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EU Postpones ICE Ban to 2040, Announces Red-Tape Relief for Auto Industry

  //automotive-transportation.news-articles.net/co .. announces-red-tape-relief-for-auto-industry.html
  Published in Automotive and Transportation on Tuesday, December 16th 2025 at 17:02 GMT by Seeking Alpha
      Locale: Brussels-Capital Region, BELGIUM

European Commission Delays 2035 ICE Ban, Reduces Red‑Tape to Keep Europe’s Auto Industry Competitive

In a move that has drawn both applause and criticism, the European Commission announced on Tuesday that it would postpone the EU‑wide ban on internal combustion engine (ICE) cars from 2035 to 2040. The decision is part of a broader “red‑tape”‑relief package that also includes streamlined regulations for electric‑vehicle (EV) incentives, faster customs procedures for battery components, and new funding for battery‑research. While the move may appear to be a step back from the EU’s climate ambitions, the Commission argues that the adjustment is necessary to protect Europe’s automotive sector from a potential global supply‑chain crunch and to keep the continent competitive against Asia‑based manufacturers.

Why the Rollback?

The original 2035 ban was a cornerstone of the EU’s “Fit for 55” package, which aims to cut greenhouse‑gas (GHG) emissions by 55 % relative to 1990 levels by 2030 and reach net‑zero by 2050. However, several industry stakeholders highlighted that the automotive market is facing a “fuel‑economy gap” – a situation where the production of zero‑emission vehicles (ZEVs) is not yet able to meet the volume of sales demanded by consumers and by regulatory commitments. The Commission said that “accelerating the transition to a low‑carbon economy requires a pragmatic approach that takes into account the resilience of the supply chain for batteries, silicon, cobalt and other critical raw materials.”

European Automobile Manufacturers Association (ACEA) representatives testified that the ban could have “undermined investment in EV manufacturing capacity and made it harder for European OEMs to compete with Chinese and German rivals.” A report by the European Battery Alliance found that the EU’s battery‑production capacity in 2024 is roughly 40 % of the global total, and a sudden surge in demand could strain the supply of raw materials.

“Red‑Tape” Relief Measures

The Commission’s announcement was accompanied by a set of regulatory “red‑tape” cuts that the EU claims will enable faster deployment of EVs. Key changes include:

1. Simplified EV Incentive Application – The Commission is introducing a single EU‑wide online portal for consumers and businesses to apply for EV subsidies, eliminating the need to submit separate applications to national governments. The portal will also incorporate a real‑time dashboard of available incentives, allowing consumers to compare offers from different member states.

2. Streamlined Certification for EV Components – The European Commission will allow harmonised testing procedures for battery packs and electric drivetrain components, cutting the time required to certify new models from 12 to 6 months. The new procedures will still maintain safety and performance standards but will reduce the burden on OEMs.

3. Customs and Import‑Duty Reforms – A new customs regime will waive import duties on EV parts for five years. The Commission also plans to harmonise technical regulations across member states to prevent “regulatory fragmentation” that slows down supply chains.

4. Funding for Battery R&D – €3 billion will be earmarked for battery research over the next decade, with a focus on solid‑state technologies, second‑life battery applications and recycling. The funding will be channeled through the EU’s Horizon Europe programme and the European Investment Bank.

5. Extended Transition Period for ICE Vehicles – The ban on ICE cars will be moved to 2040, giving manufacturers an additional five years to shift their product lineups to EVs or other low‑carbon vehicles. The Commission stresses that the move will not halt the overall climate trajectory, but will “provide a smoother, more resilient transition.”

Industry and Environmental Reactions

The European automotive industry welcomed the decision. In a joint statement, ACEA said: “The Commission’s move to extend the ICE ban and simplify the regulatory environment for EVs demonstrates a realistic approach to climate policy that protects European jobs and competitiveness.” German automobile manufacturer BMW, whose CEO Herbert Diess had previously criticised the pace of the transition, said the changes “give us the breathing room to accelerate our investment in EV production.”

However, the EU’s environmental lobby has issued a sharp critique. The Climate Action Network Europe (CANE) said that “the delay in banning ICE vehicles will lead to a prolonged period of high emissions and undermines Europe’s leadership in climate action.” CANE also called for the Commission to “revisit the 2040 deadline and accelerate the deployment of renewable energy to power EVs.”

Context in EU Climate Policy

The decision is framed within the larger EU Green Deal and the 2030 and 2050 climate targets. While the Commission’s new strategy aims to keep the EU competitive, it also underscores that the 2030 emission reduction target remains unchanged. The Commission reiterated that the EU will continue to push for a 100 % transition to renewable energy, the expansion of charging infrastructure, and the introduction of a stricter EU‑wide battery directive that will set mandatory recycling rates of 70 % by 2035.

A separate but related piece of policy is the EU’s battery‑recycling directive, currently in draft form. The new directive will require that by 2025, 55 % of battery content is recovered and reused. The Commission’s new timeline for the ICE ban is seen as a way to give manufacturers more time to meet these ambitious recycling targets.

The Bottom Line

The European Commission’s decision to postpone the ban on ICE vehicles and cut regulatory red‑tape is a pragmatic, albeit controversial, response to the realities of the global automotive supply chain and the need to keep European manufacturers competitive. While critics argue that this delays the EU’s climate ambition, proponents see it as a necessary compromise to avoid a manufacturing shock. The ultimate test will be whether the additional five years can be used to accelerate investment in EV production and battery technology while still meeting the EU’s net‑zero pledge. The Commission will monitor the rollout closely and may further adjust its policy mix to strike the right balance between environmental goals and economic competitiveness.