EU Softens 2035 EV Ban: Why Electric Startups Are Alarmed

The future of cars is electric – but in Europe, that future is now looking like it might be arriving a lot later than expected.

The European Commission has softened its landmark 2035 goal to ban the sale of new gas-guzzlers, and it’s all a bit of a mixed message for electric vehicle (EV) startups and climate-focused investors. Instead of demanding 100% zero-emission vehicles, the revised proposal says up to 10% of new car sales can be hybrids or other low-emission vehicles , as long as manufacturers cough up some cash for carbon offsets. It’s part of a much bigger Automotive Package, aimed at giving Europe’s auto industry a bit more flexibility as it figures out how to switch to cleaner power.

But for those who are betting on electric propulsion, this change is sending some pretty worrying signals.

Why the EU Did an About-Face

Traditional European carmakers have been lobbying the EU for more time to make the switch.

They’ve been hit with a triple whammy:

• Tesla’s global scale is a big deal\
• Low-cost Chinese EV manufacturers are breathing down their necks\
• and production and compliance costs are on the rise

With around 6.1% of EU employment in the auto sector, policymakers are trying to balance out climate ambition with economic realities. They’re worried that if they push too hard for zero-emission vehicles, they’ll end up hurting jobs. So the revised target is a compromise, designed to keep the industry competitive while still trying to reduce pollution.

But many people think that by compromising now, the EU is weakening its long-term leadership in electric mobility.

EV Startups Fear Losing the Plot

Climate-focused investors and EV startups are pretty worried about the softened target.

“China is already the global leader in EV manufacturing,” says Craig Douglas, a partner at World Fund.
“If Europe doesn’t send a clear, ambitious policy signal, it risks losing another big industry.”

Douglas is one of the people who signed up to the “Take Charge Europe” open letter, which urged the Commission to stick with the 2035 zero-emission mandate. Execs from companies like Cabify, EDF, Einride, and Iberdrola also signed up to the appeal.

Their point is simple: policy uncertainty just holds back innovation, investment, and scale.

A Divided Auto Industry

Even within Europe’s auto sector, not everyone’s singing off the same hymn-sheet.

Volvo, for example, says it’s got no problem meeting the 2035 deadline. But they’re worried that if the EU weakens its targets, it’ll undermine Europe’s competitiveness for years to come.

Instead of kicking the can down the road, Volvo and others are saying that the EU should focus on:

• getting the charging infrastructure rolled out faster\
• investing more in the supply chain\
• and having stronger, more stable regulations

Charging Infrastructure at Risk?

Startups building the EV ecosystem are worried that the EU’s shift in policy might do more harm than good.

Issam Tidjani, the CEO of Berlin-based charging startup Cariqa, says flexibility often backfires.

“History shows us that this sort of approach just delays scale, weakens learning curves and costs us industrial leadership,” he warns.

For companies building charging networks, fleet operators and battery startups, slower EV adoption means:

• reduced demand\
• slower infrastructure expansion\
• and weaker investor confidence

Battery Booster: A Good Start, But Will It Be Enough?

The EU’s introduced the Battery Booster, a commitment to put €1.8 billion into building a fully European battery ecosystem.

Startups like Verkor, a French battery manufacturer which recently opened a big factory in northern France, welcomed the move. They say it’s a necessary step to strengthen Europe’s battery independence.

But critics say that battery funding alone can’t make up for mixed policy signals on emissions targets.

Mixed Signals, Rising Costs

Ironically, traditional carmakers now warn that carbon offset requirements could raise vehicle prices, potentially hurting consumers and competitiveness.

At the same time, uncertainty looms over whether the UK will follow the EU’s lead. Unlike the EU and the US, Britain has not imposed tariffs on Chinese EVs — even as their market share grows rapidly.

What’s at Stake for Europe

The debate highlights a broader tension in climate policy:

• Protecting existing industries

• Versus accelerating clean-tech leadership

The choices Europe makes today will determine whether it:

• Leads the global EV transition

• Or falls behind faster-moving markets like China and the US

For electric startups, the message is clear: ambition drives innovation. And without firm commitments, the road to a clean, competitive automotive future becomes much longer.