Combustion-engined cars will be allowed to remain on sale after 2035 in the European Union (EU) under major changes put forward by the bloc's top legislators.

The lifeline for car makers follows intensive lobbying from national governments and some of the industry’s biggest companies, including Volkswagen, Renault, Mercedes-Benz, BMW and Stellantis.

More lenient rules drawn up by the European Commission (EC) amend the total ban on new ICE cars that was due to come into force from 2035. The new rules will need formal approval from the European Parliament, however.

Under the proposals, total tailpipe CO2 emissions from that year must be reduced by 90%, rather than 100%, compared with 2021. The previous 100% level effectively banned the sales of non-EVs from 2035.

The EC said this will allow hybrid and pure-ICE vehicles to remain on sale past 2035. 

It noted, however, that the remaining 10% of the emissions reduction will now need to be offset by the use of biofuels, e-fuels and European-made low-carbon steel.

In what capacity these will be used or sold has yet to be detailed, but the proposals suggest that car makers that use 'green' steel to manufacture their cars will be given extra credits towards hitting their emission targets. 

Meanwhile, small electric cars built to new M1E regulations within the EU will be given "super credits" towards emissions targets to encourage manufacturers to produce them.

The EC noted that car makers missing targets will result in fines that could run into the billions.

Notably, its proposals don't include an end date for the sale of ICE vehicles, meaning they could continue to be sold indefinitely.

The proposals put an emphasis on setting stiffer emission targets for corporate vehicle fleets. EU member states will be required to set a target for a "specific share" of new corporate car and van registrations by large corporations to be zero-emissions by 2030. That specific share and the defintion of a large corporation have yet to be outlined, however.

The EC said this will boost EV uptake while making low- and zero-emission vehicles more available for private buyers who tend to do lower mileages.

These laws are expected to be quickly brought into law once they are presented to EU member states early next year.

EC president Ursula von der Leyen said: “Innovation, clean mobility, competitiveness: this year, these were top priorities in our intense dialogues with automotive sector, civil society organisations and stakeholders. And today we are addressing them all together. As technology rapidly transforms mobility and geopolitics reshapes global competition, Europe remains at the forefront of the global clean transition.” 

Stéphane Séjourné, the EC's executive vice-president for prosperity and industrial strategy, called the changes “a lifeline for the European automotive industry”. 

He added: “We are pulling every lever at our disposal: simplification, flexibility, European preference, targeted support and innovation. Together these measures are our commitment to restoring Europe’s industrial leadership while leading the global transition on climate.”

The UK operates its own zero-emission vehicle mandate, which requires an increasing percentage of a manufacturer's vehicle sales to be electric. There has been no indication that those rules, which would still ban the sale of ICE cars from 2035, will change, but the EU pushback is likely to up pressure on the UK government to do so.

The UK has a much higher EV adoption rate than the EU, albeit still below the government-mandated target (28% for 2025).