Why undoing the EU combustion engine ban spooks automotive leases – DW – 12/04/2025 | EUROtoday

Europe’s auto trade is braced for a serious announcement from the EU on December 10, which might see vital adjustments made to the European Commission’s proposed 2035 combustion engine phase-out.

However, amid strain from carmakers and different affected sectors equivalent to automotive rental and automotive leasing firms, the announcement might now be pushed again till January.

“We are still working on it,” EU Commissioner for Sustainable Transport and Tourism Apostolos Tzitzikostas advised the German enterprise newspaper Handelsblatt this week. “We want to present an automotive package that is truly comprehensive and covers all the necessary aspects.”

Multiple media studies in current weeks have prompt the EU Commission plans to drive the electrification of rental, leasing and company-car markets by 2030, whereas considerably stress-free the broader 2035 ban on all inner combustion engines and permitting alternate options to electrical automobiles (EVs).

An govt with a serious automotive rental firm advised DW that, based mostly on their discussions with the EU, they anticipate the EU to suggest strict electrical car quotas for what are generally known as fleet operators.

They mentioned the discussions prompt that automotive rental, automotive leasing and company-car operators might face a quota of as much as 90% or larger by 2030.

“The Commission is not looking for dialogue or discussion, that’s our impression,” the manager mentioned.

The EU Commission mentioned it had no remark so as to add concerning the negotiations. A spokesperson advised DW that preparations for the upcoming bundle had been “ongoing.”

Pleading for concessions

Back in 2022, the EU’s 27 member states reached a deal to successfully ban gross sales of latest combustion engine vehicles by agreeing to cease new registrations of automobiles that emit C02 by 2035. The purpose was to deliver down the automotive sector’s excessive emissions, as a part of the bloc’s technique to turn into climate-neutral by 2050.

However, Europe’s automotive sector has been beleaguered by a variety of issues in recent times, battling the technological problem of the shift to electrification and with drastically ramped-up competitors from China.

German Chancellor Friedrich Merz has been amongst these urging to EU to melt the 2035 closing date. He has requested Brussels for exemptions for numerous applied sciences together with plug-in hybrids, battery hybrids and a few range-extended electrical techniques which use a petrol-powered generator to cost the battery.

“It is much more opportune and pragmatic to invest more effort and money in the development of efficient, hybrid systems that will combine the best of the world of internal combustion engines on the one hand and electric mobility on the other,” Merz mentioned.

Europe’s main carmakers help the German authorities’s transfer.

“The EU Commission is ignoring market realities and risking employment and competitiveness in one of its key industries,” premium carmaker BMW mentioned in a press release offered to DW. “It is crucial that the CO2 regulations are redesigned promptly.”

The firm expects the EU Commission to significantly think about the German proposal earlier than making its announcement. “We are convinced that all drive systems can and must contribute,” the assertion mentioned. “Effective climate protection requires ambitious yet realistic guidelines, not targets that are detached from the market.”

German manufacturers equivalent to BMW are notably dominant in relation to plug-in hybrids. Along with Mercedes, Volkswagen and Audi, they accounted for greater than 41% of all plug-in hybrid gross sales within the EU within the first ten months of the 12 months. A soothing of the 2035 ban in favor of plug-in hybrids would considerably profit them.

Commercial fleet operators deeply involved

Yet, carmakers stay apprehensive that any softening of the 2035 ban can be offset by the attainable quotas on industrial fleets, which comprise round 60% of all new automotive registrations in Europe. Car rental companies are particularly apprehensive.

Sixt, one of many largest European automotive rental firms, has been vocal about its opposition to the reported EU plans.

It says a power lack of charging infrastructure for electrical automobiles throughout Europe undermines any push in the direction of electrification.

“The regulation under discussion would affect more than 60% of all new registrations in Europe and would effectively bring forward the combustion engine ban by around eight years,” an organization spokesperson advised DW.

Sixt argues “premature quotas” would deepen Europe’s present dependency on China for batteries and mineral manufacturing very important to the automotive sector.

“A transformation that increases dependency and reduces employment is heading in the wrong direction,” the spokesperson mentioned. “Any regulatory framework must be aligned with real-world conditions — charging infrastructure, grid capacity, vehicle availability and customer demand.”

Andrew Mountstephens, normal counsel for Sixt, advised DW that the corporate was dedicated to emissions-free mobility and mentioned they beforehand invested closely in electrification. However, buyer choice nonetheless tended strongly in the direction of diesel and petrol vehicles.

“We just had to realize that our customers were not prepared to go the same pace as we wanted to go,” he mentioned, including that the dearth of charging infrastructure throughout Europe was a central cause for this.

Slow EV adoption weighs on earnings

Several automotive rental and automotive sharing firms have invested in electrical fashions, solely to see heavy losses on account of lack of buyer curiosity.

Hertz reported a large $2.9 billion (€2.49 billion) loss in 2024 largely on account of a failed funding in tens of hundreds of Tesla vehicles, which had been costly to take care of and which prospects largely shunned.

The issues with charging infrastructure and buyer demand are widespread and have capped beforehand excessive expectations over how shortly Europeans would take to electrical driving.

While new registrations of electic automobiles within the EU rose dramatically from 2017 to 2023,there was a decline in 2024 and solely 17% of vehicles registered in 2025 are anticipated to be absolutely electrical.

Patrick Schaufuss, the top of the Center for Future Mobility at consulting agency McKinsey, says he would anticipate the EU Commission to “take those realities into account” in no matter replace it will give you.

“The speed of the transition is maybe not as fast as we have wished for or had planned,” he advised DW, including it is very important that any coverage platform considers each decarbonization and financial success as “part of a holistic approach.”

Underscoring that long-term electrification would be the future, Schaufuss nevertheless famous that markets had been “decoupling” and completely different areas transfer at completely different speeds. “So this transition period is crucial, and maintaining economic success throughout this period is absolutely crucial.”

Edited by: Uwe Hessler