Germany Plans Push to Relax EU 2035 Petrol Engine Ban
Friedrich Merz, leader of Germany’s conservative Christian Democratic Union, announces a coalition agreement to demand revisions to the European Union’s 2035 ban on new petrol and diesel car sales. The proposal centers on permitting synthetic e-fuels and advanced hybrids to qualify as compliant, addressing criticisms that the outright prohibition threatens 4 million automotive jobs in Germany. Automakers like Volkswagen and BMW, reliant on internal combustion transitions, stand to gain from extended development timelines amid slowing electric vehicle demand.
Merz’s CDU secured 28.6% in the February 2025 federal election, forming a government with the Free Democrats and Greens, though internal rifts over green policies persist. The chancellor designate pledges to negotiate exemptions during the European Commission’s 2026 review of the regulation, originally adopted in 2023 under the Fit for 55 package. Synthetic fuels, produced from captured carbon dioxide and renewable hydrogen, emit near-zero net carbon when burned, aligning with EU climate targets of 55% reduction by 2030 from 1990 levels.
The German Automotive Industry Association, VDA, estimates that without flexibility, 10% of the sector’s 800,000 suppliers face closure by 2030, with exports to the U.S. and China dropping 15% due to uncompetitive powertrains. BMW invests 2 billion euros in e-fuel production facilities in Leipzig, targeting 10% of its 2028 lineup, while Mercedes-Benz commits 1.5 billion euros to hybrid synergies. U.S. tariffs on European vehicles, now at 2.5% under USMCA, could rise if aligned production shifts, impacting 300,000 annual exports to North America.
Hybrids currently hold 25% of EU new-car sales, up from 18% in 2023, with plug-in variants offering 50-60 miles of electric range before gasoline engagement. The proposal requires e-fuels to achieve 70% lifecycle emissions savings, verified through ISO 14040 standards, to prevent loopholes. France and Italy express support, forming a bloc of 40% of EU auto production, while environmental groups like Transport & Environment forecast a 5-year delay in net-zero transport goals.
Merz states in a Berlin press conference that “the ban as written ignores technological realities and endangers our industrial base,” echoing BMW CEO Oliver Zipse’s call for “pragmatic evolution over revolution.” The CDU manifesto outlines a 50 billion euro fund for hybrid R&D, drawing from the EU’s 95.4 billion euro Horizon Europe program. Implementation hinges on qualified majority voting in Brussels, needing 15 member states representing 65% of population.
U.S. stakeholders monitor the shift, as General Motors and Ford source 20% of European hybrid components for their own models. The proposal could stabilize global platinum demand, used in catalytic converters, at 7.5 million ounces annually, per Johnson Matthey forecasts. Electric vehicle penetration in the EU stalls at 14.6% for 2025, versus 20% projected, bolstering hybrid viability.
Negotiations launch at the March 2026 Environment Council meeting, with a draft directive due by June. Germany’s push reflects broader tensions, including 8% contraction in auto output since 2023 peaks. Success would recalibrate the 2035 deadline to 2040 for compliant fuels, preserving 70% of current engine architectures. Failure risks legal challenges at the European Court of Justice, citing disproportionate economic harm under Article 191 of the Treaty on the Functioning of the EU.
