The European Commission has announced a significant revision to its climate targets for the automotive sector. EU car manufacturers will be required to achieve a 90% reduction in CO2 emissions from 2035 onwards, instead of the previously mandated 100%. Furthermore, the regulation adopted in March 2023, which envisioned a complete ban on internal combustion engine (ICE) vehicles, has been repealed. Under this new agreement, EU car manufacturers will be obligated to reduce their emissions by 90% by 2035. These 2035 targets were formulated within the framework of the European Green Deal, a cornerstone of the EU's vision to achieve climate neutrality by 2050. In 2022, the EU set a strategic goal of banning the sale of new internal combustion engine vehicles.

While there were some calls in the automotive sector to maintain the ban and invest more in electrification, the vast majority of car manufacturers demanded that the EU reconsider its policies, arguing that their businesses were threatened with extinction by competition from China and the United States. Increased social and economic pressures, particularly in economies heavily reliant on the automotive industry, fueled serious debate within the EU about rolling back the ban. Car manufacturers highlighted competition from China, high energy prices, shortages of car parts including batteries, and insufficient consumer demand for electric vehicles due to reduced financial and tax support in the EU. With the latest decisions, the remaining 10% of emissions will have to be offset by using "EU-made" low-carbon steel or sustainable fuels. Following recent and increasing statements from the automotive sector, the EU lifted the 2035 ban on the sale of new diesel or gasoline-powered cars. Manufacturers will have to offset the remaining 10% of emissions by using sustainable fuels such as low-carbon steel produced in the EU or e-fuels and biofuels.

The decision will allow the sector to continue producing electric vehicles, as well as plug-in hybrids, hybrids, and internal combustion vehicles, after 2035. The EU stated that fully electric vehicles and small, affordable electric cars produced in the EU will also be incentivized. This change gives European car manufacturers more flexibility, and the new strategy is seen as a clear sign for the EU that technologies other than battery-electric vehicles can be introduced to the market after 2035.

The German automotive giant is expected to cease production at its Dresden plant; this marks the first time in the car manufacturer's 88-year history that it has stopped production in Germany. While many EU countries want to reconsider the 2035 internal combustion engine ban and evaluate the sale of hybrid vehicles under the law, France and Spain want to maintain the ban. These countries argued that the future belongs to electric vehicles and that support for expanding charging infrastructure should not be reduced. Large-scale investments by manufacturers and the introduction of over 300 electric models to the market were key justifications for this approach. While this decision creates more uncertainty for e-mobility, consumers will, of course, have the freedom to decide which technology they want to use. However, increasing environmental awareness and technological advancements indicate that consumers are becoming increasingly conscious of the fact that the long-term future of the automotive industry will revolve around electric solutions.