EU Reconsiders Combustion Engine Ban: A Win for Germany

The European Commission is reconsidering its 2035 ban on new combustion engine cars, amidst intense German lobbying. The suspension could mean a 90% CO2 reduction target for automakers. This shift reveals tensions between automakers invested in electric vehicles and those seeking diversified technological options.

The European Commission is reportedly shelving plans to enforce a complete ban on new combustion engine cars by 2035, marking a notable victory for Germany's lobbying efforts. Manfred Weber, president of the largest party in the European Parliament, hinted at an alternative proposal targeting a 90% CO2 emission reduction for automakers.

This decision is likely to appease German automakers facing stiff competition internationally, notably from Chinese manufacturers. The STOXX Europe 600 Automobiles and Parts index saw gains following the news, underlining market reaction to potential regulatory changes. Yet, companies like Volvo, who have heavily invested in electric technology, view this reversal as a setback.

German Chancellor Friedrich Merz emphasized the importance of technological diversity, including synthetic fuels alongside electric vehicles. His comments underscore Germany's concerted efforts to protect its automotive industry amidst evolving global competition, advocating for greater flexibility in meeting climate objectives.

(With inputs from agencies.)