In a striking reversal from its earlier ambitions, Mercedes-Benz is now sounding the alarm regarding the European automotive sector's future. The luxury automaker, which once aimed for an all-electric lineup by 2030 where feasible, has significantly revised its stance. The CEO, Ola Källenius, now warns that adhering to the European Union's proposed ban on new internal combustion engine (ICE) vehicle sales by 2035 could lead to the industry's downfall. This pivot underscores a growing apprehension within the automotive world about the pace and feasibility of the mandated transition to electric vehicles (EVs).
Källenius, who also heads the European Automobile Manufacturers' Association (ACEA), articulated his concerns in an interview with the German financial publication, Handelsblatt. He stressed the urgent need for a 'reality check' regarding the EU's 2035 directive, suggesting that without a more pragmatic approach, the industry is hurtling towards a detrimental outcome. His argument centers on the idea that decarbonization efforts must be technologically inclusive, rather than exclusively favoring electric propulsion, to safeguard the economic well-being of the region.
A critical point raised by Källenius is the potential consumer behavior preceding the 2035 deadline. He foresees a surge in purchases of gasoline and diesel vehicles as buyers anticipate the ban, a trend he argues would undermine climate objectives rather than support them. This perspective highlights a complex interplay between policy, consumer demand, and technological readiness within the automotive market.
Furthermore, Källenius pointed to existing market data to substantiate his worries. Electric vehicles currently represent a modest portion of total car sales in Europe. Statistics from the first half of the year reveal that fully electric vehicles constituted only 17.5 percent of sales across EU countries, the UK, and EFTA nations. Plug-in hybrids accounted for a mere 8.7 percent, while traditional hybrids, including mild-hybrids, made up a larger but still insufficient 35 percent. These figures strongly suggest that the market is not yet prepared for an abrupt and complete cessation of ICE vehicle sales.
The EU's 2035 ban is slated for review, yet the European Commission has recently reiterated its commitment to zero CO2 emissions for new vehicles sold from the mid-2030s. This firm stance from regulators contrasts sharply with the industry's practical challenges, creating a significant point of contention. Mercedes-Benz's own sales figures reflect this struggle, with EV sales experiencing a slight decline in the first half of 2025 compared to the previous year, further illustrating the hurdles in achieving widespread EV adoption.
Whether a balanced resolution will emerge from this debate remains uncertain. However, the strong resistance from key industry players like Mercedes-Benz indicates a clear desire for greater flexibility. It is plausible that the EU might reconsider its rigid timeline, potentially allowing for the continued sale of plug-in and full hybrids beyond 2034. Such an adjustment would acknowledge the intricate realities of automotive manufacturing and consumer preferences, preventing a precipitous shift that could destabilize a crucial economic sector.