• Brussels is considering a delay of several weeks to an automotive support package that could reshape the EU’s 2035 combustion engine phase out.
• Germany and parts of the car industry are lobbying to allow plug-in hybrids and “highly efficient” combustion engines beyond 2035.
• The file has grown into a test of Europe’s industrial strategy, its climate credibility, and the bloc’s ability to align political pressure with long-term decarbonization rules.

Europe’s debate over the future of the internal combustion engine has entered a new phase, as the European Commission considers delaying the release of a major automotive support package long viewed as central to the bloc’s 2035 clean-transport trajectory. The shift comes as Germany intensifies pressure to soften the rules, drawing industry support and sparking concern among governments that see the package as a cornerstone of the EU’s climate governance framework.

Transport commissioner Apostolos Tzitzikostas confirmed the potential delay, telling the German business daily Handelsblatt that Brussels may need a few additional weeks to finalise the proposals. “We are still working on it. We want to present an automotive package that is truly comprehensive and covers all the necessary aspects,” he said. Although the Commission had aimed to publish the package this month, the timeline may now slip into early January.

The comments landed at a sensitive moment. The 2035 target — effectively a ban on sales of new combustion-engine cars — is one of the defining components of the EU’s Fit for 55 programme. Any movement on flexibility is being closely watched by global automakers, battery producers, renewable-power developers, and institutional investors tracking the EU’s pathway toward transport decarbonisation.

Germany Pushes for Flexibility

Berlin has emerged as the most vocal government seeking changes. German chancellor Friedrich Merz recently sent a letter to Brussels urging modifications that would allow plug-in hybrids and “highly efficient” combustion engines to remain part of the market beyond 2035. The initiative has strong backing from major German carmakers who argue that a broader technology mix is necessary to preserve competitiveness, manage consumer costs, and mitigate supply-chain pressure during the transition to full electrification.

Tzitzikostas struck a conciliatory tone toward those requests. “We are open to all technologies,” he noted, adding that Merz’s proposals were “very positively received”. His comments were interpreted across the industry as a sign that the Commission is weighing concessions at a time when Europe is trying to reconcile climate ambition with industrial resilience.

The political tension reflects shifting ground for Europe’s automotive sector. Carmakers face rising capital expenditure needs, patchy public-charging infrastructure, intensifying competition from Chinese electric-vehicle manufacturers, and the economic drag of higher interest rates. Member states are also split: some want a strict regulatory signal to accelerate electrification; others fear the pace could erode industrial capacity.

Balancing Industrial Strategy and Climate Governance

The delay under consideration is more than a technical scheduling issue. It highlights the growing complexity of governing decarbonisation in a sector responsible for a large share of Europe’s transport emissions. Allowing hybrids or advanced combustion engines beyond 2035 would require careful alignment with emissions-reduction pathways, battery supply-chain strategy, energy-system planning, and evolving EU taxonomy rules.

For investors, the package will shape expectations around Europe’s long-term transport market structure. Expansion of hybrid technologies, for example, would alter the projected demand profile for critical minerals, charging infrastructure, and renewable-power assets. It could also influence credit-risk assessments for automakers that have committed billions to electrification and are sensitive to regulatory certainty.

Governance analysts note that this is the first major test of how the new Commission will handle political pressure on core climate files. While the 2035 target was agreed after lengthy negotiations, the debate over flexibility may reopen questions about the EU’s ability to maintain predictability and ambition despite shifting domestic politics in key member states.

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What Executives and Investors Should Watch

The coming weeks will reveal how much room the Commission is willing to create for Berlin’s proposals and whether other governments rally around a more flexible approach. Any revision could recalibrate the entire regulatory arc extending from supply-chain due diligence to infrastructure funding, battery-manufacturing policy, and the carbon-intensity assumptions baked into Europe’s net-zero trajectory.

The automotive package is expected to outline measures on competitiveness, decarbonisation pathways, and support for the sector’s technological shift. Its timing and content will influence investment flows across EV manufacturing, charging networks, and synthetic-fuel innovation. For C-suite leaders, the outcome will set the tone for Europe’s broader industrial strategy at a moment when global competition for clean-transport manufacturing has intensified.

The Global Stakes

The EU’s approach matters well beyond Europe. The bloc’s 2035 target has become a reference point for governments weighing their own internal-combustion phase-out timelines. Any deviation will be scrutinised by emerging markets and major trading partners that view European regulation as both a climate benchmark and a determinant of supply-chain access.

As the Commission weighs a short delay, the political and economic stakes have grown larger. The coming decision will shape Europe’s credibility on climate governance, define its industrial footing in the global EV race, and reaffirm — or reconfigure — how the bloc balances national pressure with long-term decarbonization commitments.

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