The rollback of stricter emissions standards continues to gain traction, with Europe now pumping the brakes on its future ban on new gas-powered cars.
The details: Amid pressure from automakers, the European Commission has decided to ease its shift into zero-emissions vehicles by proposing to revise its plan to bar the sale of new internal combustion engine (ICE) vehicles in the EU, reports CNN.
Initially set for a 100% ban by 2035, the new proposal by the EU’s executive arm applies the ban to 90% of vehicles instead, enabling automakers to still sell plug-in hybrids and gas-powered vehicles beyond the next decade.
Despite criticism from environmentalists about the move, the EU Commission’s president, Ursula von der Leyen, contends that the revised plan keeps Europe “at the forefront of the global clean transition.”
What they’re saying: “From 2035 onwards, carmakers will need to comply with a 90% tailpipe emissions reduction target, while the remaining 10% emissions will need to be compensated through the use of low-carbon steel…or from e-fuels and biofuels,” the European Commission said in a statement.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
Get insights trusted by 55,000+ car dealers. Free, fast, and built for automotive leaders.
Why it matters: Europe’s softer stance on ICE bans is another signal that regulators worldwide are recalibrating aggressive EV timelines in the face of cost, capacity, and demand challenges. That reduces the odds of a sudden, hard pivot away from gas and hybrid vehicles—and reinforces the need for a balanced inventory strategy that supports ICE, hybrid, and EV buyers.
Between the lines: The European Commission’s shift on the 100% ban—which follows a much more aggressive rollback on U.S. emission standards by the Trump administration—underscores automakers’ growing contention that electric vehicles have been eating away at their profits amid slowing EV demand, as detailed in a Yahoo Finance report.
European auto production has remained 15%–20% below pre-pandemic levels, with no signs of recovering soon, largely attributed to a slower-than-expected EV transition.
Automakers like Volkswagen and Stellantis have been forced to close plants and implement layoffs in Europe to adjust to market challenges, which will weigh on short-term cash generation.
Bottom line: Europe’s decision to ease its ICE ban adds to the global evidence that the transition will be gradual, messy, and mixed—giving dealers more time to sell profitable gas and hybrid models while OEMs refine their EV offerings. Stores that plan for a long “both/and” era, rather than a fast “either/or” shift, will be better positioned as policies, production, and consumer preferences keep evolving.
A quick word from our partner
Planning growth in 2026?
Join leading dealers and industry executives at the Haig Partners Maximizing Value Conference™ during NADA 2026 in Las Vegas. This year’s theme, What to Buy and How to Grow, delivers timely insights on dealership acquisitions, market conditions, OEM perspectives, and strategies for sustainable growth.
