Mercedes-Benz Chief Executive Ola Kaellenius warned that the specific terms of the European Union’s softened electrification targets risk undoing the environmental gains the measures aim to secure. His remarks came in Stuttgart ahead of the unveiling of the carmaker’s redesigned S-class series, an effort Mercedes says will help it recover after a challenging 2025.
In December, the European Commission published a package of proposals that effectively reverses what had become a de facto prohibition on sales of new internal combustion engine vehicles from 2035. Kaellenius said the change amounts to opening the door - albeit slightly - but cautioned that how the rules are written will determine whether the shift achieves its stated objectives.
Under the proposals, manufacturers could continue selling plug-in hybrid vehicles and models equipped with range extenders past the initial 2035 cutoff. In addition, companies would be able to address any shortfall in required CO2 reductions by relying on alternatives such as lower-carbon steel and the adoption of more sustainable fuels.
The Commission’s plan still needs approval from EU member states. It also includes provisions for binding electrification targets that would apply to corporate vehicle fleets, with those targets calibrated according to GDP per capita. Kaellenius, who also serves as president of the ACEA European automotive association, cautioned that these mixed measures carry risks for market dynamics.
"The door has been opened slightly for now," he said in Stuttgart. Kaellenius added a further warning about the market trajectory, stating: "There is a great risk that the market will shrink on the way there."
The comments highlight tensions between regulatory flexibility and the ambition of emissions policy. They underscore industry concerns about whether permissive provisions - such as extended sales of plug-in hybrids, use of low-carbon materials, and sustainable fuels as compliance tools - will deliver the same degree of CO2 reduction as a stricter prohibition on internal combustion vehicle sales.
With the proposals pending member state approval, the final shape of the rules and their practical effects on automakers, corporate fleets, and material supply chains remain subject to the negotiating process in Brussels and national capitals.