Next week the EU will make an announcement that will decide the fate of its car industry. The revision of the car CO2 law, and the 2035 electrification target, will tell us whether Europe is going to compete with China and the US, or acknowledge that the future of the automotive industry is not European.
The automotive industry and its political allies are throwing all their weight into the battle. What they want is ‘technology neutrality’, meaning the right to keep selling combustion cars after 2035. In a world where virtually everyone knows that battery electric is the future, this is a short-term strategy that will have devastating consequences for future competitiveness.
The real causes of the crisis
The industry is very good at blaming regulators and the 2035 target for its difficulties. In reality, the automotive crisis has nothing to do with the 2035 date.
Today, three million fewer cars are sold in Europe than in 2019. This is driven by carmakers choosing profits over volumes. Between 2018 and 2024, the average price of mass market cars rose by 40 percent, from €22,000 to €30,700.
Many manufacturers made record profits during those years.
Those decisions are now biting back in other ways. Most Europeans can no longer afford a new car. And in China, European brands are losing sales and margins at a high speed in the face of fierce local EV competition.
Their magic solution? Allow biofuels and PHEV vehicles after 2035.
This may give them short-term comfort, but strategically it is a mistake that risks pushing the European industry into a dead end.
There are three simple reasons why technology neutrality in the car CO2 law is a dangerous idea.
Targets are the compass for investment
Clear targets drive investment and business certainty. Weakening the 2035 goal would undermine the hundreds of billions already committed to the electric value chain: batteries, charging networks, power electronics, components.
More than 200 CEOs and industry leaders have written to the Commission urging it not to touch the targets.
Technology neutrality is the opposite of affordability
Electric cars are already the cheapest to run and are rapidly becoming the cheapest to buy. Behind the slogan of “technology neutrality” hides far more expensive options for drivers. Plug-in hybrids sell for around €55,000 on average and cost up to an extra €0.92 per litre for third-hand vehicle drivers compared to a petrol car. Synthetic fuels would cost €6 to €8 per litre. Advanced biofuels would also remain costly due to their scarce supply.
The world is going electric with or without Europe
The global race for electrification is on. EV sales in China and in fast growing markets like Thailand and Vietnam are booming and now outpacing Europe. Even here at home, the shift is accelerating. In Q3 2025 alone, 10 European countries hit new EV sales records.
Europe is now at a crossroads
Hold firm on the targets and the European auto industry has a real chance to compete globally and transition to be competitive global EV players. Weaken them, and allow carmakers to cling to combustion engine technology of the past, will see the industry fall permanently behind. Going slow on electrification is not going to help. It will make things worse.
Europe’s car industry was late waking up to the fact that they had fallen behind China. Part of the industry now risks repeating the same mistake and digging deeper into the combustion engine dead-end. It is very clear that the future is electric. Every moment, every year that Europe hesitates, it is another moment that China extends its lead. They won’t slow down on electrification because Europe prolongs the life of combustion engines. At home, European consumers won’t continue to buy an inferior technology.
If the EU backtracks now, it risks missing the biggest industrial shift of this generation. It would abandon its ambition to master one of the most important technologies of the 21st century, and lose the industrial, economic and social gains that come with electrification.
This is the moment to stay the course and for decision-makers to show leadership and vision.
All these discussions on biofuels, on e-fuels, on hybrids, and on ‘efficient’ combustion vehicles won’t give Europe time and space to compete with China. They are distractions that risk turning the EU into a car museum. Instead, let’s give our industry every chance to catch up on the technology of the future.
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