A new study by Transport & Environment (T&E) has issued a stark warning: the European Union could lose up to 1 million jobs and €90 billion in automotive value if it weakens or abandons its 2035 ban on fossil fuel vehicle sales. The report, released in July 2025, outlines the high economic stakes of the EU’s climate and industrial policies — especially amid intensifying global competition in the electric vehicle (EV) sector.
A Crossroads for the European Auto Industry
The EU has committed to ending the sale of new petrol and diesel cars and vans by 2035 as part of its Green Deal and long-term climate goals. According to T&E’s findings, sticking to this deadline — and backing it with strong industrial policy — could revitalize Europe’s car industry and drive job creation in new sectors such as battery manufacturing and EV charging infrastructure.
“It’s a make-or-break moment for Europe’s automotive industry,” said Julia Poliscanova, Senior Director for Vehicles & E-Mobility Supply Chains at T&E. “The global race to lead EV production, battery supply chains, and charging infrastructure is moving fast.”
Two Scenarios, Two Outcomes
T&E modeled two possible futures for Europe’s automotive sector:
Scenario 1: Target Maintained + Supportive Industrial Policy
- Automotive economic contribution rises by 11% by 2035
- Over 100,000 new battery-related jobs created by 2030
- 120,000 new jobs in EV charging expected by 2035
- Car production could return to nearly 17 million units per year, similar to pre-2008 levels
Scenario 2: Target Scrapped + No Industrial Strategy
- Up to 1 million automotive jobs lost
- €90 billion drop in supply chain value
- Two-thirds of planned battery investments could disappear
This second scenario would not only weaken Europe’s climate credibility but also severely undermine its competitiveness in a market increasingly dominated by China and the United States, both of which are ramping up EV production and securing raw material supply chains.
External Pressures: Trump’s Tariffs and Global Competition
The EU’s automotive sector is already facing significant headwinds. High energy prices, labor costs, and global inflation have raised operating costs. Meanwhile, President Donald Trump’s 25% tariff on EU car imports — enacted earlier this year — has disrupted sales forecasts for 2025, further straining European manufacturers.
Amid this uncertainty, some carmakers are re-evaluating their investment plans, raising the stakes for policymakers to provide clarity and support.
Political Landscape and Uncertainty
While the European Parliament softened some short-term emissions targets in May, the 2035 zero-emission sales ban remains in place — for now. However, growing political pressure from some EU member states and industry lobby groups could shift the debate.
T&E’s report argues that any rollback would be economically and environmentally damaging, undermining Europe’s industrial future while ceding leadership in clean transportation to global competitors.
The findings come at a critical juncture for the EU’s auto sector, which is responsible for millions of jobs and a significant share of the bloc’s industrial output. Whether the region chooses to lead in the electric vehicle era or lag behind will depend on whether it holds firm on its climate commitments and matches them with the right policies to drive innovation, investment, and employment.
The choice, the report concludes, is between industrial renewal or irreversible decline.
