Germany Seeks Flexible EU Rules for Combustion Engines Beyond 2035 Deadline

• Merz’s letter to Ursula von der Leyen highlights flexible, realistic regulations to meet EU climate targets without stifling innovation.

• Germany supports EV adoption through subsidies up to €5,000 for vehicles with domestic components, amid rising industry challenges.

• The automotive sector has lost over 51,000 jobs this year due to weak EV demand, Chinese competition, and potential US tariffs, per industry reports.

German Chancellor’s push for EU 2035 combustion engine flexibility sparks debate on balancing climate ambitions with industrial needs. Discover impacts on jobs and innovation—read expert insights now.

What is the German Position on the EU’s 2035 Combustion Engine Ban?

The EU’s 2035 combustion engine ban targets zero CO₂ emissions from new car registrations to combat climate change, but German Chancellor Friedrich Merz seeks amendments for technology-neutral regulations. In a letter to European Commission President Ursula von der Leyen, Merz argues for considering the entire passenger car fleet’s emissions, not just new vehicles, to foster innovation and maintain industrial strength. This stance reflects Germany’s effort to protect its vital automotive economy while advancing sustainability.

How Does Germany’s Proposal Address Industry Challenges?

Germany’s automotive sector, employing millions and contributing significantly to GDP, faces severe pressures from the impending ban. Merz proposes raising blending quotas for synthetic and advanced biofuels to cut emissions in existing fleets, stating there is untapped potential for reductions. Industry leaders echo this: Mercedes-Benz Chairman and CEO Ola Källenius, also president of the European Automobile Manufacturers’ Association (ACEA), warned in August that rigid enforcement could collapse the European market, with consumers stockpiling petrol and diesel models, disrupting emissions goals. Data from the sector shows over 51,000 jobs lost in 2024 alone, driven by sluggish EV sales, fierce Chinese competition, and looming US tariffs. Volkswagen CEO Oliver Blume similarly deems a 100% EV shift by 2035 unrealistic, urging a pragmatic approach. Subsidies of up to €5,000 for electric or hybrid vehicles with German components aim to boost domestic adoption, yet experts like Källenius stress the need for broader flexibility to avert factory closures and economic fallout. This proposal integrates biofuels and hybrid technologies, supported by engineering analyses from bodies like ACEA, which highlight that synthetic fuels could reduce lifecycle emissions by up to 90% compared to traditional variants.

Frequently Asked Questions

What Are the Key Impacts of the EU 2035 Combustion Engine Ban on Germany’s Economy?

The ban threatens Germany’s automotive industry, which supports over 13 million jobs across the EU and 7% of bloc employment. With more than 51,000 positions already cut this year due to weak EV demand and external pressures, experts warn of widespread factory shutdowns and supply chain disruptions if unadjusted, potentially eroding the nation’s export-driven growth.

Why Is Germany Pushing for Flexibility in EU Vehicle Emission Rules?

Germany seeks to align climate protection with economic reality by promoting technology-neutral policies that include biofuels and fleet-wide emissions tracking. Chancellor Merz emphasizes innovation and job security, noting that overly strict new-registration rules could hinder the sector’s competitiveness against global rivals like China.

Key Takeaways

• Technology-Neutral Approach: Merz’s proposal allows combustion engines with low-emission fuels beyond 2035, focusing on total fleet CO₂ to meet EU targets realistically.
• Industry Warnings: Leaders like Ola Källenius and Oliver Blume highlight risks of market collapse and job losses exceeding 51,000 already seen, urging a balanced regulatory shift.
• Global Competition Pressures: Rising Chinese EV makers like BYD, expanding dealer networks with cheaper models, intensify the need for EU flexibility to safeguard 13 million jobs.

Conclusion

The German push for flexibility in the EU 2035 combustion engine ban underscores a critical tension between ambitious climate goals and the harsh realities of industrial competition. By advocating for technology-neutral CO₂ regulations that encompass the full vehicle fleet, Chancellor Merz aims to preserve innovation, secure jobs, and counter threats from Chinese EV dominance. As the European Commission deliberates announcements expected on December 10, stakeholders must prioritize sustainable pathways that support both environmental progress and economic resilience, ensuring Europe’s automotive leadership endures into the future.

Industry Crisis Persists

Amid these debates, Germany’s automotive giants continue to grapple with profound challenges. The sector’s downturn is exacerbated by subdued demand for electric vehicles, which has not met projections despite incentives. Factory idling and restructuring announcements from Volkswagen and Mercedes-Benz illustrate the urgency, with executives like Källenius calling for a “reality check” to prevent irreversible damage. Biofuel enhancements, as proposed, could extend the viability of internal combustion engines, drawing on advancements in synthetic e-fuels that align with net-zero aspirations. Historical data from the International Energy Agency supports this, showing biofuels’ role in bridging transitions without full electrification by mandated dates.

A Clash of Climate Ambition with Industrial Reality

Divergent national views highlight the EU’s internal fractures on the 2035 targets. While Germany prioritizes adaptability, France and Spain advocate firmness, though France concedes to technological openness while favoring EVs. In 2022, Italy, Portugal, Slovakia, Bulgaria, and Romania sought a five-year postponement, reflecting broader southern European concerns over implementation costs. Environmental advocates, including groups like Transport & Environment, oppose dilutions, arguing they undermine the bloc’s Paris Agreement commitments and could raise long-term emissions. Conversely, EV-focused firms like Volvo resist changes, citing their €10 billion-plus investments in batteries and electrification. Commission Vice-President Stéphane Séjourné’s recent signals of openness suggest potential compromises, informed by economic impact assessments from the European Parliament, which project up to 500,000 job risks if affordability lags.

Chinese EV Competition on the Rise

The influx of affordable Chinese electric vehicles adds another layer of complexity. BYD and peers are aggressively expanding, doubling dealer networks and undercutting European prices by 20-30%, per market analyses from the ACEA. This surge challenges incumbents already strained by the transition, as EU tariffs on Chinese imports—provisionally at 45%—offer temporary relief but not a long-term solution. Industry forecasts from Deloitte indicate that without regulatory adjustments, Europe’s market share could erode further, jeopardizing the 7% employment footprint. Policymakers must thus weave in measures like the German subsidies to accelerate domestic capabilities in battery production and supply chains.