How Europe’s auto industry should read the adapted CO₂ rules

When the European Union adjusted its 2035 emissions target for passenger cars—from a full ban on CO₂ emissions to a 90% reduction instead of 100%—the reaction across the automotive industry was immediate. For some, it felt like relief. For others, like a pause button had been pressed.

Strip away the political framing, however, and the conclusion is far less dramatic: the destination has not changed—only the optics have.

The physics, economics, and system-level realities of road transport remain exactly the same, and they are far less forgiving than the regulation itself.

A softer target on paper, a hard one in reality

At first glance, a 90% CO₂ reduction appears to reopen doors that were supposedly closing. Combustion engines, hybrids, synthetic fuels—suddenly, everything seems back on the table.

In reality, a 90% fleet-level CO₂ reduction remains an extremely demanding target. It implies that the vast majority of kilometers driven must be close to zero-emission. Incremental efficiency gains or mild electrification simply do not scale far enough to deliver compliance.

What is legally permitted is not the same as what is technically, economically, or behaviourally viable in the real world.

OEMs vs. suppliers: same sirection, different timelines

For vehicle manufacturers, the strategic options are limited. To reach a 90% reduction while maintaining volume, only two approaches remain viable:

• Fully battery-electric vehicles, scaled aggressively

• Vehicles that operate electrically almost all of the time

Everything in between collapses under cost, weight, and system complexity.

Yes, combustion engines could technically remain part of the drivetrain—but only if electrification is so dominant that the engine becomes a rarely used backup. At that point, the uncomfortable question arises: why keep it at all?

For suppliers, the outlook is more nuanced. The adapted target marginally extends the relevance of range extenders, generators, hybrid components, and power electronics. But this is not a revival of the classic ICE supply chain. It is a narrow transition window, not a renewed long-term future.

Extended-Range EVs: A concept undermined by execution

The renewed interest in extended-range EVs—essentially plug-in hybrids with larger batteries—suggests a potential middle ground. In theory, the concept is sound: maximise electric driving, minimise combustion use.

The problem is not the idea.The problem is execution.

Most current PHEVs still offer only 40–60 km of WLTP electric range. In real-world conditions, that often drops below 40 km—barely enough to cover a single day of driving. The result is frequent combustion use and emissions that diverge sharply from official figures.

What would make Range-Extended EVs a credible interim solution?

If range-extended EVs are to become more than a regulatory workaround, they must behave like electric vehicles by default.

That starts with charging. AC-only charging and single-digit kilowatt limits are no longer defensible. Any interim solution must support 11 kW AC and meaningful DC fast charging to displace combustion use in practice.

Electric range must also be sufficient to cover daily driving without exception—at least 100 km WLTP as a baseline, with more required for fleet-level impact. Thermal systems must be fully electrified, including heat pumps and battery preconditioning, to avoid starting the combustion engine for comfort or efficiency reasons.

Crucially, driver behaviour must be addressed. Taxation or benefit-in-kind systems linked to the actual share of electric versus fossil driving, measured onboard, would strongly incentivise charging discipline. Embedding such metrics in future Euro standards would shift regulation from theoretical capability to real-world performance.

Even then, range-extended EVs remain a compromise: heavier, more complex, and less efficient than BEVs once the combustion system is engaged. As an interim solution they may reduce emissions—if tightly constrained. As a long-term strategy, they risk delaying simplification.

How much electric range is actually needed?

European mobility data is consistent: roughly 80% of daily driving is below 50 km, with an average of 35–40 km per day.

This creates a clear benchmark.

• 80–100 km electric range is the minimum for meaningful improvement

• 120–150 km WLTP electric range is required to approach a 90% CO₂ reduction, implying battery sizes of roughly 25–35 kWh

At that point, the vehicle is effectively an EV—burdened with an additional drivetrain that adds cost, weight, and regulatory complexity.

Why PHEVs earned their bad reputation

Plug-in hybrids suffer from structural shortcomings:

• They are often not charged

• Charging speeds are limited

• Heating and thermal management rely on the combustion engine

• Fuel consumption spikes once the battery is depleted

• System complexity increases cost and maintenance risk

Most PHEVs were optimised for test cycles, not real-world emissions. That credibility gap cannot be closed with marketing.

BEVs are the logical answer—but not beyond scrutiny

Battery-electric vehicles remain the most straightforward path to deep CO₂ reductions. They eliminate tailpipe emissions and scale as electricity grids decarbonise.

However, not all BEVs are equal. Large, inefficient electric vehicles place disproportionate strain on energy systems. As electrification accelerates, energy efficiency must become a core regulatory and design metric, not an afterthought.

Zero tailpipe emissions alone are no longer sufficient as a label.

The bottom line

The adapted EU regulation does not change the direction of travel. It only removes the illusion that compromise solutions buy time.

A 90% reduction is not realistically achievable with combustion engines unless electrification becomes so dominant that those engines lose their purpose. Extended-range EVs only make sense if they deliver genuinely long electric range and are regulated on real-world behaviour, not test-cycle assumptions.

BEVs remain the most rational endpoint—but they too must be judged on energy efficiency and system impact.

The real risk is not moving too fast.It is pretending that this change means we can slow down.

Simplification—not added complexity—remains the industry’s strongest move.