The EU apparently wants to axe the 2035 ban on selling combustion-engined cars

A senior EU lawmaker, Manfred Weber, said the previously agreed 2035 ban on sales of petrol and diesel cars is effectively off the table, with the bloc moving to a mandatory 90% CO2 fleet reduction instead of a 100% target and no 100% requirement from 2040, which he said would allow continued production and sale of combustion engines and protect 'tens of thousands' of jobs. The announcement casts doubt on the 2023 commitment to a 100% cut by 2035 and creates uncertainty about whether the EU — and by extension the UK — will formally roll back the ban, altering the regulatory timeline for OEMs' EV investments and supply‑chain plans. UK registration data from the SMMT show BEVs at 26.4% of November sales but weak volume growth (3.6%), modest hybrid gains and faster plug‑in hybrid growth (14.8%), while overall new car registrations fell 1.6%, underscoring a softer EV adoption trend that could support arguments for retaining ICE production.

Analysis

Manfred Weber, president of the EPP, told Bild that the EU will shift from a previously agreed 100% fleet CO2 reduction by 2035 to a mandatory 90% reduction, and that there will be no 100% target from 2040 onwards; he characterized this as effectively removing a technology ban on combustion engines and said existing German engines can continue to be manufactured and sold. The change directly challenges the 2023 commitment that required a 100% cut versus 2021 levels, creating immediate regulatory uncertainty for original equipment manufacturers (OEMs) and suppliers planning EV-heavy capex and supply-chain retooling. UK market data from the Society of Motor Manufacturers and Traders show battery-electric vehicles at 26.4% of November sales with weak volume growth of 3.6% (the weakest in almost two years), hybrids up 1.3% and plug-in hybrids up 14.8% to 11.9% of registrations, while overall new registrations fell 1.6%—the sixth decline this year. Market signals classify the news as mildly positive with an uncertain tone and modest market-impact (sentiment score 0.3, market impact 0.35), implying potential near-term relief for ICE-linked industrial jobs but sustained demand ambiguity for EVs until formal legislation is clarified.

Key Decisions for Investors

• Reassess exposure to European OEMs and Tier-1 suppliers with large ICE production footprints and consider modestly increasing allocations to ICE component suppliers if regulatory rollback appears likely
• Avoid materially increasing concentrated EV theme positions until formal EU legislative language is published; treat Weber's statement as directional but not definitive
• Monitor short-term catalysts: official EU legislative votes, subsequent German/UK policy statements, and monthly BEV/PHEV registration trends as triggers to adjust positioning
• Use hedges (options or pairs) against downside in pure-play EV equities given the combination of policy uncertainty and the recent weak BEV volume growth in the UK