​The European Gas Car Ban Won’t Continue By 2026

Major carmakers and member states exerted pressure, and the EU is relenting. What does this mean for the European gas car ban?

Not long ago, the European Union had one goal: to eliminate new gas cars by 2030. Then, it was 2035, and eventually it became 2040. Even back then, these changes should have been a sign that the European gas car ban wasn’t going to succeed, even if the idea makes perfect sense from an environmental perspective.

Now, the reality has set in. The EU will review the gas ban by the end of 2025. Germany, one of the leading critics of the ban, urged that the deadline be flexible rather than hard. Other countries agreed, including Italy, Portugal, Slovakia, Bulgaria, and Romania.

All these countries have some sort of automotive industry established, which not only serves European audiences, but also other markets. It’s this very same fact that has created stress in the European automotive industry.

It’s no secret that European carmakers are struggling to stay competitive. The continent has lost traction against Chinese manufacturers and in regions such as Asia and Africa.

Even destinations such as Latin America, where brands such as Peugeot, Volkswagen and Citroen had established themselves, these brands have lost traction, especially against Chinese EVs. The most popular brands right now include BYD, Geely and Great Wall.

What are the reasons for the struggles?

The European automotive industry has faced a combination of factors that is challenging to overcome. One would think that tariffs and the high demands of the emissions regulations lead the way, but they are not the only hurdles to overcome.

Europe has lost competitiveness. Energy prices remain structurally higher than in the U.S. or China, and the current geopolitical situation will do no help in lowering them.

A consolidated industry might have helped in the past, but now, labor costs are extremely rigid. On the other hand, they are not in countries such as India or China.​

This puts European automakers at a disadvantage just as they face intense global competition. Chinese manufacturers, in particular, are entering the European market with lower-cost EVs that are becoming increasingly competitive in terms of quality, design, and technology. At the same time, U.S. automakers are now benefiting from more relaxed rules. So, the challenges have come from both ends.

Europe Can Still Be Competitive, By Sacrificing The European Gas Car Ban

The main challenge the European Union faces is that it comprises countries, not states, like the US, or under a defined central power, such as China. That’s why reaching an agreement is the only way to succeed.

Interestingly enough, revisiting the European gas car ban might be the way to do so. However, it’s not the only action they must take. The continent needs a coherent and unified effort to create an advanced infrastructure for both ICE vehicles and EVs.

Meanwhile, automakers are making their independent efforts, and they are not tending to Europe. Instead, they are battling against the tide. As Chinese cars flood the European streets, Volkswagen is aiming straight at the Chinese consumer, in a paradigm shift. If it works, it might help save the European automotive industry by looking elsewhere.

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