The EU's determination to ban the sale of internal combustion engine (ICE) vehicles by 2035 was once seen as a firm signal of green transition. However, it has faced repeated setbacks due to industrial realities and divisions among member states. Now, the focus of controversy has shifted from technological routes to the 'pacing authority.'

In literary works, 'eating books' is often used humorously to describe authors overturning previous settings as if nothing had happened.

Today, this lighthearted metaphor unexpectedly reflects the dilemma faced by the EU's 'combustion engine ban': between ideals and reality, rules are suspended, and commitments are stranded.

'To eat or not to eat?' For the EU, this is no longer just a joke.

On December 16, as the European Commission unveiled a package of new automotive industry policies, it made substantive adjustments to post-2035 vehicle emissions requirements: abandoning the insistence on 'complete zero emissions' and instead allowing manufacturers to achieve a 90% overall emissions reduction target; remaining emissions could be offset through compensation mechanisms; while introducing more flexible compliance pathways to replace the original 'one-size-fits-all' sales ban. These changes mark a significant shift in EU policy direction from 'banning new fossil fuel vehicle sales' to 'overall emissions reduction targets + flexible compensation enforcement mechanisms.'

This is no coincidence. To understand this shift, we must return to the origins of the matter.

In 2023, the EU formally adopted a landmark regulation: banning the sale of internal combustion engine (ICE) passenger cars and light commercial vehicles from 2035. This 'combustion engine ban' was once hailed as Europe's most symbolic green transition initiative, reflecting the EU's firm commitment to driving the entire automotive supply chain toward full electrification.

However, barely a year after implementation, cracks quickly emerged. Electric vehicle (EV) adoption lagged behind expectations, charging infrastructure development lagged, market growth faltered, and traditional supply chains faced sustained pressure. Governments and automakers across countries also showed significant divergences over future technological routes.

More critically, this controversy has transcended environmental or technological issues, touching on the core propositions of European industrial competitiveness, employment structures, and strategic industrial security.

As the EU formally adjusts its 'combustion engine ban' policy orientation, the industry has spoken out forcefully, while major member states like Germany, France, and Spain have taken divergent stances. The 'unified and firm' green transition trajectory once envisioned now has to be redefined.

Electrification Has Not Yet Entered the 'Fast Lane'

More than a year into the 'combustion engine ban,' the EU's new energy vehicle market has not shown linear growth but instead revealed complex and even wavering trends.

The original intention of the 2035 combustion engine ban was to use a clear endpoint to force a full supply chain shift toward electrification. However, reality has proven far more complex than anticipated: EV sales growth in the EU has slowed markedly, with market corrections occurring in multiple countries; charging infrastructure remains severely inadequate, particularly in Eastern Europe and rural areas; supply chain pressures continue to mount, with small and medium-sized parts suppliers facing structural shocks; while consumers lack confidence due to range anxiety and price sensitivity.

These challenges are not accidental but structural manifestations of policy advancement outpacing market readiness. The German Automotive Industry Association (VDA) and multiple automakers have repeatedly emphasized in position papers the need to maintain technological neutrality, such as allowing some internal combustion engine vehicles to continue registration after 2035 and keeping pathways open for plug-in hybrid electric vehicles (PHEVs) and synthetic fuels (e-fuels). These proposals aim to secure more buffer space for the industry.

Objectively speaking, this is not 'obstruction' of transition but systemic consideration of supply chain scale, employment structures, and transition costs. Particularly for engine supply chains and small and medium-sized parts manufacturers, an overly rapid shift to battery electric vehicles (BEVs) could cause irreversible industrial disruption.

Beyond the VDA, multiple automotive industry bodies within the EU have also pointed out that infrastructure and supply chain bottlenecks cannot be ignored: if charging network expansion fails to keep pace with sales growth, consumers will struggle to accept electrification timelines. Especially in the light commercial vehicle segment, electrification faces practical difficulties such as payload degradation, rising costs, and weak affordability among commercial users.

In short, the pace of electrification depends on infrastructure development speed.

As Germany's industry insists on 'backup technologies' like synthetic fuels, German media generally analyzes that the underlying intent is to preserve a lifeline for the internal combustion engine industry, mitigate labor market impacts, and maintain flexibility in energy security. If the EU reopens legal space for synthetic fuels during policy reviews, Europe's powertrain technology routes will no longer be limited to pure electrification.

Member State Rivalry and Institutional Restructuring

The divisions among member states over the 'combustion engine ban' are not occasional political swings but inevitable results shaped by their respective industrial structures. Germany has long relied on a massive internal combustion engine supply chain with enormous employment volumes, particularly in southern and central regions where parts clusters remain deeply integrated with traditional powertrains. Therefore, during reviews, Germany naturally emphasizes 'buffer space for traditional systems,' hoping to reduce impact intensity by extending parallel periods for technological routes.

In contrast, France and Spain have pursued electrification more like national strategy-driven industrial projects, with supply chain structures more dependent on pure electric routes. They thus need clearer timelines to secure 'first-mover advantages.' Precisely because of these structural differences, the debate within Europe over whether to adjust the '2035 target' remains fundamentally a 'tug-of-war' over routes caused by differing industrial distributions.

Germany was the first to show clear adjustment tendencies in this policy debate. German Chancellor Friedrich Merz publicly stated he would 'fight to lift the ban,' emphasizing that 'the industry needs buffer space'; Bavarian Governor Markus Söder went further, declaring that 'the internal combustion engine ban must be abolished,' arguing it threatens Germany's economic prosperity. Political attitudes align closely with industry views: facing a noticeable decline in pure electric vehicle sales after subsidy phaseouts in 2024, suppliers and automakers widely worry that overly rapid electrification will trigger supply chain disruptions and employment structural imbalances.

Against this backdrop, Germany is pushing not merely for 'delays' but to secure continued existence for hybrid, synthetic fuel, and other technologies to maintain traditional manufacturing capabilities and domestic industrial resilience. The VDA has also explicitly advocated in public recommendations that some long-term hybrid and internal combustion engine technologies should be permitted to continue, ensuring European supply chain security. For Germany, this is not a simple technological discussion but a strategic choice intertwined with industrial foundations and social stability.

In stark contrast to Germany's calls for policy flexibility, France and Spain jointly expressed their determination to 'adhere to the original route' at the EU Climate Ministerial Meeting held in Luxembourg. Their joint position paper explicitly stated that the 2035 new vehicle zero-emissions target should be maintained, and no reviews should deviate from established carbon reduction pathways. In their view, the 'regulatory certainty' provided by the combustion engine ban is crucial for attracting battery investments and securing industrial upgrade windows. Once diluted, Europe's position in global electrification competition would rapidly decline.

While supporting limited flexible mechanisms like 'super credits' for European small vehicles, both countries firmly oppose lowering core emissions reduction requirements or granting plug-in hybrids additional preferences. This stance reflects a more 'industrial policy-driven' logic: using clear routes to stabilize investment expectations and policy continuity to shape new industrial clustering effects.

Against significant member state divisions, EU institutions are attempting to find new balance points between climate ambition and economic reality. In October 2025, multiple European Parliament members submitted written inquiries demanding reassessment of the 2035 ban's feasibility, questioning whether it adequately considered technological realities and social costs, and calling for 'technological neutrality' to be incorporated into review frameworks. Meanwhile, the EU Council has approved an important amendment: allowing automakers to calculate vehicle carbon emissions as a three-year average from 2025–2027, seen as a transitional signal to the industry.

Transition Is Consensus, But 'How?'

The 'combustion engine ban' touches not just automaker profits but the reshaping of entire supply chain structures and employment landscapes. In this struggle, industry attitudes are becoming a key force influencing policy direction.

The European Automobile Manufacturers Association (ACEA), representing major automakers, has proposed more constructive suggestions: policies should adhere to pragmatic principles, allowing multiple technological paths to coexist rather than clinging to a single electrification route. This stance reflects both industry commitment to decarbonization goals and systematic assessment of transition risks.

ACEA particularly notes that electrification of light commercial vehicles faces greater challenges—reduced effective payloads, inadequate charging networks, and compliance cost pressures on small and medium-sized enterprises being especially significant. The association recommends that future EU rule designs should fully consider these practical difficulties, requiring systemic support systems from infrastructure upgrades and vehicle-grid interconnection to flexible emissions regulatory mechanisms.

Some automotive leaders' statements more directly reveal potential risks. BMW Chairman Oliver Zipse publicly criticized the EU's 2035 hard deadline as a 'major mistake.' He argued that overly rigid rules fail to adequately consider emissions across the entire value chain—including battery production and fuel preparation processes. He advocates for synthetic fuels to be assigned a clearer long-term role in policies.

On November 17, Stellantis Chairman John Elkann warned in an interview with POLITICO that unless the EU restores technological neutrality principles, the automotive industry could descend into structural 'chaos.' He not only suggested smoothing mid-term emissions reduction targets into a five-year average from 2028–2032 but also proposed establishing scrappage incentive mechanisms to accelerate old vehicle replacements. Elkann emphasized: 'We are at a tipping point. As critical decisions are made in global markets, growth can become a choice; otherwise, we will accelerate toward decline.'

He also proposed averaging transition period emissions reduction targets before 2035. Notably, the European Commission had previously allowed automakers to use three-year averages to dilute this year's compliance requirements, an arrangement that indeed helped companies avoid substantial fines. Elkann argues that the industry should not be set specific single-year targets for 2030 but instead given more flexible achievement windows.

Behind this policy debate, trade union organizations' concerns about employment and social stability are equally strong. Germany's IG Metall union warns that overly rapid phaseouts of internal combustion engine technologies will trigger large-scale job restructuring, with enormous pressure on worker retraining. It must be recognized that traditional powertrain technologies remain core employment sources in many regions—this is not merely an industrial transition but a profound social structural transformation.

Pacing Authority Replaces 'Route Debates'

After this round of intensive struggles in autumn-winter 2025, the 'combustion engine ban' has evolved from a technological issue into a strategic topic reshaping Europe's industrial landscape. The controversy's focus no longer centers on whether electric vehicles represent the future but on who has the authority to define this transformation's pace and who will bear the accompanying transition costs. The dominant rhythm of transformation speed is replacing 'route debates' as the most decisive concept in Europe's electrification process.

While overall goals remain consistent, parties take starkly different stances due to varying interpretations of 'pacing authority': Germany, with the largest industrial chain, emphasizes resilience and capacity, preferring buffer zones for traditional systems; France and Spain insist on route stability and industrial sovereignty, hoping to secure strategic positions in new competitive landscapes. This represents a classic clash between 'steady-state value' and 'forward-looking value'—neither can fully negate the other, yet together they constitute structural contradictions Europe must confront.

It should be clarified that Germany's advocacy for 'technological neutrality' does not represent regression but broadens pathways to reduce systemic risks; France and Spain's insistence on 'policy stability' does not mean clinging to outdated planning but opening predictable investment cycles for capital. Future policy adjustments will not revert to binary opposition but evolve toward new institutional combinations capable of accommodating both positive and negative externalities.

This suggests subsequent European automotive industry policies may exhibit policy outlines more familiar to Chinese industry: for example, carbon credit mechanisms to ensure decarbonization rhythms stay on track; scrappage and replacement mechanisms to buffer social costs of existing vehicles; infrastructure investments and regional coordination to address charging network imbalances; or permitting multiple technological route windows to provide transition space for different industrial chain structures. In other words, green ambitions will not be weakened, but their implementation methods will place greater emphasis on matching realistic execution conditions with social affordability.

EU automakers' market feedback continually validates this point: decarbonization pathways cannot divorce from infrastructure development speeds, cost structure changes, and consumer acceptance. Between ideal intensity and implementation probability always lies an industrial reality that must be taken seriously.

For Chinese companies, Europe has transformed from a former 'high-certainty regulatory region' into a 'most policy-volatile mature market.' After subsidy exits, tariff pressures, member state stance divergences, and localization requirements overlap, strategies relying solely on cost efficiency and product competitiveness are no longer sufficient. The current policy adjustment period instead offers new 'collaborative opportunities': multi-route discussions on plug-in hybrids, extended-range electric vehicles, and synthetic fuels allow technologically prepared companies to compete across more tracks; rising localization demands for supply chains create new entry windows for batteries, thermal management, electric drives, and components; increased uncertainty makes 'understanding and participating in European policies' more critical than merely 'adapting to European policies.'

From this perspective, what matters more than market share is long-term presence in Europe's future rule systems; what's more crucial than technological exports is finding one's position in defining transformation rhythms. Perhaps for Chinese companies aiming globally, understanding this process's complexity and grasping its regularities will constitute a vital part of building sustained competitive advantages.

Note: This article first appeared in the 'Global Vision' column of the December 2025 issue of Auto Review magazine. Please stay tuned.

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