The future may be electric, but that future is being postponed. The European Commission, citing the need for flexibility, has softened its ambitious plan to ban the sale of gasoline cars by 2035.
Instead of requiring 100% of new cars to be zero-emission vehicles by that date, the revised plan would allow 10% of new car sales to be hybrids or other vehicles, as long as manufacturers purchase carbon offsets to compensate. This change is part of a broader ‘Automotive package‘designed to help the European car industry become clean and competitive.
If the European Parliament approves this change, it would likely satisfy traditional European automakers who have been asking for more time to move beyond hybrid vehicles. These companies are struggling to compete with Tesla and the rise of affordable electric vehicles (EVs) coming from China. But the policy change has created division between electric vehicle startups and their investors.
“China already dominates electric vehicle manufacturing,” said Craig Douglas, a partner at World Fund, a European climate-focused venture capital firm. “If Europe does not compete with clear and ambitious political signals, it will lose leadership of another globally important industry, and all the economic benefits that come with it.”
Douglas was one of the signatories of “Take Charge Europe,” an open letter to European Commission President Ursula von der Leyen, published in September. Senior executives from companies including Cabify, EDF, Einride, Iberdrola and numerous electric vehicle-related startups signed the letter, urging the Commission to “stay firm” on the original target of zero emissions by 2035.
Its attractiveness was not enough to counteract the pressure from the traditional automobile industry, which represents 6.1% of total employment in the European Union. But the continued pressure has sparked debate within and outside the startup community about the best path for Europe to remain competitive during the energy transition.
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Even within the automotive industry opinions differ. In a statement to Swedish media, a Volvo press officer warned that “backtracking on long-term commitments in favor of short-term gains risks undermining Europe’s competitiveness for many years to come.”
Unlike Mercedes-Benz and other manufacturers, the Swedish automaker was not worried about meeting the 2035 ban. Rather than postponing the deadline, Volvo would have preferred to see greater investment in expanding charging infrastructure, something critics fear the new policy could actually discourage.
Issam Tidjani, CEO of Cariqa, a Berlin-based electric vehicle charging startup, echoed these concerns. He warned that weakening the zero-emissions mandate by 2035 could hurt electrification progress overall. “History shows that this kind of flexibility has never worked well,” said Tidjani, who also signed the Take Charge Europe letter this fall. “It slows scale, weakens learning curves, and ultimately costs industry leadership rather than preserving it.”
To be fair, the Commission has not completely ignored infrastructure and supply chain issues. As part of its automotive package, it introduced the “Battery Booster,” a strategy that would invest €1.8 billion (around $2.11 billion) in developing a fully European-made battery supply chain. The objective is to strengthen local production and guarantee security of supply.
The plan received positive feedback from Verkor, a French startup that produces lithium-ion battery cells for electric vehicles. The company, hoping to succeed where Swedish battery maker Northvolt struggled, opened its first large-scale battery factory in northern France this week. Verkor called the Booster initiative “a necessary step to expand the battery industry in Europe.”
mixed signals
Still, many question whether the Battery Booster is enough to offset what they see as negative signals about the EU’s commitment to using decarbonization as an engine of economic growth.
Traditional automakers have already begun to complain that carbon offset requirements could make cars more expensive for consumers, potentially undermining the competitiveness the policy change was intended to protect.
Another uncertainty involves the United Kingdom. It is unclear whether the UK will follow the EU’s lead and amend its own ban on combustion engines by 2035. Unlike the EU and the United States, the UK has not yet imposed tariffs on Chinese electric vehicles, even though their rapidly increasing sales in the British market have raised concerns among domestic manufacturers.
The debate highlights current tensions in climate policy between how to balance the economic realities facing existing industries and the urgency of transitioning to cleaner technologies. As Europe attempts to thread this needle, decisions made now will invariably affect whether the continent leads or lags behind in the global electric vehicle market.
