The European Commission will propose a review of its plan to completely eliminate CO2 emissions from new cars and vans by 2035, with a decision expected by the end of the year, Reuters reports.
The review will start in 2026 and comes amid growing pressure from carmakers who warn that an all-electric future is no longer realistic.
The EU currently has a 100% emissions reduction target, effectively eliminating internal combustion engines in new vehicles.
Commission President Ursula von der Leyen met with executives from leading car companies on Friday to discuss the future of the sector. European manufacturers face serious challenges - weak demand in Europe, US tariffs and fierce competition from Chinese electric cars.
According to the team of Commission Executive Vice-President Stephane Séjournay, special attention will be paid to vans, where the market share of electric models is only 8.5% - half that of electric cars. The new rules could include allowing CO2-neutral fuels such as biofuels, as well as support for plug-in hybrids or cars with extended ranges.
German Chancellor Friedrich Merz said at the IAA Mobility car show in Munich that the industry should not be limited to one solution.
Volkswagen, Europe's largest manufacturer, supported the zero-emissions target but called for more time and flexibility. The company expects the review to include transitional measures, relief for small manufacturers and recognition of the role of CO2-neutral fuels.
The new proposals are likely to be presented alongside legislation to decarbonise corporate fleets, which account for around 60% of new car registrations in the EU. The Commission is also considering creating a new category for small electric cars with more favourable tax treatment and additional credits to meet climate targets.
The EU plans to prioritise local production of batteries and car components, setting clear conditions for foreign investment - particularly from China. After the introduction of tariffs on Chinese electric car imports, investment from the country has increased, but Brussels wants to avoid models where final assembly in Europe is carried out with parts mainly made in China.