External publications

How phase-out policies strengthen Europe’s automotive industry

Rogge, Karoline / Nicholas Goedeking / Jörn Hoppmann / Hauke Lütkehaus / Adrian Rinscheid / Aline Scherrer / Daniel Rosenbloom / Qi Song
External Publications (2025)

EMPOCI: Accelerating sustainable energy-mobility transitions, Policy Briefing 1 (February 2025)

Europe is committed to phasing out the sale of new petrol and diesel cars by 2035. Some assume that these net-zero sales targets are bad for business. This assumption is particularly prevalent in Germany, which relies heavily on its automotive industry. However, recent research suggests that relaxing or scrapping these phase-out policies would do more harm than good to Europe’s struggling automotive industry. This is because the targets generate investment certainty and thus help companies compete in the global innovation race. This brief explains why credible phase-out policies strengthen the European automotive industry, rather than weakening it. It also covers additional key steps European policymakers could take that would bolster the industry’s global competitiveness.