The European Commission recently unveiled its Automotive Package, revising the 2035 climate target from full CO₂ neutrality to 90% by the same year. The remaining 10% is only flexible if it is offset through low‑carbon steel, e‑fuels or biofuels. This policy has once again ignited global debate on the path of green transformation in the automotive industry. The EU’s adjustment is a reluctant compromise between climate ambitions and industrial realities. It reflects the complex interplay of industrial transformation, economic growth, party politics, and climate policy—and highlights the short-term challenge for European governments and companies in balancing electrification strategies with economic interests. Yet beyond compromise, the fact of green transformation won’t change. Openness and cooperation will shape the next phase of global automotive transformation, and in this process, China–Europe industrial cooperation will serve as a key anchor for sustaining the world’s green transition.
I. The Evolution of the EU’s ICE Ban and the Causes of Its Adjustment
The EU’s 2035 ban on internal combustion engine (ICE) vehicles has been revised multiple times, evolving from an aggressive target to a more flexible approach. In July 2021, the European Commission first proposed a full ban on new ICE vehicle sales by 2035, mandating electrification to back its 2050 carbon neutrality goal. The proposal sent shockwaves through the global auto industry. In February 2023, the European Parliament adopted the Regulation (EU) 2023/851 by 340 votes to 279, officially enshrining the zero-emission mandate. In March of the same year, under pressure from Germany, Italy, and others, the EU made its first U-turn, revising the framework to exempt e-fuel-powered vehicles and ditching the one-size-fits-all approach. By late 2025, the EU rolled out its latest update: the core target shift from 100% zero emissions to 90% reduction. The remaining 10% can be offset via low-carbon steel, synthetic fuels, and similar mechanisms. A 2030–2032 transition period was also added. For light commercial vehicles, the 2030 emissions cut was trimmed from 50% (vs. 2021) to 40%, while passenger cars keep the 55% cut target through 2032.
At its core, this adjustment reflects the mounting pressure from Europe’s industrial realities and competitive challenges.
First, market transition has fallen short of expectations. According to the European Automobile Manufacturers’ Association (ACEA), to meet the original 2025 carbon targets, battery electric vehicles (BEVs) would need to make up around 25% of sales. As of November 2025, the share stood at just 16.9%. As the first punitive compliance deadline (a 15% cut from 2021 levels) loomed, European automakers faced potential fines over €10 billion. This immediate threat was the direct driver of the policy tweak. China’s experience proves EV adoption hinges not just on policy, but also on consumer habits, charging infrastructure, after-sales services, and business-model innovation. The EU’s underinvestment in these areas is a major reason for its lagging market shift.
Second, Europe’s domestic auto industry is struggling to transform. The automotive sector is a pillar of the European economy. Germany Association of Automotive Industry has repeatedly cautioned that an aggressive ICE ban could put some 270,000 jobs at risk. But European automakers were late to electrification. Traditional OEMs still lag in core areas like three-electric systems and intelligent systems, and rely heavily on suppliers from China, Japan, and South Korea. Tech, cost, and supply chain constraints have created a vicious cycle of rising transformation costs, declining sales, and workforce reductions—making it hard to balance electrification strategies with profitability.
Third, internal benefit games and lobbying among EU member states have been decisive. Germany has spearheaded the push for changes. Chancellor Merz has repeatedly slammed the original policy as “rigid and ill-conceived,” advocating technology neutrality to protect domestic competitiveness and uphold room for efficient ICEs and PHEVs. Italy, Poland, Czechia, Hungary, Bulgaria, and Slovakia—nations with robust auto sectors or high job reliance—fear industrial hollowing. Conversely, France, Spain, Sweden, Denmark, and the Netherlands firmly oppose any relaxation: France aims to leapfrog via electrification, while Nordic nations see climate targets as core policy priorities. This divide forced an EU-level compromise.
II. The Direction of Global Green Transition Remains Unchanged, China–Europe Cooperation Takes Center Stage
The EU’s policy relaxation should not be misread as a retreat in global green transformation. Instead, 2025 global market trends confirm that electric vehicles, fueled by their inherent competitiveness, have emerged as the transition’s core driver. The shift to zero-emission mobility is unshakable.
Globally, the EV industry has shifted from policy dependence to market-driven growth. Tech upgrades and cost cuts keep boosting competitiveness. Global annual NEV sales jumped from around 200,000 in 2013 to over 17 million in 2024, over 20% of total vehicle sales for the first time. 2025 global EV sales are projected to top 20 million, making up over a quarter of new car sales. Electrification has entered the “early majority” stage of the diffusion of innovation, with unstoppable momentum. By 2030, market share could reach 45%.
Regionally, China’s NEV sector is fully market-driven, boasting dynamic innovation, fierce competition, better infrastructure, and growing cross-industry models. Penetration is projected to exceed 70% by 2030. In the US, EV policy is shaped by partisan rifts and poor federal-state coordination. Despite recent policy tweaks, the market is set to hold around 10% share, showing strong resilience. Europe stays a global leader in environmental and sustainability initiatives. Jan–Nov 2025, BEVs sales in Europe (EU+EFTA+UK) hit 2.276 million units, with PHEVs at 1.149 million, pushing total NEV penetration to 28.3%. Meanwhile, emerging regions—ASEAN, the Middle East, Latin America, Australia and New Zealand—are speeding up their shift. These markets have large populations, solid industrial bases, and strong growth prospects. Fueled by pollution control, energy security, and green growth goals, NEV demand is surging.
Notably, the new EU framework introduces special incentives for small, affordable EVs. Vehicles meeting certain standards—like under 4.2 meters in length and EU-local production—earn 1.3 times super credits each. This shows the EU’s effort to balance industrial development and transition.
Amid geopolitical complexities and pressing green goals, openness and cooperation are growing more vital. China-Europe auto cooperation, in particular, provides a realistic path for global transition.
Their complementary EV strengths can help Europe tackle transition bottlenecks, give China more room for upgrading, and build global consensus. China has full industrial chains and cost edges in batteries, OEMs production, and intelligent connectivity. Europe, in turn, brings deep auto heritage, strong R&D, and premium brand management. In recent years, these strengths have yielded tangible results via trade, tech licensing, joint ventures, and local R&D and production. This is no one-way tech export or market expansion—it’s a mutually beneficial, empowering collaboration.
Future cooperation can expand in four areas:
·Joint manufacturing and technology collaboration – Chinese OEMs set up production bases in Europe, creating jobs and upgrading local supply chains.
·Supply chain coordination – Co-develop European hubs for batteries and other core components to boost localization.
·Standards alignment – Secure mutual recognition in areas like battery carbon accounting and charging interfaces to cut trade and transition costs.
·Joint expansion in emerging markets – Share channels in Australia, New Zealand, Southeast Asia, and Africa to tap incremental growth.
