Only a few years ago, Mercedes-Benz was positioning itself as a frontrunner in the European shift toward electric vehicles. In 2021, the German luxury automaker boldly announced it would stop selling cars with combustion engines “where market conditions allow” by the end of the decade. Today, that vision has been rolled back, sharply.
Mercedes-Benz CEO Ola Källenius now warns that if the European Union moves ahead with its 2035 ban on new petrol and diesel cars, the continent’s automotive industry could face devastating consequences.
“We Need a Reality Check”
Speaking to German business daily Handelsblatt, Källenius said the EU’s current trajectory risks economic disaster.
“We need a reality check. Otherwise, we are heading at full speed against a wall,” he cautioned. “Of course, we have to decarbonize, but it has to be done in a technology-neutral way. We must not lose sight of our economy.”
Källenius, who also serves as president of the European Automobile Manufacturers’ Association (ACEA), believes that pushing ahead with the ban will spark a rush among consumers to buy internal combustion engine (ICE) vehicles before the cut-off date, a move he argues would hurt both the industry and the environment.
EV Sales Far From Target
The EU’s vision is clear: by 2035, every new car sold should produce zero tailpipe emissions. But the numbers paint a sobering picture.
In the first half of 2025, fully electric cars made up just 17.5 percent of total sales across EU countries, the UK, and the European Free Trade Association (EFTA) markets, which include Iceland, Liechtenstein, Norway, and Switzerland. Plug-in hybrids accounted for 8.7 percent, while traditional hybrids, including mild hybrids, which many critics don’t consider “true” hybrids, represented 35 percent.
Mercedes’ own performance mirrors the wider challenge. Battery electric vehicles (BEVs) comprised only 8.4 percent of the company’s global sales in the first half of 2025, a drop from 9.7 percent during the same period last year. Even when plug-in hybrids are included, electrified models made up just 20.1 percent of deliveries.
The 2035 Ban Under Review
The EU’s zero-emissions deadline is not set in stone. The legislation is due for review in the coming months, and Brussels has signaled it may reassess the plan sooner than expected. Earlier this year, the European Commission reaffirmed its commitment to the 2035 target but also promised to “accelerate work” on reviewing CO₂ standards for cars and vans.
Industry insiders suggest that the review could open the door for exceptions, such as allowing plug-in hybrids or even certain full hybrids beyond 2034. This possibility could provide breathing room for manufacturers and consumers alike.
High Stakes for Europe’s Auto Industry
For Mercedes-Benz and its peers, the stakes are enormous. The European automotive sector is not only a major employer but also a key pillar of the region’s economy. A misstep in the transition strategy, Källenius warns, could result in irreversible damage.
Whether EU policymakers will ease the timeline or stick to the current course remains to be seen. For now, the clash between climate targets and economic realities is set to intensify, and automakers are bracing for a turbulent road ahead.
