EU leaders clashed over a planned 2035 ban on combustion engines at their summit in Brussels on Thursday (23 October).
The EU has already agreed on the ban, but Italy's Giorgia Meloni and Germany's Friedrich Merz have called for the ban to be overturned, the latter vowing to "do everything" to convince other leaders in Brussels.
Not everyone agreed, as French and Spanish governments rejected such a move ahead of the Brussels summit.
“Plug-in hybrid vehicles, which are mainly used in thermal mode, must not be favoured after 2035,” the French and Spanish negotiating draft document seen by EUobserver stated.
"European car manufacturers and battery manufacturers have invested billions euros to produce a full range of EVs, it is crucial not to lose the benefit of these investments and scatter future ones by sending mixed signals,” they also wrote.
Experts, however, warn that the topic is beside the point. "By every metric, the industry is in deep trouble — and none of it has anything to do with future emission rules or an engine ban a decade away," Nils Redeker, of the Jacques Delors Centre, wrote on social media.
The real problems facing Europe's car industry are different.
In a report published ahead of the summit by various think tanks, including the Centre for European Reform, Redeker and colleagues Sander Tordoir and Lucas Guttenberg point to a different set of problems EU leaders should be trying to solve.
"Chinese car exports are surging, European producers are being squeezed out of global markets, US tariffs are rising, and domestic demand remains 20 percent below pre-pandemic levels," they write.
"By focusing the political debate on the wrong issue, Europe's car industry may well turn into the next industrial policy train wreck," Redeker warned.
The automotive sector employs over 13 million people across Europe and accounts for a larger share of private R&D spending than any other industry. But it now faces what the authors describe as a "perfect storm" of exploding Chinese subsidies, US tariffs and weak domestic EU demand.
Rather than fighting over regulatory rollbacks, the authors argue leaders should focus on boosting demand for European-made electric vehicles.
Their central proposal: Europeanise the French 'eco-bonus model' and apply it to national EV-support schemes across the bloc.
This French model limits subsidies to EVs built in low-emission supply chains, effectively steering demand toward EU-made cars and filtering out Chinese production.
It can't be lifted straight to the European level and would "need an update," Redeker notes, "but it's effective, WTO-proof, and ready to deploy."
Key to making this work, the authors argue, is harmonising eligibility rules across the EU "so member-states are not busy outsmarting each other while losing the global race."
Public support for EVs should apply only to cars made in Europe or allied countries like Norway or Japan, they recommend.
And crucially, these 'Buy-European' clauses should cover both household purchases and corporate fleets, the latter of which accounts for over 60 percent of EU new car registrations (especially relevant for high-end German cars).
The report notes that Germany, France, Spain and Italy, accounting for 70 percent of EU new car registrations, are all set to review their EV support schemes in the coming months.
Most member-states already have support schemes for EVs in place, but they are “completely uncoordinated,” they write.
With Germany just committing to reintroduce EV subsidies, together they would have the “critical mass” to “kick start” EU coordination across all markets.
"Future cars will be electric, not because of regulation, but because EVs will soon be substantially cheaper," the authors write. "If Europe's car industry is to survive, it must pivot faster to producing EVs that are high-quality, affordable and profitable."
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Wester is a journalist from the Netherlands with a focus on the green economy. He joined EUobserver in September 2021. Previously he was editor-in-chief of Vice, Motherboard, a science-based website, and climate economy journalist for The Correspondent.
Wester is a journalist from the Netherlands with a focus on the green economy. He joined EUobserver in September 2021. Previously he was editor-in-chief of Vice, Motherboard, a science-based website, and climate economy journalist for The Correspondent.