AUTONEWS

Surprising announcement: If the EU fails to ban diesel and gasoline vehicles, a new wave of layoffs in the auto industry could follow
Weakening European Union CO2 emission standards for passenger cars and vans could cost up to 185,000 jobs in the European automotive industry by 2035, leaving employment levels significantly below those of 2025, according to a new analysis by the International Council on Clean Transportation (ICCT), an independent non-profit research organization.
This is because, despite a temporary halt to job losses in the production of internal combustion engines, weaker regulation would slow down job growth in the manufacturing of battery electric vehicles, battery production and recycling, and the installation and maintenance of charging infrastructure—ultimately resulting in a net loss of jobs.
The ICCT argues that a ban on gasoline and diesel vehicles would keep employment largely stable through 2035; growth across the entire battery electric vehicle supply chain would generate enough new jobs to offset those lost in the production of internal combustion engines. Combining these standards with industrial measures that support EU-based manufacturing could transform this stability into long-term job growth.
The European Union is considering reversing its decision to ban the sale of new gasoline and diesel vehicles starting in 2035. Instead, the proposal would require an 85 percent reduction in CO2 emissions compared to 2021 levels. This would apply to all new vehicles sold (on average)…
The relationship between the European Union's shifting climate targets and employment in the automotive sector has become a major crisis point. The EU's decision to water down its 2035 100% zero-emissions target to a 90% reduction framework—effectively backing away from a total ban on diesel and gasoline vehicles—has fueled predictions of a new wave of automotive layoffs across Europe.
While automakers argued that a strict ban would destroy the industry, economic and climate analyses suggest that softening the policy creates a double-edged sword that could trigger massive job losses anyway.
Green fleets...The commission also unveiled a slew of additional measures to support the auto sector as part of a package that needs approval from the EU parliament and member states.
In the run-up to 2035, carmakers will benefit from "super credits" for small "affordable" electric cars made in the EU, in an accounting trick that would make reaching emission targets easier.
This would mean that sales of electric cars under 4.2 metres in length will be counted 1.3 times, thus artificially boosting the share of zero-emission cars in an automaker's fleet.
The commission also proposed reducing the interim 2030 emission target for vans from 50 to 40 percent and allowing truck manufacturers more time to meet their own 2030 target, in line with a previous concession to automakers.
To boost EV sales, medium and large firms will be required to green their fleets, which currently account for about 60 percent of new car sales in Europe.
At least 30 percent of new vehicles bought by companies will need to be zero- or low-emission, under targets that will differ from country to country, with the bar set higher for richer nations.
Finally, the EU will provide €1.5 billion to support European battery producers through interest-free loans.
Road transport accounts for about 20 percent of total planet-warming emissions in Europe, and 61 percent of those come from cars' exhaust pipes, according to the EU.
The European Union's proposal to water down its 2035 ban on new petrol and diesel vehicles highlights a major shifting dynamic in the automotive industry, where slower-than-expected electric vehicle (EV) adoption and fierce global competition have forced a policy retreat to protect regional manufacturing jobs.
The policy rollback...Under intense pressure from major car-producing nations like Germany, France, and Italy, as well as European auto groups like the ACEA, the European Commission moved to alter its landmark "zero-emission" mandate.
• The new target: Instead of a strict 100% reduction in tailpipe emissions by 2035, the proposed amendment lowers the required reduction to 90%.
• What stays: This revision effectively allows the remaining 10% of the market to be comprised of conventional internal combustion engines (ICE), hybrids, and plug-in hybrids beyond 2035.
• The drivers: Automakers argued that enforcing the original ban would trigger multi-billion-euro penalties due to low consumer demand for EVs, inadequate charging infrastructure, and steep production costs.
The threat of layoffs and retooling...While the policy shift aims to act as a "cushion" for traditional manufacturing sectors, the auto industry remains highly vulnerable to structural job losses and economic displacement:
• The EV slump paradox: Carmakers have already begun adjusting their EV strategies by axing unprofitable electric models. However, the slower transition strains both traditional ICE workers and new EV-focused facilities.
• Supplier vulnerability: Component suppliers and sub-contractors face severe instability. Because electric drivetrains require far fewer parts than ICE vehicles, legacy suppliers are trapped in a costly limbo—caught between shrinking ICE orders and stagnant EV supply chains
Why the EU watered down the 100% ban...The original landmark policy mandated that all new cars sold after 2035 produce zero tailpipe emissions. However, the European Commission faced immense pressure from major automotive nations (like Germany and Italy) and industry trade groups (like the ACEA). The decision to pivot to a 90% reduction target—allowing the remaining 10% to be traditional combustion engines, hybrids, or cars using synthetic e-fuels—stems from several systemic issues:
• Collapsing EV Demand: European consumers are buying electric vehicles at a much slower rate than anticipated. High upfront costs and a severely lacking public charging network have stalled adoption.
• The Chinese EV Onslaught: European automakers are struggling to compete with heavily subsidized, lower-cost electric vehicles imported from China.
• Regulatory Penalties: Under strict 100% rules, forcing an unready market to buy EVs would have triggered "multi-billion euro" fines for European manufacturers who failed to hit targets.
• Economic Defense: The automotive sector employs over 13 million people and generates roughly 7% of the EU's GDP. Leaders prioritized immediate industrial preservation over pure environmental idealism.
Why easing the ban triggers a "new wave" of layoffs...Ironically, relaxing the rules does not insulate the workforce from unemployment. Instead, it places European automakers in a vulnerable strategic limbo. Experts, labor unions, and climate groups warn of a subsequent wave of layoffs due to specific structural traps:
1. The cost of strategic indecision...By allowing combustion engines to survive past 2035, the EU is encouraging automakers to split their capital. Splitting funds between maintaining aging internal combustion engine (ICE) architectures and developing next-gen EV platforms limits their scale. Analyst reports indicate that every euro spent on fading legacy technology is a euro not spent on catching up to global EV leaders like China. This technological lag will ultimately cost European brands global market share, leading to factory closures.
2. Undermining past green investments...European manufacturers, battery start-ups, and supply chains have already spent hundreds of billions of euros preparing for full electrification. Easing the targets devalues these investments. According to a study by the International Council on Clean Transportation (ICCT), diluting EU CO2 standards could eliminate up to 185,000 passenger car industry jobs by 2035. Sustaining clear targets was the only way to ensure that new battery and EV manufacturing jobs would offset the inevitable losses in combustion engine plants.
3. Already accelerated downsizing...The industry is already shrinking rapidly due to high energy costs, inflation, and a drop in overall European vehicle production (which sits roughly 20% below 2019 levels). Major brands have already initiated severe cost-cutting measures:
• Volkswagen has outlined plans that could affect up to 100,000 positions.
• BMW, Porsche, Volvo, and Jaguar Land Rover have all announced thousands of engineering and manufacturing job cuts.
• The Supplier Crisis: The European Association of Automotive Suppliers (CLEPA) warns that up to 350,000 supplier jobs are highly vulnerable through 2030.












