Mercedes CEO Warns Europe’s EV Strategy Faces Critical Challenges

Mercedes-Benz CEO Ola Källenius prepares to unveil the brand’s latest electric SUV, a symbol of its future. Yet, simultaneously, he delivers a stark warning: the European Union’s plan to ban new combustion engine cars by 2035 risks driving the continent’s auto industry “full speed into the wall.”

Källenius Calls for EU Combustion Ban “Reality Check”

In a candid interview with Germany’s Handelsblatt newspaper published August 12, 2025, Källenius urged EU lawmakers to abandon the hard 2035 deadline. “We need to do a reality check,” the Mercedes chief and newly appointed president of the European Automobile Manufacturers’ Association (ACEA) stated bluntly. His core concern is economic stability. Källenius fears the impending ban will trigger a consumer rush to buy the last petrol and diesel cars before 2035, followed by a potential market collapse if buyers remain hesitant about electric vehicles (EVs) when the mandate takes full effect.

“Of course, we have to decarbonize,” Källenius acknowledged, emphasizing Mercedes’s own multi-billion euro investment in EVs. “But it has to be done in a technology-neutral way. We mustn’t lose sight of our economy.” He criticized the “draconian penalties” associated with the ban, arguing they create unnecessary risk. “I wouldn’t set a specific date for the phase-out of combustion engine technology. An absolute target at a fixed time won’t help.” His stance echoes previous warnings from BMW CEO Oliver Zipse, who in 2024 called the 2035 target “unrealistic” and warned of increased reliance on Chinese batteries.

Advocating Incentives Over Mandates for EV Transition

Instead of a ban, Källenius champions a strategy focused on persuasion and infrastructure, pointing to China’s approach as a model. “Look at China. There, there’s no end date on this issue, no ban on any technology,” he observed. “Instead, low prices at charging stations and tax breaks provide strong incentives to buy all-electric cars.” He argues this method, allowing hybrids and efficient combustion engines alongside EVs, fosters organic market transition without economic shock.

Källenius outlined key pillars for a successful European shift:

• Massive Charging Infrastructure Rollout: Ensuring convenient, reliable, and fast charging is ubiquitous.
• Affordable Electricity: Making the cost of charging significantly cheaper than petrol or diesel.
• Targeted Tax Incentives: Implementing substantial purchase and ownership tax benefits for EVs to offset higher initial costs.
• Technology Neutrality: Allowing all viable low-emission solutions, including advanced hybrids and synthetic fuels (e-fuels), to compete and meet climate goals.

Mercedes-Benz is actively investing in charging solutions, exemplified by its own network of premium charging hubs, demonstrating commitment to improving the EV ownership experience. However, Källenius stresses that consumer adoption must be driven by genuine appeal and practicality, not solely by regulatory force. The EU Commission maintains the 2035 ban is essential for achieving its legally binding climate neutrality target by 2050, though it includes a review clause in 2026 to assess progress towards zero-emission goals.

The debate over Europe’s path to automotive decarbonization has reached a critical juncture. Källenius’s powerful intervention, amplified by his ACEA presidency, signals deep industry concern that the current regulatory path risks severe economic disruption without guaranteeing faster environmental gains. As the 2035 deadline approaches, pressure mounts on the EU to balance ambitious climate action with the realities of technological readiness, infrastructure gaps, and consumer acceptance. The choice between mandates and incentives will define Europe’s automotive future and its economic resilience. Industry leaders urge policymakers to prioritize pragmatic solutions that empower consumers and safeguard jobs over rigid deadlines.

Brent Rivera: The Social Media Kingpin of Comedy and Relatable Content

---

Must Know

Q: What is the EU’s 2035 combustion engine ban?
A: The European Union has passed legislation effectively banning the sale of new cars emitting CO2 from the tailpipe from 2035 onwards. This primarily targets petrol and diesel internal combustion engine (ICE) vehicles, pushing automakers to sell only fully electric or hydrogen fuel cell vehicles.

Q: Why does Mercedes CEO Ola Källenius oppose the 2035 ban?
A: Källenius fears the hard deadline could destabilize Europe’s auto industry and economy. He predicts consumers will panic-buy ICE cars just before the ban, leading to a potential market crash afterwards if EV adoption hasn’t organically reached critical mass. He advocates for incentives and infrastructure investment instead.

Q: What alternative to the combustion ban does Källenius propose?
A: He proposes a technology-neutral approach focused on strong incentives: building a vast, reliable charging network, ensuring cheap electricity for EVs, and offering significant tax breaks. He points to China’s model, which uses incentives without an outright ICE ban, allowing hybrids alongside EVs.

Q: Is Källenius against electric vehicles?
A: No. Mercedes-Benz is investing heavily in EVs, and Källenius emphasizes the need for decarbonization. His objection is to the mandate and the economic risk of a hard cut-off date, not the transition itself. He believes incentives will lead to more sustainable, consumer-driven adoption.

Q: Are other automakers critical of the EU’s 2035 ICE ban?
A: Yes. BMW CEO Oliver Zipse previously called the 2035 target “unrealistic,” expressing concerns about battery supply chains and reliance on China. Källenius’s position as ACEA president suggests his views reflect significant industry unease.

Q: Could the EU 2035 combustion engine ban actually be scrapped?
A: While fully scrapped is uncertain, Källenius’s call adds weight to growing pressure for revision. The legislation includes a review clause in 2026. Industry lobbying, economic arguments, and potential shifts in the political landscape could lead to modifications, such as allowing e-fuels or adjusting the timeline based on infrastructure progress