Has Europe Slammed the Brakes on Net Zero? And will the UK be left (EV) driving alone?

For much of the past decade, the direction of travel on clean transport seemed settled. The EU would ban the sale of new petrol and diesel cars from 2035. The UK would follow suit. Carmakers would invest, supply chains would retool, and the internal combustion engine would quietly fade into history. Last wee, European officials moved to ease their ban on sales of cars with internal combustion engines by 2035, responding to pressure from governments and automakers, raising significant questions about reversing its climate targets and the overall pace of EV adoption.

Across Brussels, there is growing momentum to water down, delay or redefine what the 2035 ban actually means, part of a wider political shift that puts industrial pressure, voter anxiety and short-term competitiveness ahead of long-term climate goals. It is a move that increasingly aligns Europe with the rollback of efficiency standards under a second Trump presidency in the United States, and one that raises an uncomfortable question for the UK: As Europe slows down, will Britain be left isolated if it doesn’t change gears as well?

From Ban to “Flexibility”: What’s Changing in the EU?

Formally, the EU has not yet repealed its 2035 ban on new petrol and diesel cars. But in practice, the policy is already being hollowed out.

Under pressure from member states, notably Germany and Italy, and from car manufacturers facing high transition costs, the European Commission has begun softening the framework in three key ways:

• Expanded exemptions for e-fuels, allowing combustion engines to continue beyond 2035 if they run on synthetic fuels.

• Looser interim emissions targets, reducing penalties on manufacturers that fail to hit near-term CO₂ reduction milestones.

• A renewed emphasis on “technological neutrality”, signalling that the electric vehicle (EV) may no longer be the default end-point of policy.

What this means in practice, is that instead of outright banning new combustion engine vehicles after 2035, the new plan aims to allow limited emissions from these vehicles, reducing them by 90% rather than reaching zero.

Yet, car manufacturers have launched a scathing criticism of the measures, notably the head of Fiat, Antonio Filosa, stated that "there are none of the urgent measures needed to return the European automative sector to growth". One of the key concerns is that the EU will mandate these offsets through the use of low-carbon steel and sustainable fuels, which will hugely ramp up manufacturing costs and make the European market far less competitive than its Asian and US rivals.

But seeing the latest EU proposals, Filosa continued that “Without growth, it becomes very difficult to think about investing more. Without additional investments, it is difficult to build the resilient supply chain that is vital for European jobs, European prosperity and European security.” 

What was once a clear, rules-based transition is becoming a negotiated compromise designed to placate industry and nervous voters, particularly in countries where the automotive sector remains economically and culturally dominant. What is becoming clear is that industry does not believe that the measures have been watered down enough to enable the European car industry to stay remotely competitive on the world stage.

Europe Is Starting to Sound Like America

The EU’s shift is striking not just for what it changes, but for how familiar it sounds.

In the United States, Donald Trump has already pledged, again, to tear up vehicle efficiency standards, attack EV mandates, and restore “consumer choice” as the organising principle of transport policy. Climate action is framed not as economic opportunity, but as regulatory overreach.

Could Europe be inching in the same direction? The language has softened. The ambition has blurred. The long-term signal to industry is weakening.This convergence matters because it signals a broader global trend: net zero is no longer politically untouchable, even in jurisdictions that once led the charge.

Where Does This Leave the UK?

The UK sits in an increasingly awkward position. On paper, it still has one of the most ambitious transport decarbonisation frameworks in the developed world, including the phase-out of new petrol and diesel cars, strong EV mandates, and legally binding climate targets.

But if the EU dilutes its approach while the US actively dismantles it, the UK risks becoming an outlier, especially given the hugely controversial policy to tax EV's per mile that they drive (this policy may require an urgent rethink). That creates three immediate pressures:

1. Industrial Competitiveness

Carmakers operate global platforms. Divergent standards raise costs. If Europe relaxes rules and the UK doesn’t, manufacturers will inevitably ask why British consumers and factories face tighter constraints than their continental neighbours.

2. Political Pressure to Follow

Calls to “align with Europe” will grow louder, particularly from those already sceptical of net zero or wanting a closer alignment with EU policies. The argument will be framed as common sense: why go further than everyone else?

3. Policy Confidence Erosion

If the UK looks isolated, investors may start to question whether its policies are durable, or merely waiting for the next political U-turn (the last year has shown that they come thick and fast!).

This is exactly the uncertainty that has already slowed EV uptake, frozen charging investment and shaken market confidence.

For a sector that generates around £92-93 billion in turnover, contributes approximately £22-25 billion in Gross Value Added, directly employs nearly 200,000 people (with the wider industry supporting over 800,000 jobs) produces over 900,000 vehicles (the majority for export) annually and invests billions £ in R&D, this could create a major, major headache.

The Real Risk: A Race to the Bottom

The deeper problem is not that the EU is softening its stance. It is that no one is offering a credible alternative vision. Rolling back emissions standards does not make the transition cheaper, it simply delays it. It locks consumers into volatile fuel costs, leaves infrastructure half-built, and increases the eventual cost of adjustment.

The car industry itself has repeatedly warned that what it needs most is clarity and stability, not endless political renegotiation. Constant rule-changes are far more damaging than ambitious targets. Yet across Europe and the US, climate policy is being sacrificed to short-term politics, with little regard for the long-term economic consequences. The question is then whether car manufacturing will survive long enough in Europe and the UK if they do not fall in line with other global offerings...

Should the UK Hold Its Nerve or Fall in Line?

This is the strategic choice now facing the UK. It can either hold firm, maintain ambition, and focus on fixing delivery, namely charging infrastructure, affordability, finance and skills.Or should it shift gears, align downward, and join a growing chorus arguing that net zero was simply too challenging against the backdrop of global pressures?

The irony is that the UK’s biggest problem has never been ambition. It has been execution.

Weakening targets will not fix grid delays, lack of charging infrastructure or high costs associated with purchasing an EV. It will only remove the pressure to solve them and we will be back to square one in 5, 10, 15 years time, but we might also be in a far better position financially to transition. What is certain, is that the UK needs a clear, concise strategy to address these challenges that provides UK car manufacturers with the confidence they need to invest - that certainty is not the current state of play.

Conclusion: Leadership or Drift

The EU’s softening of its combustion engine ban is not an isolated decision. It is part of a wider retreat from long-term climate planning in favour of political expediency and trying to avoid the huge financial problems that will present themselves if the European/UK car manufacturers cannot compete on something approaching an equal footing to Asia and the US.

If the UK responds by following suit, it risks repeating the same mistake, confusing delay with relief. Net zero was never meant to be easy. But abandoning clarity now, just as the transition becomes real, would be the most expensive option of all.

The question is not whether the UK ends up “alone” in Europe. it is whether it chooses to lead with confidence, or drift with the political tide, and pay the price later. If it is the latter then the government should consign the planned pay-per-mile tax for EV usage to the scrapheap, otherwise our car manufacturing sector will be the one that misses out short-term.