Europe's Weakened EV Mandate Sparks Startup Backlash Over Industry Competitiveness

The European Commission’s revised 2035 emissions target has become a flashpoint for the continent’s clean energy transition. Rather than enforcing a strict zero-emission vehicle requirement, the new framework permits hybrid vehicles to constitute up to 10% of new car sales provided manufacturers offset remaining carbon emissions. What regulators framed as necessary pragmatism has triggered significant pushback from electric startups and climate-focused investors.

The Policy Shift and Its Origins

The regulatory relaxation stems from pressure by established European automakers facing intense competition. Traditional carmakers have lobbied for extended timelines to phase out combustion engines, citing production challenges and market pressures—particularly from Tesla and a wave of competitively priced Chinese electric vehicles flooding global markets. The revised “Automotive Package” attempts to balance industrial concerns with climate objectives, aiming to keep European manufacturers competitive without abandoning decarbonization altogether.

Startup Community’s Unified Concern

EV startups and their backers view the policy adjustment as strategically counterproductive. Craig Douglas of World Fund, a European climate venture capital firm, articulated the sector’s core anxiety: “China already dominates EV manufacturing. If Europe doesn’t compete with clear, ambitious policy signals, it will lose leadership of another globally important industry—and all the economic benefits that come with it.”

This concern prompted senior executives from companies including Einride, Cabify, and numerous clean-tech ventures to sign “Take Charge Europe,” an open letter demanding the Commission maintain its original 2035 zero-emission target. The initiative underscores deep divisions within the business community about Europe’s strategic direction.

Fractures Within Traditional Industry

Interestingly, consensus doesn’t exist among established automakers either. Volvo stated publicly that the policy reversal risks undermining Europe’s long-term competitiveness. The Swedish manufacturer, unlike Mercedes-Benz, expressed confidence in meeting the original 2035 deadline and advocated instead for expanded charging infrastructure investment. This divergence reveals disagreements about optimal timelines and support mechanisms.

Infrastructure as the Real Battleground

Issam Tidjani, CEO of Cariqa, a Berlin-based EV charging marketplace startup, warned that the mandate’s relaxation sends the wrong signal to infrastructure investors. “History shows that this kind of flexibility has never worked out well,” Tidjani explained. “It delays scale, weakens learning curves, and ultimately costs industrial leadership rather than preserving it.”

The Commission addressed some infrastructure concerns through its “Battery Booster” initiative, allocating €1.8 billion toward developing a fully European battery supply chain. Verkor, a French lithium-ion battery cell producer that recently commissioned its first large-scale factory in Northern France, praised the investment as essential for scaling European battery production—particularly given Swedish competitor Northvolt’s earlier difficulties.

Broader Implications and Uncertainties

The policy modification creates ambiguity across multiple fronts. The carbon offset requirements could paradoxically increase vehicle costs, potentially harming the consumer affordability that justified the policy shift. Meanwhile, the United Kingdom’s response remains unclear—it hasn’t adopted Chinese EV tariffs despite rising import volumes and domestic manufacturer concerns.

The European approach reflects an ongoing tension: balancing existing industrial interests against the urgency of technological transition. How effectively Europe resolves this dilemma will significantly determine whether it maintains or loses ground in the global electric vehicle market during this critical decade.