Fwd: EU scraps combustion engine ban

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Loretta Lohman

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Dec 16, 2025, 10:22:07 AM (13 days ago) Dec 16

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The European Union is planning to ditch a controversial ban on combustion engine cars starting in 2035 after months of debate and pressure from the automotive industry.

Today’s newsletter brings you exclusive information from our reporters in Brussels, who were told by people familiar with the plan that the EU will today propose softening emissions rules for new cars. Meanwhile, Ford plans a $19.5 billion overhaul of its EV business that will include ending production of the F-150 Lightning.

In other news, BlackRock has lost a $5.9 billion mandate from a Dutch pension fund due to its lack of a “clear commitment” to ensuring climate is part of its investing agenda.

And don’t miss our dispatch from Indonesia, where rice fields nearly ready to harvest are under mud, electricity is out and towns are clogged with downed trees following a deadly storm.

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EU relaxes car rules

By John Ainger, Ewa Krukowska, and Alberto Nardelli

The European Union is planning a softening of emissions rules for new cars, scrapping an effective ban on combustion engines following months of pressure from the automotive industry.

The proposal will allow carmakers to slow the rollout of electric vehicles in Europe and aligns the region more closely with the US where President Donald Trump is tearing up efficiency standards for cars put in place by the previous administration.

The European stepback — to be unveiled later today — follows a global pullback from green policies as economic realities of major transformations set in. Mounting trade tensions with the US and China are pushing Europe to further prioritize shoring up its own industry. Although the bloc is legally bound to reach climate neutrality by 2050, governments and companies are intensifying calls for more flexibility, warning that rigid targets could jeopardize economic stability.

https://www.bloomberg.com/news/articles/2025-12-16/eu-to-abandon-combustion-engine-ban-in-win-for-carmakers?sref=FUtuEW8l

Employees at a Stellantis auto manufacturing plant in France Photographer: Nathan Laine/Bloomberg

Under the new proposal, the European Commission will lower the requirements that would have halted sales of new gasoline and diesel-fueled cars starting in 2035, instead allowing a number of plug-in hybrids and electric vehicles with fuel-powered range extenders, according to people with knowledge of the matter.

“It is a geopolitical moment and a complicated context,” said Sara Aagesen, Spain’s minister for the ecological transition. “The Commission itself has already introduced flexibilities in the past.”

Tailpipe emissions will have to be reduced by 90% by the middle of the next decade compared with the current goal of a 100% reduction, said the people, who asked not to be identified because talks on the proposal are private. The commission will set a condition that carmakers need to compensate for the additional pollution by using low-carbon or renewable fuels or locally produced green steel.

“We believe that we must continue with that roadmap that was drawn up with the goal of ending the commercialization of combustion vehicles in 2035,” said Aagesen, who has publicly defended the ban in the past. “It is important to meet the commitments that have been defined in order to provide stability to investors and also to citizens.”

The European Commission declined to comment on the proposals. But the plan is set to be adopted by EU commissioners later today and will then be discussed by the European Parliament and by member states in the EU Council. Each institution has the right to propose their own amendments and the final shape of the measure will be negotiated in the so-called trilogue talks, which will involve the parliament, the council and the commission.

With automakers now gaining more time to go fully electric, environmental groups are concerned the changes create new loopholes that undermine Europe’s climate ambition and leave key car manufacturers further behind China in the race to battery-powered road transport.

China’s car market has continued its rapid electrification and foreign brands are being muscled aside in the world’s biggest car market which was once a major source of profits for Western automakers. Even in their home countries, European carmakers are facing a growing competitive threat from Chinese brands. New import tariffs thrown up by the EU offer them only limited protection.

The electric-car race has become global. A third of the 39 countries reaching more than 10% of electric vehicles sold in 2025 are outside of Europe, according to energy think tank Ember. India, Mexico and Brazil have a higher share of electric vehicle sales than Japan, while electric vehicle penetration in Indonesia overtook the US this year. Globally, electric cars made up over a quarter of new car sales in 2025, up from less than 3% in 2019.

Still, the prospect of an EU ban on combustion engine cars in 2035 prompted intense lobbying from Stellantis NV, Mercedes-Benz Group AG and others. Germany, home to Mercedes, Volkswagen AG and BMW AG, also pushed for changes to ease political tensions and protect jobs.

Globally, automakers are struggling to make the shift profitable with Ford Motor Co. announcing it will take $19.5 billion in charges tied to a sweeping overhaul of its EV business.

A Ford F-150 Lightning Platinum electric pickup truck Photographer: Andrej Ivanov/Bloomberg

The majority of the charges will come in the fourth quarter, Ford said yesterday in a statement. As part of the strategic shift, the automaker is canceling a planned electric F-Series truck, shifting production toward gas and hybrid vehicles and repurposing an EV battery plant.

Ford will also convert its signature electric F-150 Lightning pickup into an extended-range hybrid vehicle.

With assistance from Keith Naughton, Gabrielle Coppola, Daniel Basteiro and Alastair Marsh

Read the full story on the EU’s bid to soften emissions requirements for new cars, and on Ford’s plans to revamp its lineup and subscribe for unlimited access to the latest developments in the electric vehicle industry.

EV roll back

1.45 million

New electric vehicles registered in the EU in 2024, compared to 1.54 million in 2023. EV sales have slowed down as governments roll back incentives

The race is still on

“We must ensure that green fleets reach companies, that smaller vehicles are accessible and offered at democratic prices for all citizens.”

Sara Aagesen

Spain’s minister for the ecological transition

BlackRock loses its mandate

By Frances Schwartzkopff

PME, a Dutch pension fund overseeing about $70 billion, has severed ties with BlackRock Inc. based on an assessment that the world’s largest money manager no longer acts in its best interests on issues such as climate risk.

The decision means that BlackRock will no longer oversee a €5 billion ($5.9 billion) equity mandate, PME said by email. Instead, the portfolio is being transferred to UBS Group AG and MN, an investment manager based in The Hague, PME said.

BlackRock headquarters in New York. Photographer: Bing Guan/Bloomberg

As part of an ongoing review that includes other asset classes, “we decided to end our relationship with BlackRock,” PME said. Though the New York-based money manager has provided many years of “high-quality services,” including money market fund management, it’s no longer seen as a firm that can act in ways that “best align with our vision,” the pension fund said.

PME, which looks after the savings of people employed in the metals and technology sector, had made clear earlier this year that it was reviewing its relationship with BlackRock after the asset manager quit a key net zero coalition. Daan Spaargaren, PME’s senior strategist for responsible investing, told Bloomberg in May the goal was to work with partners that can stand up to the anti-climate and anti-judiciary agenda that PME worries is being promoted by the Trump administration.

A spokesperson for BlackRock said the asset manager is “grateful” to have been able to provide investment services to PME for more than a decade, noting that it continues to manage more than €350 billion for other Dutch clients.

Read the full story on Bloomberg.com and subscribe to Green Daily for more free reads on how large money managers are dealing with clients’ climate mandates.

‘The city was gone’

By Chandra Asmara

By the time the floodwaters swallowed the ground floor of Muda Sedia hospital in Karang Baru, the building had become an island in a torrent of brown water and the power was failing. When the electricity finally cut out, a baby on oxygen support upstairs died.

As a rare cyclone-driven storm tore across northern Sumatra late last month, hospital director Andika Putra had moved patients to the second floor in this town at the edge of Indonesia’s northernmost province. Fast-moving currents isolated the compound, trapping patients, staff and neighbors for days. Nine others perished.

“This scale of flooding has never happened before in the hospital’s history,” he said, standing outside the building in a light rain. Behind him, the waters had left broken medical equipment and a thick layer of mud spread across the waiting room floor.

Uprooted trees in the aftermath of flash floods in Northern Sumatra. Photographer: Aditya Aji/AFP

More than a million people were displaced by some of the worst flooding in Indonesia’s modern history. Over 1,000 are dead. Houses, more than a hundred bridges and in some cases, entire communities, were washed away in landslides across an area half the size of California. Come nightfall, much of northern Sumatra remains in darkness, with scores of villages still cut off.

The disaster has become a test of Indonesia’s climate resilience and development model, exposing how logging has reshaped floodplains that are home to tens of millions of people. Sumatra is a major hub for palm oil, mining, timber and oil and gas, industries that generate tens of billions of dollars in exports a year and depend on now damaged roads, bridges and ports.

Read the full story to find out how deforestation drove floods.

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