EU Backs Away From 100% Combustion-Engine Phase-Out for 2035

Industrial policy has trumped headline climate ambition before: in 1981 the Reagan administration dialed back the 1979 U.S. CAFE standards after automakers warned of job losses, and California’s 1990 Zero-Emission Vehicle mandate was watered down in 2003 for similar reasons. Today’s EU retreat fits that pattern—regulation tightens during optimism (the 2023 Green Deal package) and loosens when growth stalls and foreign competition (this time Chinese EVs) threatens strategic industries. It highlights two longer trends: the continent’s perennial struggle to reconcile industrial competitiveness with decarbonisation targets, and the political clout Germany exerts inside the bloc. On a 100-year arc the decision may delay, but is unlikely to stop, the structural shift away from fossil mobility: once battery costs beat combustion on total ownership—and carbon pricing spreads globally—the market, not Brussels, will finish the job. Yet every policy wobble risks slowing capital flows and innovation, just as previous vacillations did to solar manufacturing in the 2010s, potentially ceding another strategic industry to Asia.