For years, Europe positioned itself as a global leader in the transition to clean mobility. The message was clear: by 2035, new cars sold in the European Union would be zero-emission. Now, that clarity is fading.
The European Commission, citing the need for “flexibility,” has softened its flagship policy. Under a revised proposal, carmakers would no longer be required to ensure that 100% of new vehicle sales are zero-emission by 2035. Instead, up to 10% of new cars could still be hybrids or other low-emission vehicles, provided manufacturers purchase carbon offsets to compensate.
The change is part of a broader Automotive Package, intended to help Europe’s car industry remain both competitive and climate-aligned. But for many in the tech and startup ecosystem, the move sends mixed and potentially dangerous signals.
A Concession to Legacy Carmakers
If approved by the European Parliament, the revised plan would largely satisfy traditional European automakers that have been lobbying for more time. Many of them are struggling to compete with Tesla and the growing wave of affordable electric vehicles coming from China.
From their perspective, hybrids offer a financial and technological bridge. From a policy standpoint, however, that bridge risks becoming a detour.
“China already dominates EV manufacturing,” warned Craig Douglas, partner at World Fund, a European climate-focused VC. “If Europe doesn’t compete with clear, ambitious policy signals, it will lose leadership of another globally important industry and all the economic benefits that come with it.”
Douglas was among the signatories of Take Charge Europe, an open letter addressed to Ursula von der Leyen. Executives from companies such as Cabify, EDF, Einride, and Iberdrola joined numerous EV startups in urging the Commission to “stand firm” on the original 2035 zero-emission target.
That appeal, however, struggled to outweigh pressure from the traditional auto industry, an industry that accounts for 6.1% of total EU employment.
A Divided Industry, Not a United Front
The debate is not simply startups versus incumbents. Even within the automotive sector, opinions diverge sharply.
In a statement to Swedish media, Volvo cautioned that retreating from long-term commitments for short-term relief could undermine Europe’s competitiveness for years. Unlike rivals such as Mercedes-Benz, Volvo has repeatedly stated it has no issue meeting the 2035 deadline.
For Volvo, the real bottleneck isn’t regulation, it’s infrastructure. The company would have preferred stronger public investment in charging networks, something critics fear may now lose urgency under the revised policy.
Issam Tidjani, CEO of Cariqa, a Berlin-based EV charging marketplace, echoed that concern. Weakening the mandate, he argued, risks slowing the entire electrification curve. “History shows that this kind of flexibility has never worked out well,” Tidjani said. “It delays scale, weakens learning curves, and ultimately costs industrial leadership rather than preserving it.”
The Battery Bet: Too Little, Too Late?
To its credit, the Commission has paired regulatory flexibility with targeted industrial investment. Central to the Automotive Package is the Battery Booster initiative: a €1.8 billion plan to build a fully European battery supply chain and reduce reliance on Asian manufacturers.
The initiative was welcomed by Verkor, which this week opened its first large-scale battery factory in northern France. After the struggles of Northvolt, Verkor is hoping to prove that Europe can still build battery champions at scale.
Yet critics question whether industrial subsidies can compensate for weakened policy ambition. Decarbonization, they argue, only drives innovation when the destination is non-negotiable.
Mixed Signals, Rising Risks
Ironically, traditional carmakers now warn that carbon offset requirements could raise vehicle prices, undermining the very competitiveness the policy was meant to protect. Meanwhile, uncertainty looms over the United Kingdom, which has yet to clarify whether it will mirror the EU’s shift or maintain its own 2035 ban unchanged.
Unlike the EU and the US, the UK has not imposed tariffs on Chinese EVs, even as their market share grows rapidly, adding another layer of strategic ambiguity for European manufacturers.
Leadership or Lag?
At its core, this debate reflects a familiar tension in climate and tech policy: how to balance the economic realities of legacy industries with the urgency of transformation.
Europe’s strength has long been its ability to pair regulation with innovation. By softening its stance on zero-emission vehicles, the EU risks blurring that formula. The question is no longer whether the future is electric, it is whether Europe intends to lead that future, or merely adapt to it after others have set the pace.
