The European Union plans to lift the ban on new internal combustion engines (ICE), originally set for 2035, allowing some emissions from gasoline engines and hybrids if they are offset by the use of environmentally friendly steel and biofuels, while supporting manufacturers of small electric vehicles (EV).
Steel producers welcomed the potential demand for environmentally friendly steel, but there is a risk that cheaper options will be given priority.
According to the proposal of the European Commission on the regulation of car packages, published on Tuesday, December 16, the European Union proposes to reduce carbon dioxide (CO2) emission targets for new passenger cars and light commercial vehicles for 2035, which will allow the continued production of cars with internal combustion engines and hybrid vehicles.
In 2022, the EU set a target for 2035: to sell new cars with zero carbon dioxide emissions, as specified in EU Regulation 2019/631 and in line with climate-friendly policies.
Now this target has been reduced to minus 90% compared to the 2021 emissions level, and the remaining 10% of emissions will be offset through the use of "low-carbon steel produced in the EU" or electronic fuels and biofuels," the EC said in a statement.
In order to support electric mobility, the new car package also includes loans for automakers for "small affordable electric vehicles manufactured in the EU" and financing for European battery manufacturers under the 1.8 billion euro ($2.1 billion) Battery Booster program.
"It sounds like a lot of money, but it's not really enough," said William Adams, head of non-ferrous metals and chief battery analyst at Fastmarkets. He added that the Swedish battery manufacturer Northvolt received government funding in the amount of 0.9 billion euros, but this did not save it from bankruptcy.
The electric vehicle market needs realistic goals
Adams said the new EU emissions cuts are "disappointing, but probably necessary" to support automakers in Europe.
According to the European Automobile Manufacturers Association (ACEA), 27% of new gasoline-powered vehicles and 35% of hybrid electric vehicles (ICE with an additional battery) were registered in the EU in 2025, with approximately 25% of the new fleet being plug-in electric vehicles with batteries. The Association represents the interests of the 15 largest manufacturers in the region.
Demand of electric vehicles for metals and minerals used in their batteries, such as lithium, cobalt,
