The European Commission has proposed changing the EU’s 2035 CO₂ rules for new cars and vans: instead of the existing 100% emissions-reduction target, it would require a 90% reduction in tailpipe emissions and compensation for the remaining 10%. EV startups and investors say that softening the target could weaken confidence in electrification investment. The change is a proposal, not an enacted replacement for the current rule.
What the Commission proposed for 2035
Regulation (EU) 2023/851 established a 100% emissions-reduction target from 2035 for new passenger cars and vans. On 16 December 2025, the European Commission presented a proposal to revise that framework. Under the proposal, automakers would meet a 90% tailpipe-emissions reduction target and compensate for the remaining 10% using Union-made low-carbon steel, e-fuels or biofuels. The Commission describes the current rule and proposed revision on its cars and vans policy page.
The Commission says the proposal would allow plug-in hybrids, range extenders, mild hybrids and internal-combustion-engine vehicles to continue to play a role beyond 2035. That does not establish how many of each type would be sold, or guarantee that any particular vehicle or fuel would be commercially viable. The proposal’s practical effect would depend on its final terms and implementation.
As of the Commission’s policy summary, the revision is described as a proposal. The existing 100% target therefore remains the applicable framework unless and until the EU completes the legislative process and changes the law.
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Why EV startups and investors are concerned
In a 21 December 2025 report, TechCrunch described a split among startups, investors and established automakers. The concern voiced by some EV-focused businesses is that a less stringent long-term signal could make it harder to plan factories, technology development and other investments around a steadily expanding electric-vehicle market.
Concerns about policy certainty and scale
World Fund partner Craig Douglas argued that Europe risks losing leadership without clear, ambitious policy signals. Cariqa CEO Issam Tidjani said greater flexibility could delay scale and learning curves, potentially costing the region industrial leadership. These are stakeholder predictions about possible consequences, not evidence that the proposal has already reduced investment or caused a loss of competitiveness.
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E-Mobility Europe, an industry association, also said the lower ambition could harm investment certainty. The association said that more than 200 European business leaders had called for a clear 2035 electrification signal in September 2025. That figure and characterization are the association’s account. Its Secretary General, Chris Heron, said: “Changing the rules midway through the game undermines business confidence after companies have already committed capital and built factories around a 100% trajectory.” The statement appeared in the association’s 16 December 2025 press release; it represents the association’s position, not an independently established measure of the proposal’s investment impact.
Industry is not taking one position
The reported responses are not unanimous. TechCrunch said Volvo wanted the 2035 direction maintained and more investment in charging infrastructure, while some traditional automakers had pressed for more time. These positions reflect different views on the pace and cost of the transition; they do not establish what the industry as a whole supports.
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The Commission’s package also includes measures beyond the car-and-van standards. It announced a battery strategy with €1.8 billion for a fully EU-made battery value chain. TechCrunch reported that French battery-cell startup Verkor welcomed the Battery Booster. That response illustrates why support for a battery initiative can coexist with criticism of a proposed change to emissions standards. The Commission’s announcement describes the broader automotive package.
The market context—and what it does not prove
The Commission reports that average emissions from newly registered passenger cars in Europe fell 28% between 2019 and 2024. It also reports that zero-emission vehicles made up 14.5% of new car registrations and 6.4% of new van registrations in the EU, Norway and Iceland in 2024. These figures provide context for the transition, but they do not by themselves show what the proposed rule would do to future sales, investment or emissions.
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What is at stake in the debate
The core disagreement is about how to balance a predictable electrification pathway against flexibility for automakers and the Commission’s stated competitiveness rationale. Startups building around electric vehicles may value a clear long-term signal because major investments and production scale take time. Automakers seeking more flexibility may argue that a less rigid framework better reflects the challenges of changing technologies and markets.
The outcome also depends on whether European battery manufacturing and charging infrastructure can grow alongside vehicle production. The Commission’s battery funding is one part of that picture; Volvo’s reported call for more charging investment points to another. The available statements identify priorities and risks, not a settled forecast of which policy mix will succeed.
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