Retreating from EVs could be hazardous for Western carmakers
Governments are tempting a shift back to petrol ( from the Economist)
Summary
Smoke blows out of the exhaust pipe on a car
photograph: getty images
Dec 17th 2025
|
4 min read
Listen to this story
Safe motoring requires adjusting your speed to suit road conditions. Western carmakers know this well. Their customers are not embracing electric vehicles (evs) as fast as once anticipated, and governments in America and Europe are pulling back on efforts to speed up the transition. On December 16th the eu dropped an earlier ban on the sale of petrol cars from 2035. The day before, Ford announced it would write down the value of its assets by $19.5bn, as it rethinks its ev strategy. But hitting the brakes on the transition away from petrol engines could also be dangerous for Western carmakers.
The eu’s commitment to speedily end petrol’s dominance of the road was always ambitious. But when unveiled in 2022, it did not seem far-fetched. One reason is that legacy carmakers, bewitched by the frothy valuation of all-electric Tesla, made big promises to investors in the hope that some of that magic might rub off on them. Volkswagen said that 70% of its European sales would be electric by 2030, and later increased this to 80%; for Stellantis (whose biggest shareholder, Exor, part-owns The Economist’s parent company) the figure was to be 100%. America’s General Motors looked conservative with its 2035 deadline for a complete transition to battery power.
But the route to electrification has been bumpy. This year only around one in five cars sold in Europe will be purely battery-powered. Growth is far from the trajectory needed to eliminate petrol cars by 2035. High upfront costs, a lack of smaller models, fears over insufficient charging infrastructure and toing-and-froing by governments over purchase subsidies have all weighed on demand for evs.
Under pressure from carmakers and the governments of Germany and Italy, the eu is cutting the industry some slack. Rather than a u-turn, which some expected, the eu has opted for what ubs, a bank, describes as “moderate adjustments”. Instead of an outright ban, the estimated emissions from the new cars each company sells will have to be cut by 90% from 2021 levels by 2035. The remainder will have to be compensated for by measures including the greater use of European “green” steel.
Although the eu insists its new strategy “maintains a strong market signal for zero-emission vehicles”, sales of petrol and hybrid cars will continue as a result; according to Transport & Environment, a think-tank in Brussels, a quarter of the cars sold in 2035 could include some form of fossil-fuel power following the changes. The new measures, which still have to be ratified by the eu’s parliament and member states, also include changes to interim targets and the rules for commercial vehicles.
Over in America, where pure electrics account for fewer than a tenth of car sales, the transition has now stalled altogether. President Donald Trump’s preference for gas-guzzlers has led to a rolling back of incentives and other measures that supported evs. Ford has realigned its plans in response. Most notably, it is ending sales of the all-electric version of its f-150 pickup, replacing it with a model with a small petrol engine that recharges the battery when needed, though it is pressing ahead on a lighter electric pickup set to hit the road in 2027 and recently signed a deal with Renault to develop small and cheap evs for the European market.
Reversing on evs could be risky for Western carmakers. According to Schmidt Automotive Research, a consultancy, Chinese brands controlled 10.7% of the market for all-electric cars in western Europe in the first ten months of the year, a percentage point higher than a year before, despite the eu’s imposition of additional tariffs on evs imported from the country in October 2024. Sales of Chinese hybrids, which are not subject to the new tariffs, have surged. Western carmakers are also coming up against fast-growing Chinese ev brands elsewhere in the world.
Eventually evs will become the cheaper option for customers, as production expands and costs fall. Western carmakers must therefore perform a tricky balancing act, profiting now from petrol cars while investing enough to stay competitive in evs. Those that slow down risk giving their competitors an unassailable lead. ■
To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our