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European Union Rolls Back 2035 ICE Ban as EV Demand Softens
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Key Takeaways
EU plans to replace the 2035 zero-emission rule with a 90% CO2 cut target, allowing some non-EVs to continue.
The proposal adds a 2030-2032 compliance window and eases van targets.
Stellantis has pulled back from a 100% BEV goal, pivoting to hybrids and plug-in hybrids as EV demand weakens.
The European Commission recently presented a proposal to roll back the EU’s effective ban on new internal-combustion engine vehicles from 2035, following pressure from the region’s automotive industry. The move represents the bloc’s most significant retreat from its green agenda in recent years.
The proposal, which still requires approval from EU member states and the European Parliament, would permit the continued sale of certain non-electric vehicles. Automakers in Germany and Italy had lobbied for looser rules. The Commission appears to have responded to industry calls to allow ongoing sales of plug-in hybrids and range-extender vehicles that use fuel, as European carmakers struggle to compete with Tesla and Chinese EV manufacturers.
Under the plan, the EU would replace the current requirement that all new cars and vans sold from 2035 be zero-emission with a target to cut CO2 emissions by 90% from 2021 levels. Automakers would be required to offset the remaining emissions through measures such as using lower-carbon EU-produced steel, synthetic e-fuels, or non-food biofuels derived from sources like agricultural waste and used cooking oil.
The proposal also introduces a three-year compliance window from 2030 to 2032 to achieve a 55% reduction in car CO2 emissions versus 2021 levels, while easing the 2030 emissions-reduction target for vans to 40% from 50%.
Per Transport & Environment, the changes could result in up to 25% fewer battery-electric vehicles being sold in 2035 than under the current rules. The group also argues that credits for advanced biofuels and e-fuels would enable carmakers to sell fewer EVs in exchange for emissions reductions that do not materialize. In addition, it warns that advanced biofuels cannot be scaled sustainably and could increase Europe’s dependence on imports of used cooking oil and animal fats, which are often vulnerable to fraud.
Automakers to Gain From the Recently Presented Proposal
Ford’s (F - Free Report) hybrid strategy adds resilience as EV adoption evolves. While the Model e segment faces near-term losses, Ford is positioning for long-term success with its Universal EV Platform, designed for affordable, digitally advanced vehicles starting around $30,000. The company plans to begin equipment installation for UEV production in Louisville and start LFP battery cell production in Michigan later this year, reinforcing its long-term electrification strategy.
The Zacks Consensus Estimate for 2026 EPS implies year-over-year growth of 34.9%. The consensus mark for F’s 2026 EPS has moved up 3 cents over the past 30 days. The stock has gained 26.8% over the past six months.
Stellantis (STLA - Free Report) has pulled back from its earlier goal of achieving 100% battery-electric vehicle sales by 2030 and is pivoting toward a more flexible, multi-energy approach. This strategy incorporates hybrids and plug-in hybrids alongside BEVs to better align with evolving consumer demand. As part of this shift, the company is scaling back or postponing some all-electric model launches and temporarily halting production of certain EVs where demand has proven weaker.
STLA currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 sales and EPS implies year-over-year growth of 3.2% and 151.9%, respectively. The stock has gained 11.8% over the past six months.
Renault (RNLSY - Free Report) is scaling down investment in EV-related services that have failed to deliver strong returns. The company is withdrawing from some car-sharing activities and significantly slowing the expansion of its EV charging network across Europe to refocus on more profitable core operations. This includes closing services such as Zity in Milan and Madrid, and sharply trimming previously ambitious charging infrastructure plans.
RNLSY currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2025 sales implies year-over-year growth of 20.5%. The consensus mark for RNLSY’s 2025 EPS has moved up 4 cents over the past 90 days. The stock has lost 8.8% over the past six months.
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European Union Rolls Back 2035 ICE Ban as EV Demand Softens
Key Takeaways
The European Commission recently presented a proposal to roll back the EU’s effective ban on new internal-combustion engine vehicles from 2035, following pressure from the region’s automotive industry. The move represents the bloc’s most significant retreat from its green agenda in recent years.
The proposal, which still requires approval from EU member states and the European Parliament, would permit the continued sale of certain non-electric vehicles. Automakers in Germany and Italy had lobbied for looser rules. The Commission appears to have responded to industry calls to allow ongoing sales of plug-in hybrids and range-extender vehicles that use fuel, as European carmakers struggle to compete with Tesla and Chinese EV manufacturers.
Under the plan, the EU would replace the current requirement that all new cars and vans sold from 2035 be zero-emission with a target to cut CO2 emissions by 90% from 2021 levels. Automakers would be required to offset the remaining emissions through measures such as using lower-carbon EU-produced steel, synthetic e-fuels, or non-food biofuels derived from sources like agricultural waste and used cooking oil.
The proposal also introduces a three-year compliance window from 2030 to 2032 to achieve a 55% reduction in car CO2 emissions versus 2021 levels, while easing the 2030 emissions-reduction target for vans to 40% from 50%.
Per Transport & Environment, the changes could result in up to 25% fewer battery-electric vehicles being sold in 2035 than under the current rules. The group also argues that credits for advanced biofuels and e-fuels would enable carmakers to sell fewer EVs in exchange for emissions reductions that do not materialize. In addition, it warns that advanced biofuels cannot be scaled sustainably and could increase Europe’s dependence on imports of used cooking oil and animal fats, which are often vulnerable to fraud.
Automakers to Gain From the Recently Presented Proposal
Ford’s (F - Free Report) hybrid strategy adds resilience as EV adoption evolves. While the Model e segment faces near-term losses, Ford is positioning for long-term success with its Universal EV Platform, designed for affordable, digitally advanced vehicles starting around $30,000. The company plans to begin equipment installation for UEV production in Louisville and start LFP battery cell production in Michigan later this year, reinforcing its long-term electrification strategy.
F currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2026 EPS implies year-over-year growth of 34.9%. The consensus mark for F’s 2026 EPS has moved up 3 cents over the past 30 days. The stock has gained 26.8% over the past six months.
Stellantis (STLA - Free Report) has pulled back from its earlier goal of achieving 100% battery-electric vehicle sales by 2030 and is pivoting toward a more flexible, multi-energy approach. This strategy incorporates hybrids and plug-in hybrids alongside BEVs to better align with evolving consumer demand. As part of this shift, the company is scaling back or postponing some all-electric model launches and temporarily halting production of certain EVs where demand has proven weaker.
STLA currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 sales and EPS implies year-over-year growth of 3.2% and 151.9%, respectively. The stock has gained 11.8% over the past six months.
Renault (RNLSY - Free Report) is scaling down investment in EV-related services that have failed to deliver strong returns. The company is withdrawing from some car-sharing activities and significantly slowing the expansion of its EV charging network across Europe to refocus on more profitable core operations. This includes closing services such as Zity in Milan and Madrid, and sharply trimming previously ambitious charging infrastructure plans.
RNLSY currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2025 sales implies year-over-year growth of 20.5%. The consensus mark for RNLSY’s 2025 EPS has moved up 4 cents over the past 90 days. The stock has lost 8.8% over the past six months.
Image Source: Zacks Investment Research