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There is a school of thought, and it has no shortage of adherents in the belly of the beast that is EU regulatory affairs, that the only way to get Europe’s car industry to go electric is to force it.
They think “ban the combustion engine at some fixed date in the future, make the penalties for non-compliance crippling, and we’re on to a runner.” They may, or may not, also think “It has to work for us, look with it did for the Soviet Union.”
But simple logic, a yearning for the grand industrial plans of the SU, and complex industrial reality don’t always get along, and anyone who’s watched Brussels try to regulate its way to an outcome knows how that tends to go.
The European Commission’s Automotive Package, which landed in December 2025, takes a different view. It is trying to get to the same place — fewer emissions, cleaner transport, net zero by 2050 — without blowing up the industry on the way there. Whether you think that’s wise or reckless probably depends on how much faith you have in European car manufacturers to actually adapt when nobody’s holding a gun to their head.
What’s actually in it
Four main pieces to the package, and its worth understanding what each one does before we get into whether any of it is enough.
First, CO2 emission standards for cars and vans get reworked. From 2035, manufacturers have to hit 90 percent reduction in tailpipe emissions. The other 10 percent can be offset — low-carbon steel made in the EU, e-fuels, biofuels. So in practice, cars with combustion engines don’t totally vanish after 2035, as long as they’re using sustainable materials or fuels. That’s quite a big deal and it hasn’t gotten nearly enough attention. Before 2035, there are incentives — “super credits” they’re calling them — for manufacturers who build small, affordable EVs inside the EU.
Second, the Battery Booster. €1.8 billion on the table, €1.5 billion of it in interest-free loans, aimed at European battery producers. The goal is building out a battery supply chain that doesn’t depend on China for absolutely everything,
Third, the Automotive Omnibus. Consolidation of secondary legislation, simpler testing for vans and trucks, harmonisation of various rules. All that good stuff. One that matters more than it sounds: rest time rules for drivers of electric vans are being aligned with combustion engine van rules. If you’re running a delivery business and trying to figure out whether going electric makes any financial sense, that kind of regulatory parity actually matters quite a lot. The Commission says the streamlining saves manufacturers about €706 million a year. Part of a bigger push to cut €14.3 billion in admin costs across all sectors, though whether those numbers materialise is another question entirely.
Fourth, binding national targets for zero and low-emission vehicles in large corporate fleets. Basically pushing decarbonisation through company car purchases rather than waiting around for individual consumers to make the switch, which at current EV prices could be a very long wait indeed.
The case for this approach
Industry groups were notably positive about this, which in itself tells you something. Usually when the Commission announces a major regulatory package the first thing you hear from industry is complaints. Not this time. HGV Ireland, who represent heavy goods vehicles, pointed to the flexibility in CO2 standards and the van rest-time equalisation as proof that someone in Brussels was genuinely listening for once.
The EU-made components emphasis – batteries, low-carbon steel – is doing quite a lot of the heavy lifting here. No point going electric if every battery comes from Shenzhen and the steel from somewhere else; you’re just trading one strategic dependency for another. Europe spent the last five years learning that lesson the hard way with Russian gas. Building domestic supply chains is expensive and slow, nobody disputes that, but the alternative is worse.
The ECR Group backed this, and its not hard to see why it fits their playbook. The package allows a mix of technologies — EVs, hydrogen, plug-in hybrids, even combustion engines with offsetting mechanisms — rather than picking one winner and forcing everyone onto it. Thats been the ECR position for a while now; let member states and manufacturers find their own way to the targets instead of having Brussels dictate exactly how. Corporate fleet targets respect subsidiarity. The regulatory streamlining cuts bureaucratic overhead that, lets be honest, hurts smaller manufacturers and component suppliers disproportionately.
The case against
Not everyone’s buying it though, and the criticism deserves a hearing. John Fitzgerald, writing in the Irish Times, called the easing of the 2035 combustion engine ban “long-fingering” — essentially accusing the Commission of kicking the can down the road in a way that could end up being catastrophic for European manufacturers.
His argument is pretty straightforward and he’s far from the only one making it. Chinese EV manufacturers already have better tech, lower costs, and control over the rare earth materials you need for batteries. Every year European manufacturers spend hedging between combustion and electric is a year the gap gets wider. That 10 percent offset allowance, in this reading, basically gives companies permission to keep doing what they’re already doing instead of committing properly to the transition. And if they dont commit — if they keep faffing about with powertrain strategies while BYD and CATL eat their lunch — the end result is job losses and permanent decline in a sector that employs millions of people.
Theres real force to that argument, I think. The question is whether the alternative — a hard ban, no flexibility, no exceptions — would actually produce better results or would just bankrupt companies that aren’t ready for it. European manufacturers are still dealing with supply chain disruptions. Charging infrastructure across most of the continent is, to put it charitably, patchy. Consumer demand for EVs outside of a handful of wealthy northern European markets remains pretty soft. Forcing a pace the industry can’t sustain doesn’t make those problems go away; it just piles a regulatory crisis on top of a market one.
Where the balance lies
Nobody knows if this package gets the balance right. That’s the honest answer and anyone who tells you otherwise is selling something. It is a bet — a bet that European manufacturers, given flexibility and support, will use the breathing room to catch up rather than to coast. If they invest and retool and compete, the package will look like smart policy in hindsight. If they use it as an excuse to delay, and the Chinese competition keeps accelerating while they’re still having internal debates about what kind of engine to build, then this will look like the kind of well-meaning European compromise that ends up accelerating the decline it was trying to prevent.
What you can say is that the package at least deals with something the hardliners tend to ignore: the European automotive sector isn’t one thing. What works for Volkswagen does not work for a family-run component supplier in Calabria or a haulage firm in Roscommon. Any framework that can’t accommodate that variation isn’t a serious policy, no matter how satisfying it looks on paper.
The €1.8 billion for batteries is necessary. Probably not sufficient, but necessary. The regulatory simplification is welcome but only useful if it actually speeds things up at national level, and EU regulatory reform has a frankly mixed record on delivering that. Depends on implementation, as it always does with this stuff.
What the package has going for it, at the bare minimum, is that it was put together with the people who actually build and drive these vehicles rather than against them. Thats a lower bar than it should be for EU industrial policy. But given how things have gone lately, its not nothing.