EU compromise could extend combustion-car sales beyond 2035

European lawmakers have reportedly reached a compromise that would give car makers more flexibility to sell combustion-engined vehicles after 2035, further easing proposed emissions requirements.

According to reports, representatives of the European People’s Party, Socialists and Democrats, and Renew Europe have agreed on a target requiring average CO₂ emissions from new cars to fall by 87.5 per cent from 2021 levels by 2035.

That is less demanding than the 90 per cent reduction proposed by the European Commission in December 2025. However, neither proposal has replaced the existing legislation, which requires a 100 per cent reduction.

The latest compromise would also allow manufacturers to use credits linked to low-carbon steel produced in the EU, accounting for up to 7.5 percentage points of their emissions obligations.

That could leave more room for plug-in hybrids, range-extender vehicles and other combustion-engined models to remain in European showrooms beyond the deadline. Exactly which vehicles could qualify, and in what numbers, would depend on the final regulations and credit calculations.

The distinction is important because these are targets for manufacturers’ average new-vehicle fleet emissions. An 87.5 per cent reduction requirement does not translate directly into permission for 12.5 per cent of new cars to have combustion engines.

Manufacturers would still need to balance higher-emitting models with lower-emission vehicles and meet the applicable compensation rules. Electric cars would remain central to that calculation.

The agreement represents another proposed step away from the rules adopted in 2023, which set a 100 per cent CO₂ reduction target for new cars and vans from 2035, effectively ending new-vehicle sales of models with tailpipe emissions.

Following pressure from car makers and governments, particularly Germany and Italy, the Commission proposed reducing the target to 90 per cent last December. Its plan allowed the remaining emissions to be compensated through measures involving low-carbon steel and renewable fuels.

The latest parliamentary compromise would soften the proposed car target further while tying credits to European steel production.

It also proposes emissions reductions of 55 per cent for cars and 35 per cent for vans by 2030. The van figure is below the Commission’s earlier proposed 40 per cent reduction.

Additional flexibility would come through compliance arrangements spanning multiple years and credits for certain smaller or more efficient electric cars.

There are still several legislative steps ahead. The participating parliamentary groups must formalise their position before the European Parliament and EU member states negotiate the final rules.

Until that process is completed, the existing 2035 requirement remains the legal baseline. It applies to new-vehicle sales; it does not require existing petrol and diesel cars to be taken off the road.