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The European Union’s potential reversal on its plan to cease the sale of new gasoline and diesel vehicles by 2035 could create new opportunities for Chinese automakers. Industry insiders suggest that Chinese electric vehicle manufacturers might have an edge under the upcoming point-based system intended to replace the earlier combustion engine ban, as they can earn additional revenue by selling surplus credits. Meanwhile, European automakers may need to buy credits to make up for shortfalls in meeting emissions targets.
Recently, the European Commission proposed lifting the ban on new gasoline and diesel car sales starting in 2035. Instead, they plan to implement a new regulation requiring automakers to cut carbon dioxide emissions from new vehicles by 90% compared to 2021 standards. This regulation also features a points-based reward system: for each small EV in the M1E category sold after assembly of the vehicle and battery pack within the EU, manufacturers will earn 1.3 times the basic emission reduction points. These points can be used to offset emissions from higher-polluting vehicle models.
The proposal, which still needs approval from the European Parliament and member countries, has gained strong backing from automakers in Germany and Italy. They argue that electric vehicles in Europe face riddles like high costs and inadequate charging infrastructure, making the original targets challenging to meet. Some companies, such as Volvo and its EV brand Polestar, have publicly defended keeping the combustion engine ban, citing their significant investments in electrification and concerns that the EU may fall behind other regions in transitioning to electric vehicles.
In the first ten months of this year, over 1.47 million EVs were registered across Europe, accounting for 16.4% of the market — up from 13.2% the previous year, according to data from the European Automobile Manufacturers’ Association. Chinese EV brands are seeing steady growth in Europe, with BYD reporting a 452% increase in sales in Spain and a 648% uptick in Germany, reaching 22,400 and 19,200 units respectively from January through November. In Italy, sales soared by 4,800%, hitting 20,200 units, capturing a 2.8% market share.
BYD aims to further accelerate its European expansion, projecting the opening of 1,000 stores across 32 countries by the end of this year. Meanwhile, SAIC Motor sold 173,900 units within the EU during the same period, up nearly 40% compared to last year. Other Chinese automakers, including Changan, GAC Group, Nio, and Xpeng Motors, have also entered the European market in increasing numbers.
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