The EU plans to relax the ban on internal combustion engines, giving car manufacturers a breather.

Under pressure from the automotive industry for months, the European Union is preparing to propose relaxing emissions regulations for new cars, effectively lifting the ban on fuel engines. This move would allow car manufacturers to slow down the pace of introducing electric cars in Europe, bringing the region closer to the United States in terms of policy - where President Trump is overturning the fuel efficiency standards set by the previous government. Global car manufacturers are facing profitability challenges in the transition to electrification, and Ford Motor Company has announced that it will incur $19.5 billion in costs related to the comprehensive restructuring of its electric car business. The EU's policy rollback is set to be announced on Tuesday, as part of a trend of global green policies contracting under the pressure of economic transition. The escalating international trade tensions are pushing Europe to prioritize supporting its domestic industry further. While the EU has legally committed to achieving climate neutrality by 2050, governments and businesses are increasingly calling for more flexibility, warning that rigid targets could jeopardize economic stability. According to sources familiar with the matter, under the new proposal, the European Commission will lower the requirement to stop selling new petrol and diesel cars that was originally set to take effect in 2035, instead allowing a certain number of plug-in hybrid cars and electric cars with fuel extenders to be sold. These unnamed sources indicate that by 2035, emissions will need to be reduced by 90% from current levels, rather than the originally set 100% complete emissions reduction target. The European Commission will set a condition that car manufacturers need to offset additional pollution by using low-carbon or renewable fuels, or using locally produced green steel. The European Commission declined to comment on the proposal. The proposal is set to be approved by the European Commissioners on Tuesday, and will then be submitted to the European Parliament and the Council of the EU for discussion among member states. Each institution has the right to propose its own amendments, and the final form of the measure will be negotiated in "trilogue" talks involving the parliament, council, and commission. As car manufacturers are given more time to transition to full electrification, environmental groups are concerned that these changes create new loopholes that undermine Europe's climate ambitions and further lag major car manufacturers behind China in the electrification race. The Chinese car market continues to rapidly electrify, with foreign brands being pushed aside in the world's largest car market, which used to be a major profit source for Western car manufacturers. Even in the domestic market, European car manufacturers are facing growing competition threats from Chinese brands. The new import tariffs set by the EU can only provide limited protection for them. This has prompted lobbying efforts from Stellantis Group, Mercedes-Benz Group, and other companies. Germany, home to headquarters of Mercedes, Volkswagen, and BMW, has also pushed for policy adjustments to ease political tension and protect jobs. Earlier this month, six prime ministers including Italian Prime Minister Giorgia Meloni and Polish Prime Minister Donald Tusk lobbied the European Commission to allow the use of plug-in hybrid cars, range-extender electric cars, and fuel cell technology after 2035. Germany has also been working to downplay the upcoming ban to protect its car manufacturers from US trade tariffs, intense international competition, and weakening demand in Europe. Incentives for purchases The sales growth of new battery electric cars slowed after purchasing incentives were withdrawn last year in countries including Germany, the EU's largest market. While growth is starting to recover, partly because of the reinstatement of some subsidies, the pace is still far from meeting EU target requirements. The penetration of electric cars in the region remains very uneven. This year, the market share of pure electric cars in the Netherlands reached 35%, while in Spain it was only 8%. In Spain, uneven distribution of charging infrastructure and relatively high prices continue to deter some consumers. According to documents seen last Saturday, the comprehensive plan will also include measures to increase the penetration rate of small electric cars manufactured in Europe. This includes exemptions for such cars from certain safety and emissions requirements for up to 10 years, as well as incentives in the form of parking spaces and subsidies.