The political forces in Brussels have taken a decisive step towards revising the complete ban on the sale of new gasoline and diesel cars, planned for 2035. In the late hours of October 20, negotiators from the three most influential groups in the European Parliament - the European People's Party, the Socialists and Democrats and the liberal "Renewing Europe" - reached a key compromise agreement. The new framework gives carmakers a breath of fresh air, allowing them to keep some of their conventional models and hybrids, while meeting environmental targets by using low-carbon steel produced in Europe.
The substance of the agreement reached envisages a reduction in carbon emissions from new passenger cars by 87.5% compared to the 2021 baseline. To reach the final threshold of 95% reduction, carmakers will be able to benefit from an additional bonus of 7.5 percentage points if they rely on environmentally friendly European steel. In this way, part of the decarbonization is transferred from the exhaust directly to the production process of raw materials.
For end buyers, this new regulatory mechanism brings long-awaited flexibility, ensuring a variety of powertrains on the market after 2035. It is important to note that the target values set determine the average level of emissions for the entire fleet of a given brand, and do not fix a fixed share or quota for the sale of gasoline and diesel modifications.
The proposed scheme significantly modifies the current legislation, which required a full 100% reduction in emissions from new cars and light commercial vehicles by 2035. At the end of 2025, the European Commission tried to soften its position, proposing a 90% reduction in emissions, combined with full compensation for the remainder through green steel and alternative fuels. However, the current draft of the parliamentary groups introduces a different balance between direct restrictions and possible compensation.
The changes directly affect the intermediate steps on the path to decarbonization. The 2030 requirement for a 55% reduction in emissions for passenger cars remains, while for light commercial vehicles (vans) the bar is lowered to 35%, down from the 40% initially proposed by the Commission. The final target for new vans in 2035 is now set at 80%. To ease the transition, compliance with the regulations will be assessed as an arithmetic average over a three-year period - from 2029 to 2031. This will allow car companies to balance their weaker sales results in one year with stronger sales in the next.
The legislators have also provided for additional financial and regulatory incentives. Manufacturers that focus on small, affordable electric cars or vehicles with extremely high energy efficiency will receive extraordinary compliance credits. At the same time, cars adapted to run on renewable fuels will be treated fully on an equal footing with zero-emission models.
The easing of environmental pressure comes at a time of severe crisis for the European auto sector. The car giants of the Old Continent are squeezed between high import duties on the US market and an aggressive offensive by Chinese manufacturers, forcing them to cut costs and cut thousands of jobs. The regulatory relief provides vital technological neutrality for brands, and the requirement for green steel directly supports the struggling European metallurgy.
Despite the political compromise reached, the road to final adoption of the legislation remains long. The parliamentary committees on transport and industry will examine the documentation on October 22, and the environment committee will hold debates in early November. The plenary vote in the European Parliament is scheduled for December.
In parallel, member states are also preparing their national positions. France and Germany recently agreed on a 90% reduction in emissions without mandatory offsetting mechanisms - an approach that is at odds with the European Parliament's vision. Final negotiations between the Parliament and the Council of the EU are expected to start in early 2027, once the two institutions have finally approved their negotiating mandates.