European Commission Abandons 2035 Combustion Ban

European Commission Drops 2035 Combustion Engine Ban

Good morning! It’s Friday, December 12, 2025, and we’re here to discuss some big news in the automotive world. The European Commission has decided to abandon its plan to ban new combustion engine cars by 2035. This change comes amid various challenges and competition in the market. It seems that Germany’s concerns played a key role in this decision, as they are the largest economy in Europe.

Germany’s Influence on the Ban

Germany has backed out of the combustion engine ban, and this has significant implications for the rest of the EU. Chancellor Friedrich Merz has stated that while electric mobility is important, other technologies like synthetic fuels will also be necessary to achieve carbon neutrality. This means that the automotive industry will now have a more flexible approach to meeting climate goals.

“Next Tuesday, the European Commission will be putting forward a clear proposal to abolish the ban on combustion engines,” said Manfred Weber, president of the EPP party.

Slowdown in Global EV Sales

In addition to the combustion engine ban news, global electric vehicle (EV) sales are experiencing a slowdown. November marked the slowest growth rate in EV sales since February 2024. This is primarily due to a decline in the Chinese market and the ending of the $7,500 federal EV tax credit in the U.S. North America is now facing its first year of decline in EV sales since 2019.

Regional Variations in EV Sales

• In Europe, EV registrations have increased by a third this year, thanks to national incentives.
• Global EV registrations rose by 6% to nearly 2 million units in November.
• North American registrations plummeted by 42% to just over 100,000 cars sold.

Mexico Imposes Tariffs on Chinese Vehicles

Lawmakers in Mexico have approved a bill to impose a hefty 50% tariff on Chinese-made vehicles. This move aims to align with U.S. efforts to limit trade with China. Over 1,400 other products will also face various tariffs. The goal is to boost local production and protect Mexican industries.

Impact of Tariffs on the Automotive Industry

• Chinese cars will be most affected, facing the steepest tariffs.
• Mexico’s finance ministry estimates an increase of $2.8 billion in revenue by 2026.
• These tariffs might raise car prices for consumers, depending on how manufacturers respond.

Volkswagen’s New EV Strategy

Volkswagen is considering introducing electric vehicles with range-extending gas motors to markets in the U.S. and Europe. This shift reflects a strategic change for the automaker as it looks to adapt to changing market conditions and consumer needs. While pure EVs are ideal for some, range-extending vehicles might ease concerns for others.

Future of Volkswagen’s EV Plans

• Volkswagen is evaluating adding range-extending engines to popular SUV and sedan models.
• The company is preparing its next five-year investment plan, which will be discussed soon.
• Future decisions will depend on market demand and other external factors.

Looking Ahead: Industry Challenges

All these changes indicate that the automotive industry is at a crossroads. With significant shifts in policies and consumer preferences, automakers must navigate these waters carefully. The potential rollback of fuel economy standards and reduced EV subsidies in various countries could further complicate the situation.

• Automakers may need to diversify their technology to stay competitive.
• Consumers are likely to encounter higher prices due to new tariffs.
• The balance between traditional combustion engines and electric vehicles will continue to evolve.