Electric vehicles have long been projected as the future of transportation. Governments promoted them, manufacturers invested heavily in them, and policy deadlines were drawn to accelerate the shift away from fossil fuels. However, economic realities are now slowing that momentum.
Europe offers a clear example. Two years ago, the European Union set a firm target: a complete ban on new petrol and diesel cars by 2035. The decision was a cornerstone of its Green Deal, aimed at achieving zero emissions by fully transitioning to electric vehicles. That certainty is now fading. Policymakers are considering easing the ban. Instead of reducing emissions to zero, automakers may be required to cut emissions by 90%, leaving room for a limited number of petrol and hybrid vehicles to remain on the roads after 2035.
This push to soften the policy is being led primarily by Germany and Italy, home to major automotive giants such as Volkswagen, BMW, Stellantis, and Renault. Their concerns are rooted in several practical challenges.
The first is consumer demand. Automakers argue that electric vehicles are not being adopted quickly enough, largely because they remain more expensive than petrol or diesel alternatives. For many buyers, affordability remains a barrier, making a complete and immediate ban difficult to implement.
The second challenge is competition from China. China dominates the global electric vehicle market, accounting for more than half of worldwide EV sales. Heavy state subsidies have allowed Chinese manufacturers to significantly lower production costs, making their vehicles far cheaper. European companies say they are unable to compete at those price levels.
The third concern is employment. The automotive sector is one of Europe’s largest sources of jobs. Governments fear that an aggressive transition could lead to factory closures and large-scale job losses, creating economic and political instability.
Europe’s hesitation reflects a broader global trend. Worldwide EV growth is slowing. In November, global electric vehicle sales increased by just 6%, the weakest growth rate since early 2024. Consumer preferences are also shifting. Recent surveys indicate that nearly half of global car buyers now plan to purchase petrol or diesel vehicles, while only 14% are considering fully electric cars.
Automakers are responding accordingly. Ford has announced a significant pullback from its electric vehicle strategy, absorbing losses nearing $20 billion. The company has acknowledged that its EV investments did not deliver expected returns, citing high manufacturing costs and weak demand for large electric models. Policy shifts in the United States, including reduced support for EVs under Donald Trump’s administration, have further reinforced this retreat. Ford is now refocusing on petrol and hybrid vehicles and has paused several high-profile EV projects.
This pattern extends beyond mass-market brands. Luxury manufacturers such as Porsche and Mercedes-Benz have also struggled to scale electric vehicle sales, despite catering to affluent customers.
Taken together, these developments do not signal the end of electric vehicles. Rather, they point to a slower, more expensive, and politically complex transition than originally envisioned. Electric cars may still represent the future of mobility, but the path toward that future is proving far longer and more challenging than promised.
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