Fearing China, EU may U-turn on 2035 combustion engine ban, Commissioner wants review in 2026

Just one week after the European Union (EU) had finalized its decision to ban internal combustion engine (ICE) cars by 2035, EU Internal Market Commissioner Thierry Breton is raising a red flag, cautioning the trade bloc that a complete ban on combustion engines by 2035 may not be feasible after all.

While news headlines in the past weeks had focused on the EU’s decision to ban combustion engines by 2035, many overlooked the fact that the EU had also slipped in a 2026 review clause that basically allows them to review, and if necessary, push the deadline further.

The 2026 review clause was inserted by Breton, who insisted that a back-up plan of sorts is necessary to safeguard the EU’s interest.

“I respect the fact that some are deciding to accelerate toward a 100 percent electric offer, but I also encourage manufacturers to continue to produce internal combustion engine cars, generate quality jobs and remain an export force,” said Breton in an interview with a French daily Les Echoes last week.

What's motivating the re-thinking of ICE ban?

At the core of Brenton’s concern is the impact of a combustion engine ban on job security, affordability of cars as electric vehicles are priced too high for the common people, inability of battery and raw materials supply chain to support the transition, and most importantly – charging infrastructure.

“I am announcing the creation of a working group to prepare for the 2026 review,” he added.

“Every three months I will bring together this group made up of the major car manufacturers, suppliers, unions, consumer associations, cities, power utility companies, etc. Its objective will be to identify and address the difficulties in implementing this mega transformation. The questions are numerous, and we may have to adapt in 2026, or before 2026, the measures supporting the path towards 2035.”

Breton’s comments, and the fact that he said it after the ban was finalized, upset quite a few industry stakeholders, who questioned the timing of his comment. “We have been saying these arguments for two years . It is a pity that they were not considered,” an industry expert told another French daily Le Figaro, which published a follow-up story on the topic. “These statements come too late,” he added.

Also read: Well done! To build more EV batteries, we will soon be mining the ocean floor for minerals

Europe's middle class will soon not be able to afford a car

Several car makers have already warned that although they can and will support the transition to become 100 percent electric, the transition will result in the middle class not being able to afford a car, at least not one that offers them the same utility as their current combustion engine car.

On the day the EU finalized the ban, Carlos Tavares, CEO of Stellantis said, “I am not worried about Stellantis (which is already working towards 100 percent EV sales in Europe by 2030), I am worried about the middle classes who will not be able to buy cars that cost 30,000 Euros.”

Luca de Meo, CEO of Renault Group said that predictions of EVs reaching price parity with combustion engine cars have been quite off, “I do not see this parity getting close,” said de Meo at the recently concluded Paris Motor Show.

"I can come up with better battery chemistry and better power electronics, but these gains would be erased when the price of cobalt doubles in just six months," said de Meo, who also called high-end EVs with large capacity batteries marketed as green products ‘environmental nonsense.’

Also read: Renault: Prediction of cheaper EV batteries were wrong, calls high-end models environmental nonsense

Surprisingly, the BMW Group, which operates at the other end of the price scale, also weighed in on the matter. CEO Oliver Zipse said in his visit to the Spartanburg plant in the US last month, "We do not want cars to be taken away out of the base segment, politically that is super dangerous. If you all of a sudden make car ownership only for rich people, it's a dangerous thing."

"As a politician I would be mega-careful... because you are taking away cars by regulation," Zipse said.

Also read: BMW: An EV-only future means only the rich can drive, does not believe in phasing out ICE

For reference, the Wuling Hongguang Mini EV, the world's cheapest EV, is sold in Europe under the Freze Nikrob brand at a very high 13,000 Euros. That's several hundred Euros more than a Kia Picanto, which is twice the car the Wuling Mini EV can ever be. 

Why the huge diffrerence in prices from China? That's because after modifications to comply with European safety regulations (and without Chinese subsidies), the Wuling Mini EV is not the cheap car many think it is.

Europe's ICE ban is benefiting China, the Europeans get nothing in return

Commissioner Breton also questioned if a blanket ban is wise, when it will cost Europe in 600,000 jobs lost; and since the rest of the world will continue to run on combustion engines, the ban will only benefit Chinese manufacturers. 

Chinese manufacturers welcome Europe's ICE ban and are aggressively moving into the European battery EV market while still peddling combustion engine cars elsewhere, especially in the Middle East, Southeast Asia, and South America.

“If the EU ends the sale of combustion engines after 2035 in Europe, this does not apply to the rest of the world. The European automotive ecosystem must remain present on the export market with clean Euro 7 (emission standard) cars made in Europe,” said Breton.

A week after Breton’s comments, Geely signed an engine partnership deal with Renault that will see Renault being pulled into Geely’s sphere of influence, taking advantage of Renault’s expertise in fuel efficient, small capacity engines. Geely and Renault will form a new joint venture company that will see Geely-Renault engines and transmissions supplied to manufacturers outside Geely and Renault groups.

Also read: Proton Savvy has the final laugh - Geely-Renault engine partnership confirmed to power future Proton, Mitsubishi, and Nissan models

At the same time, Geely has also launched its all-electric Geometry brand in Europe, starting with the Geometry C.

MG is also muscling into the low- to- mid-range EV segment, a segment that Peugeot and Renault compete in, while Geely's Polestar, Nio and Xpeng are entering the mid- to high-range segment dominated by Volkswagen, Volvo, Tesla, BMW, Audi, and Mercedes-Benz.

Don't forget Smart too, which is now owned by Geely, built in China, exported back to Europe. Yes we recognize that it is not exactly correct to say that Smart is owned by Geely since Mercedes-Benz owns half of Smart, but remember that Geely's founder Li Shufu is Mercedes-Benz's single largest shareholder. So yes, Geely owns Smart. Calling it co-owned with Mercedes-Benz is just a face-saving measure for the Stuttgart outfit.

Europe's competency in the automotive business is slowy being chipped away by China and the ICE ban will only accelerate it further.

While China has a pro-EV policy, it has no intention of banning combustion engines. China only wants 50 percent of all new cars sold by 2035 to be battery EVs, plug-in hybrids, or hydrogen fuel-cell electric. The remaining half will be regular hybrids, which still need combustion engines.

This direction has allowed Chinese manufacturers to adopt a much more robust multi-pronged powertrain strategy that allows them to grow and develop their automotive supply chain ecosystem outside of China. They make healthy profits from ICEs while exporting their EVs to Europe, often at a lower cost base that European manufacturers cannot compete with.

So who is the winner and the loser? And who opened the city's gates to the enemies?

Geely for example, is busy snapping up combustion engine assets from Renault and Volvo Car, valuable assets that European bureaucrats want to throw away. Geely is repackaging these engines to be sold to other manufacturers who cannot afford to develop both EVs and combustion engines / hybrids in parallel, pitching to them as a short-cut, low cost solution.

At the same time, Geely is building competency in battery EVs, allowing it to corner the European EV market with its 3 EV brands aimed at the 3 different segments - low (Geometry), mid (Smart), and high (Polestar). No European manufacturer has an answer to Geely's three-tier EV brands hierarchy, not even the Volkswagen Group.

Banning combustion engines will also push European manufacturers to buy even more Chinese batteries. Europe has its own battery manufacturing plan, including Northvolt, Italvolt, and if you include UK, Britishvolt, but most rely on raw materials and technology from China, and none is profitable enough to operate without government subsidies.

In the same way Porsche needs to sell 3 SUVs for every 1 sports car it builds, manufacturers need profitable combustion engine cars to fund the development of battery EV models, which aside from the unstoppable Tesla, is still a money-losing business. Most of these battery EV models cannot survive in an open market without tax breaks / subsidies.

Clearly, the bureaucrats at Brussels haven't really thought deeply through their combustion engine ban deepy enough. A hard braking in 2026, or even a course adjustment, is more likely than not. Recent political frictions with China, the push to de-couple Western economies from China, will provide greater impetus for the review.