Clinging to the past rarely works. Not in relationships. Not at work.
Not in automotive policy.
But this is what the EU is doing with its automotive policy as it is once again reviewing the clean cars regulation, walking back on the CO2 targets enacted just a few years ago.
Can we go 100% battery electric by 2035 or will we need some other clean alternatives a decade from now? No modeller, industry expert or academic has the crystal ball. But the car industry’s argument that because we don’t have enough chargers in some countries or haven’t built all battery factories yet means we can’t achieve our goals a decade later is, frankly, absurd.
All we can do is prepare for the most climate aligned, economically sound and technologically smart automotive pathway. Rather than repeating arguments from years back (EVs running on coal-fired electricity, really?!), an updated real-world check is needed.
This means getting to terms with some uncomfortable truths.
The first one is that the world is going electric, with or without Europe. Beyond China, a well covered story, battery electric car sales are fast growing across emerging markets globally. On average, one in four new cars sold was electric (including hybrids) in 2025, with impressive leaps in Brazil, India, Vietnam and even Ethiopia. The BEV sales shares in Indonesia, Thailand and Turkey are higher than the US.
This is the single biggest real-world change in the car market compared to a few years ago.
But drivers in these markets are not buying from the usual names of Ford, Toyota or VW. Rather, they are going after the affordable EV models on offer from Chinese brands, such as BYD and Chery. This is starting to erode the export volumes of western carmakers.
Manufacturing combustion engines in Europe for export is no longer a viable strategy. Instead, improving electric models and vertically integrating key components such as batteries is the best external industrial policy to stay competitive. (The US market is going in the opposite direction, which is likely temporary and is only increasing the cost of doing business for the likes of Ford and Stellantis.)
The second uncomfortable truth is that transition technologies such as plug-in hybrids will not help Europe’s competitiveness or sustain the supplier base. Our data shows that PHEV sales from Chinese brands, notably BYD and SAIC, surpassed those of BMW and Mercedes in 2025. Chinese models also top the list of infamous ‘extended range’ vehicles becoming popular with drivers.
Yes, this is partly due to a loophole as these models are exempt from the EV tariffs. But it’s also because the same dynamics around economies of scale and technology readiness apply. We are simply not good enough (yet) at making high quality but competitively priced electric vehicles.
Which leads me to the final crucial point.
European carmakers finally got their electric car mojo going in 2025. The EU’s 2025 emissions target (before it was relaxed until 2027) accelerated EV investment and production, resulting in dozens of affordable EV models hitting showrooms. The funky yellow Renault 5’s driving around European capitals (the third most sold model in the EU last year!) is in part thanks to the EU.
Having to sell more of those mass market EV models resulted in more efficient production methods, better battery procurement and even improved software and connectivity features. VW has finally solved its software glitches in what is today a decent ID range, while BMW’s Neue Klasse models get top reviews.
And just as our carmakers started to catch up, European policy-makers are pouring cold water on the EV momentum. The European Commission proposal will allow more of the old – combustion engines – rather than doubling down on the new.
Giving two more years to meet the milestone 2030 target, as the Commission proposes (or even five if the car lobby succeeds), removes the key driver for continued investment and acceleration. Averaging the target up to 2032 alone would decrease the ambition by 8.5 percentage points, resulting in 1 million battery electric cars that don’t have to be sold. That’s not only a climate problem, but a big faux pas in the EU’s automotive industrial policy too.
It weakens the signal to continuously invest to make EV production and models competitive with the Chinese brands that are quickly gaining ground in Europe. It also screws the business case for the surrounding cleantech, as fewer batteries, EV components and chargers are needed.
Carmakers, like most industry players, have natural incentives to maximise short-term profits. Long-term competitiveness of key industries, however, is a core task for the government. Lawmakers should understand that clinging to combustion engines or favouring hybrids won’t make European automakers great again. Not in Europe, nor globally. But pushing them to improve their electric cars by keeping the 2030 standard intact will.
