As the European Union lowers its 2035 targets for electric vehicles, electric startups are expressing concern

The future may be electric, but that future has been postponed. The European Commission, citing a need for flexibility, has watered down its ambitious plan to ban the sale of gas-powered cars by 2035.

Instead of requiring 100% of new cars to be zero-emission vehicles by that date, the revised plan would allow 10% of new car sales to be hybrids or other vehicles as long as manufacturers buy carbon offsets to compensate. This change is part of a “broader”Auto package“Designed to help the European automotive industry become clean and competitive.

If the European Parliament approves the shift, it would likely satisfy traditional European automakers that have been calling for more time to move beyond hybrid vehicles. These companies are struggling to compete with Tesla and the increase in affordable electric cars coming from China. But the change in policy has led to a divide between electric vehicle startups and their investors.

“China already dominates electric vehicle manufacturing,” said Craig Douglas, a partner at the Global Fund, a European climate-focused venture capital firm. “If Europe does not compete with clear and ambitious policy signals, it will lose leadership of another globally important industry – and all the economic benefits that come with it.”

Douglas was among the signatories of “Take Responsibility for Europe,” an open letter to European Commission President Ursula von der Leyen that was published in September. Senior executives from companies including Cabify, EDF, Einride, Iberdrola and several EV-related startups signed the letter, urging the Commission to “stand firm” on the original zero-emissions 2035 target.

Their attractiveness was not enough to confront the pressures imposed by the traditional automobile industry, which represents 6.1% of total employment in the European Union. But the ongoing pressure has sparked debate within the startup community and beyond about the best path for Europe if it wants to remain competitive during the energy transition.

Industry split on timeline

Even within the auto industry, opinions differ. In a statement to Swedish media, a Volvo press official warned that “backing away from long-term commitments in favor of short-term gains threatens to undermine Europe’s competitiveness for many years to come.”

Unlike Mercedes-Benz and other manufacturers, the Swedish automaker had no concerns about meeting the 2035 ban. Rather than push back the deadline, Volvo would have preferred to see increased investment in expanding charging infrastructure — something critics fear the new policy could actually discourage.

Issam Tidjani, CEO of Cariqa, a Berlin-based EV charging startup, echoed these concerns. He warned that weakening the 2035 emissions reduction mandate could hurt progress on electrification overall. “History shows that this kind of flexibility never works,” said Tidjani, who also signed a letter holding Europe accountable this fall. “It delays scale, dampens learning curves, and ultimately costs rather than sustains industrial leadership.”

To be fair, the Commission has not completely ignored infrastructure and supply chain issues. As part of its automotive package, it introduced the “Battery Booster,” a strategy that would invest €1.8 billion (about $2.11 billion) in developing an entirely European-made battery supply chain. The aim is to boost local production and ensure security of supply.

The plan has received positive feedback from Verkor, a French startup that produces lithium-ion battery cells for electric cars. The company, hoping to succeed where Swedish battery maker Northvolt has struggled, opened its first large-scale battery factory in northern France this week. Vercor described the Booster initiative as “a necessary step to expand the battery industry in Europe.”

Mixed signals

However, many question whether the battery boost initiative is enough to offset what they see as a negative signal about the EU’s commitment to using decarbonisation as an engine of economic growth.

Already, traditional automakers have begun to complain that carbon offset requirements could make cars more expensive for consumers, potentially undermining the very competitiveness that the policy change was supposed to protect.

Another uncertainty concerns the United Kingdom. It is unclear whether the UK will follow the EU’s lead and amend its own ban on combustion engines for 2035. Unlike both the EU and the US, the UK has not yet imposed tariffs on Chinese electric cars, although their rapidly increasing sales in the British market have raised concerns among local manufacturers.

The debate highlights ongoing tensions in climate policy between how to balance the economic realities facing existing industries and the urgent need to transition to clean technology. As Europe tries to thread that needle, decisions made now will always influence whether the continent leads or falls behind in the global electric vehicle market.