{"id":83588,"date":"2025-09-10T13:08:06","date_gmt":"2025-09-10T17:08:06","guid":{"rendered":"http:\/\/autosector.com\/?p=83588"},"modified":"2025-09-10T13:08:06","modified_gmt":"2025-09-10T17:08:06","slug":"europe-iaa-fossil-fuel-ban-2035-evs","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=83588","title":{"rendered":"‘Fundamentally Wrong’: Why Europe’s Gas-Car Ban Could Make Or Break The Auto Industry"},"content":{"rendered":"

After spending a few days at Europe’s biggest auto show, I’ve come to realize the fate of the auto industry on that continent comes down to what happens in two cities: Beijing and Brussels.<\/p>\n

The first should be obvious. This year’s IAA Munich, the biennial auto industry expo focused on the European mobility market, felt like a sequel to the Shanghai Auto Show<\/a> I attended in April. The Chinese auto brands were there in force<\/a>, unveiling new models, new brands and new technologies aimed at stealing buyers from Skoda all the way up to Bentley.<\/p>\n

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But the second city that’s shaping the fate of the business is the heart of the European Union government, and a plan for all cars sold there to be zero-emission-only by 2035 is more hotly contested than ever\u2014even as the European automakers roll out aggressive electric plans to fend off Chinese competition.<\/p>\n

That story headlines today’s Critical Materials<\/strong><\/a>, our morning roundup of industry and technology news. Also on deck: Volvo’s CEO says what we all know to be true, and one of China’s biggest state-owned automakers has big plans for Europe too. Let’s dig in.<\/p>\n

<\/svg><\/span>30%: Europe’s 2035 Gas Car Ban Is Back In The Spotlight<\/h2>\n
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2026 Mercedes-Benz GLC With EQ Technology Live Photos<\/p>\n<\/div>\n

Photo by: Patrick George<\/p>\n<\/section>\n

I witnessed an interesting quip at Mercedes-Benz’s big debut event Sunday night: right as he announced that Mercedes was making big progress at Megawatt charging<\/a>, CEO Ola K\u00e4llenius reaffirmed that the company’s V12 engines weren’t going anywhere<\/a>.<\/p>\n

Talk about investing in two extreme ends of the powertrain spectrum at once.\u00a0<\/p>\n

But that’s the position Europe’s automakers are in these days. To prepare for the EU’s 2035 ban on new gasoline- and diesel-powered cars<\/a>, they’re investing heavily in next-generation EV powertrains. That does seem to be paying off. From range to charging times to software and beyond, I saw some very impressive efforts coming soon from Mercedes, BMW, Volkswagen and the rest.\u00a0<\/p>\n

Yet it’s a lingering question of how profitable they can be if\u2014not when, but if\u2014they can successfully pivot their businesses to “electro-mobility” in just 10 years. As CNBC reports<\/a>, many are fighting to ease that ban, and they’re hardly being quiet about it.<\/p>\n

Interestingly, they’re not a united front on this. Several automakers and executives are just fine with the ban and say they’re getting ready for it:<\/p>\n

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More than 150 leaders of the region\u2019s electric car industry on Monday\u00a0signed<\/a>\u00a0an open letter calling for the European Commission, the EU\u2019s executive arm, to \u201cstand firm,\u201d maintain the goal of its 2035 zero-emission target for cars and vans, \u201cand back it up with bolder action.\u201d<\/p>\n

The signatories \u2014 which included the likes of EV manufacturers Volvo and\u00a0Polestar, as well as material suppliers, battery manufacturers and grid operators \u2014 said the introduction of the target had already triggered hundreds of billions of euros in new investment.<\/p>\n<\/blockquote>\n

Here’s the other side of the argument via a letter from two automotive and supplier lobbying groups that represent BMW, Mercedes, Volkswagen, Renault and others:\u00a0<\/p>\n

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Addressed to European Commission President Ursula von der Leyen, the groups said the EU\u2019s 2035 carbon targets were \u201csimply no longer feasible.\u201d The letter was signed by Mercedes boss Ola K\u00e4llenius, who is currently serving as ACEA president, and Matthias Zink, CLEPA president and CEO of Schaeffler\u2019s Automotive Technologies division.<\/p>\n

Instead, the auto industry associations said the 27-nation bloc\u2019s emissions reduction plan \u201cmust be recalibrated\u201d to safeguard Europe\u2019s industrial competitiveness, social cohesion and the strategic resilience of its supply chains, while safeguarding climate goals.<\/p>\n<\/blockquote>\n

Germany’s new, more conservative chancellor jumped in too. He essentially said that enforcing this ban could be suicide for the country’s highly important automotive sector:<\/p>\n

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German Chancellor Friedrich Merz also waded into the debate on Tuesday. Speaking at the IAA Mobility conference, Merz said \u201cone-sided political commitments to specific technologies are the fundamentally wrong economic policy path,\u201d according to a CNBC translation. \u201cThey are not the path that will allow us to reliably achieve common goals,\u201d Merz said. His comments were seen as a thinly veiled reference to the EU\u2019s 2035 carbon regulation.<\/p>\n<\/blockquote>\n

Auto industry leaders are set to meet with the\u00a0European Commission President on Friday to discuss the matter.\u00a0<\/p>\n

From a business perspective, it’s easy to understand where many of these automakers are coming from. Europe has faced plenty of issues with EV demand, charging infrastructure, energy costs and wider consumer adoption, as well as labor issues and a slowing market overall. Last year, Volkswagen announced plans to close factories for the first time ever<\/a>. Now they’re getting hammered by U.S. tariffs as well.<\/p>\n

A gun to their heads to go zero-emissions in 10 years certainly isn’t helping. But on the other hand, the EU government is about as aggressive in fighting climate change as you get, and the science is clear<\/a> that carbon emissions from transportation and manufacturing must be drastically reduced or we’re all cooked. And that’s all before we get to the fact that China’s automakers are making huge inroads in Europe, and certainly not with gas-powered cars.<\/p>\n

So do regulators risk eviscerating a major industry, or side with climate concerns? Is a happy medium even possible? That tug-of-war is sure to determine the future of driving on the entire continent.\u00a0<\/p>\n

<\/svg><\/span>60%: Volvo CEO: Not Every Automaker Is Gonna Pull This Off<\/h2>\n
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Volvo XC70<\/p>\n<\/div>\n

Photo by: Volvo<\/p>\n<\/section>\n

Like in\u00a0The Godfather Part III<\/em><\/a> or The Dark Knight Returns<\/em><\/a>,\u00a0Hakan Samuelsson has been called out of retirement for one last war. And this one happens to be the biggest yet.\u00a0<\/p>\n

Samuelsson was CEO of Volvo from 2012 to 2022. Now 74, he’s returned to his post to deal with all of the challenges I listed above\u2014and the fact that his company is now owned by a Chinese one, the Geely Group. That hasn’t helped Volvo avoid problems, however. Volvo has been dogged by declining sales, software problems, delays to key models and, yes, the tariffs here in America.\u00a0<\/p>\n

“I must admit I didn\u2019t analyze exactly what was in our books and how tough this job would be before I came back, and when you add everything up with Trump\u2019s tariffs and all other things, it\u2019s probably got a bit worse than I thought,”\u00a0Samuelsson told Bloomberg<\/em><\/a>.<\/p>\n

He’s got his work cut out for sure. But he’s also taking a different tack than his colleagues who are fighting against a ban on gas-powered cars:\u00a0<\/p>\n

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The industry will be electric\u2014there\u2019s no turning back. It may take a bit longer in some regions, but the direction is clear. In (about) 10 years, cars will all be electric and they will be lower cost.<\/p>\n

There will be new dominant players, exactly as Ford, GM, Toyota and Volkswagen were in the old world. In the new world, there will be two or three very strong Chinese brands. That makes the room for the old ones tougher. So this will trigger a (wave of) restructuring. Some companies will adapt to new circumstances and survive. Others will not.<\/p>\n<\/blockquote>\n

I’ve long believed this myself. The auto industry is built around entrenchment<\/a>, and the history books are full of companies that folded because they couldn’t innovate fast enough or adapt to a new technology. It’s the way of the world.<\/p>\n

But it’s interesting to hear that from such an industry veteran, and one who’s back running another legacy brand trying to face the future. If things go poorly, Volvo could well be one that doesn’t survive, either.\u00a0<\/p>\n

<\/svg><\/span>90%: GAC’s European Glow-Up<\/h2>\n
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GAC IAA 2025<\/p>\n<\/div>\n

Photo by: GAC<\/p>\n<\/section>\n

Contrary to popular opinion, not every Chinese automaker is state-owned. Sure, they’ve all benefitted from generous subsidies, and big Chinese companies always have heavy ties to the government. But I’ve always sensed the privately owned car companies (BYD, Xpeng, Nio, Geely Group, to name a few) are the more technologically advanced ones.<\/p>\n

Yet GAC<\/a>, the automaker owned by the local government of\u00a0Guangzhou, also had a strong showing at IAA. It’s finally deploying its first electric model for Europe, the Aion V<\/a>, roughly the size of a Volkswagen ID.4, and it has big plans for that thing and more EVs to come. They actually seem pretty nice, too. Here’s CNBC<\/a> with more:\u00a0<\/p>\n

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Guangzhou Automobile Group\u00a0(GAC) aims to increase its European electric car sales 17-fold over the next two years, becoming the latest Chinese player to take on the region\u2019s traditional automakers through aggressive expansion.<\/p>\n

GAC is setting its sights on expansion despite the European Union\u2019s tariffs on China-made EVs, with the company saying it is looking at local manufacturing in Europe.<\/p>\n

\u201cWe are hoping the Chinese government and the European Union can negotiate further to bring the tariffs down,\u201d Wei said. \u201cIn the future, we hope to accelerate the manufacturing localization. So that, in the future, we [can] build up manufacturing capability in Europe for Europe, to better serve the European markets.\u201d\u00a0<\/p>\n<\/blockquote>\n

Just as not all legacy automakers will survive, not all Chinese brands will, either. But their industry as a whole isn’t going anywhere.<\/p>\n

<\/svg><\/span>100%: You’re In Charge Of A Major European Automaker. What Do You Do?<\/h2>\n
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2026 Mercedes-Benz GLC With EQ Technology Live Photos<\/p>\n<\/div>\n

Photo by: Patrick George<\/p>\n<\/section>\n

Congratulations, InsideEVs reader! Thanks to your deep knowledge of the space, you have been appointed to be the CEO of a major European automaker of your choosing. (A major<\/em> one, mind you; you can’t pick Aston Martin or whatever because that’s cheating, and they have their own problems.) But now you have to figure all this stuff out.<\/p>\n

Do you err on the side of being a positive force in the fight against climate change? Or do you try and slow-walk electrification and other technologies to either buy time or secure long-term relief from this pesky EV business? And what do you do about the rise of China and Trump’s tariffs? Drop your business plan in the comments. And don’t worry\u2014you got this.\u00a0<\/p>\n

Contact the author: patrick.george@insodeevs.com<\/a><\/em><\/p>\n

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After spending a few days at Europe’s biggest auto show, I’ve come to realize the fate of the auto industry on that continent comes down to what happens in two cities: Beijing and Brussels. The first should be obvious. This year’s IAA Munich, the biennial auto industry expo focused on the European mobility market, felt […]<\/p>\n","protected":false},"author":1,"featured_media":83589,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-83588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-cars"],"_links":{"self":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/83588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=83588"}],"version-history":[{"count":0,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/83588\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/media\/83589"}],"wp:attachment":[{"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=83588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=83588"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=83588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}