EU backtracks on 100% 2035 ICE ban

The European Union has formally softened its proposed 2035 ban on new petrol and diesel vehicles, clearing the way for internal combustion engine (ICE) cars and hybrids to continue beyond the original deadline.

The policy shift follows sustained pressure from several EU governments and major carmakers — including Volkswagen, Renault, Mercedes-Benz, BMW and Stellantis — who argued that an outright ban risked economic disruption and reduced consumer choice.

Under the revised European Commission proposal, manufacturers will now be required to reduce average tailpipe CO2 emissions by 90% by 2035, rather than the previously mandated 100%. The earlier target would have effectively prohibited sales of new non-electric vehicles.

The change means hybrid and even pure ICE vehicles can remain on sale after 2035, provided manufacturers meet the new emission thresholds. The remaining 10% gap may be offset using biofuels, synthetic e-fuels and low-carbon materials such as European-produced “green steel”.

Further incentives are expected to apply for brands using low-carbon steel in vehicle production, with additional credits proposed to help them reach their emissions goals. Small electric vehicles built under the EU’s forthcoming M1E rules will also receive “super credits” to encourage the development of affordable, city-focused EVs.

The European Commission has emphasised that penalties for breaching emissions limits will remain severe, potentially reaching billions of euros for non-compliant manufacturers.

Critically, the updated framework does not include any new sunset date for ICE sales. Petrol and diesel vehicles could therefore remain available indefinitely, so long as they meet emissions requirements.

Corporate fleets are another focus of the reforms. EU member states will need to set binding targets ensuring a defined share of new company car and van purchases are zero-emissions by 2030. The exact threshold, and the definition of a “large corporation”, are still under discussion.

The Commission says the revised rules will boost EV uptake through fleets and increase the supply of used low-emissions vehicles for private buyers.

The proposals require approval from the European Parliament, but member states are expected to consider them early next year — marking one of the most significant shifts yet in Europe’s approach to decarbonising road transport.