JAKARTA - The direction of global automotive policy has turned again. After the United States signaled a weakening of support for electric vehicles and opened the way for the revival of internal combustion engines (ICE), now it is Europe's turn to make a surprise. The European Commission is reportedly preparing to cancel the plan to ban the sale of new cars with ICE engines that were originally scheduled to take effect from 2035.
The decision, which has the potential to change the map of the European automotive industry, is said to be a major victory for Germany and its manufacturers. The information was conveyed by Manfred Weber, President of the European People's Party (EPP) and a senior member of the European Parliament, last Friday.
The cancellation of the plan is inseparable from the intensive lobbying of member countries and automotive industry players who demand flexibility in technology, amid slowing the rate of adoption of electric vehicles (EV) in the European market.
Previously, a ban on the sale of ICE-powered cars by 2035 was a key pillar of the EU's decarbonization strategy to encourage a full transition to electric vehicles. However, instead of implementing a total ban, Weber hinted at a new approach in the form of a 90 percent CO₂ emission reduction target for the car manufacturer's fleet starting in 2035.
The European Commission's official announcement scheduled for December 16 is said to no longer include a 100 percent zero emissions target starting in 2040 and beyond.
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This change in policy direction immediately received a positive response from the market. Citing Reuters, Monday, December 15, the STOXX Europe 600 Automotive and Parts Index jumped 0.8 percent. Shares of major manufacturers such as Volkswagen, Porsche, and Stellantis were recorded to have significantly strengthened.
German Chancellor Friedrich Merz, speaking at a press conference in Heidelberg, confirmed that electric vehicles remain the main path to carbon neutrality. However, he assessed that other technologies, including synthetic fuels or e-fuels, must still be given room for development.
Merz said this step provided "real planning certainty" for the automotive industry, in line with Germany's efforts to protect manufacturers in the country from the pressure of intense competition, especially from Chinese rivals, and EV demand that has not met market expectations.
On the other hand, this policy triggered criticism from a number of industry players who have invested heavily in a full transition to electric vehicles. Volvo Cars, for example, considers that reversing the direction of policy risks undermining confidence in the certainty of future regulations, even though the company has prepared a fully electric vehicle portfolio. For them, policy consistency is the key to long-term investment stability.
The European Commission's decision is said to reflect a shift in approach from technology obligations to achieving climate target results. Thus, the market and consumers are given more room to determine how to achieve these emission targets. This step also ends months of speculation and gives a fresh wind to German car manufacturers, both luxury brands and large volumes, to develop a variety of carbon neutral solutions and fuels outside of pure electric vehicles.
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