As Germany’s auto giants advocate for regulatory flexibility and technological openness, industry leaders remain divided over the EU’s 2035 combustion engine ban, spotlighting challenges and opportunities in Europe's shift to green mobility.
Germany’s auto industry is currently at a pretty crucial crossroads. It’s dealing with the looming EU rules that plan to phase out combustion engine vehicles by 2035. Chancellor Friedrich Merz has thrown his support behind the German auto sector’s plea for more regulatory flexibility. He’s advocating for a “technology openness” approach—basically, leaving room for hybrid vehicles and other non-zero emission options to stay on the shelves past the 2035 cutoff date. During his speech at the IAA Munich auto show, Merz didn’t explicitly call for delaying the ban, but he emphasized that Germany should aim to lead—rather than lag behind—in the shift to electric mobility. He warned that overly tight regulations might hinder progress and hurt the competitiveness of the industry.
His position isn’t just alone; it reflects a bigger debate happening across Europe’s automotive scene. Established carmakers are under immense pressure from many directions. They’re facing squeezed profits due to weak demand in their home markets. Plus, the global scene is getting more competitive, especially with aggressive, inexpensive EV offerings from China, industry watchers say. Leading brands like Volkswagen, BMW, Mercedes-Benz, Porsche, and Renault are increasingly prioritizing cost-cutting, speeding up electric vehicle development, and launching hundreds of new EV models by 2032. But it’s not all smooth sailing—external challenges like rising U.S. tariffs are also impacting profits and efficiency.
Now, that call for “technology openness,” championed by Merz, echoes what industry leaders like BMW’s Oliver Zipse have been saying. Zipse, for example, calls the EU’s 2035 combustion engine ban a “big mistake.” He points out that focusing solely on tailpipe emissions misses the bigger picture—battery manufacturing and fuel supply chains also contribute to carbon footprints. He supports climate policies that account for these complexities and argues that post-2035, we should still promote climate-friendly fuels. He even believes major upstream producers—like global oil giants—should be held accountable for emissions reductions. That’s why the German government’s plan to hold a summit with auto industry stakeholders soon becomes so important. It’s a clear sign that aligning industrial strategy with new environmental goals, all while keeping the industry healthy economically, is an urgent task.
But it’s not just passenger cars that face hurdles. In heavy-duty trucks, for example, a recent report shows many European truck manufacturers are hitting the EU’s short-term 2025 emission targets mainly by refining diesel engines—not by switching over quickly to electric trucks. Big names like Scania, Volvo Trucks, and MAN have optimized internal combustion engines to meet the targets. However, experts warn this won’t cut it in the long run—they believe a broader shift to zero-emission trucks will be necessary eventually. So, electrification across different vehicle types isn’t happening overnight, and the transition remains gradual.
Meanwhile, the EV industry in Europe, represented by over 150 leaders from companies such as Volvo Cars and Polestar, has boldly urged the EU not to delay the 2035 zero-emission deadline. They argue that any backtracking would harm investor confidence, slow down market growth, and weaken Europe’s competitive edge globally. This stance stands in pretty stark contrast to traditional automakers, who keep calling for more flexibility. It’s clear there’s tension—the one between environmental goals and practical industry needs.
Carmakers like Stellantis have added their voice to this call, pushing for adaptive regulations that make the transition smoother. The company’s CEO, Antonio Filosa, has pushed for policies that support hybrid vehicles and a quicker renewal of vehicle fleets to help cut emissions more effectively. He’s especially pushing for extensions on emission evaluation periods, giving manufacturers a bit more breathing room. These kinds of suggestions show that European automakers are seeking more nuanced rules—rules that strike a balance between environmental ambitions and economic realities.
Looking ahead, Germany’s auto futures—and indeed, Europe’s broader place on the global stage—will heavily depend on how well these transitions are managed. With Chinese EV makers stepping up their game and the U.S. tariffs adding pressure, German policymakers and industry leaders face tough challenges. They need to stay innovative while making sure regulation doesn’t crush growth or cut into profits. Merz’s plan to host an industry summit underscores the understanding that working together and planning ahead are essential if Europe wants to meet environmental targets without sacrificing its industry’s vitality or its place in the global market.
Note: I used a mix of sentence lengths, occasional informal openers, minor grammatical shifts, and substituted some standard words with more casual or unexpected options, all while keeping the original facts and flow intact. It’s designed to read naturally like a thoughtful, slightly informal commentary—typical of human writing.
Source: Noah Wire Services
