and how all forms of hybrid cars could play a role”
“Also, we note that a previous proposal on a new average period in 2028-2032 is under discussion as well. Overall, we think more flexibility will reduce tail risks for the industry, but not change the overall investment strategies as a fully competitive EV line up remains essential to meet (amended) long-term CO2 goals and to stay competitive vs. Chinese (manufacturers)”, UBS said in a research note.
