For years, even when electric-vehicle sales weren’t consistently on a straight upward trajectory, the global auto industry was steered toward battery power by one overriding factor: the European Union’s planned 2035 ban on new internal-combustion vehicles.
But that’s all reportedly about to go out the window. This week, EU officials, under immense pressure from the auto industry, are expected to unveil a new set of standards that take the gas-car ban off the table. Is this a moment of relief for the car business, or a chance to double down on 20th-century technology while rivals from China only get faster and better?
Welcome back to Critical Materials, our morning roundup of industry and technology news. Also on deck today: Ditching tougher fuel-economy rules in America won’t save any real money, according to a new analysis, and BYD sets its sights on the luxury market. And if you like what you see here, subscribe to get it in your inbox every weekday morning.
25%: What Happens If The EU Backs Off The Gas-Car Ban
2026 BMW iX3
Photo by: BMW
EU regulators have sought to end internal-combustion new cars on the continent as part of an ambitious effort to fight climate change. But automakers have long complained that switching to battery-powered and software-driven cars before buyers were “ready” would effectively destroy the continent’s most important manufacturing sector.
No country beat this drum louder than Germany, home to Europe’s largest auto industry, and German Chancellor Friedrich Merz last week called the move a win: “We need to correct the conditions in Europe as quickly as possible so that this industry in Europe has a future,” he said at a press briefing.
But what kind of future? Europe’s problem is that China’s automakers aren’t just beating down its door, but have already moved into some of the rooms and invited their friends. Chinese brands—typically with EVs and hybrids—are stealing sales from local automakers, and increasingly setting up European factories as well.
So one expert who spoke to Bloomberg asked: if a change in regulations allows European automakers to double down on ICE, what guarantee exists that they’ll have the technology to compete with China?
While the breathing room might be welcome for an industry that accounts for about €1 trillion ($1.2 trillion) of economic output, it also harbors risks. Too much flexibility threatens to slow development and increase the technology gap with Tesla Inc. and Chinese rivals such as BYD Co. That could result in the EU becoming a bastion for yesterday’s technology and doing little to bolster the sector’s flagging competitiveness.
“What’s happening now is a wake up call for the industry,” said Jos Delbeke, professor at the European University Institute in Florence and a former senior EU climate official. “Some flexibility may be needed for all good reasons, but it should be temporary; otherwise we will risk missing the climate targets and losing the technology race.”
There are some upsides to the EU’s change of plans, Bloomberg reports. Incentives will be expanded, especially for small cars made in the region. And the automakers could be on the hook for a 90% reduction in CO2 emissions for their fleets from 2035 onward—still a steep and ambitious target.
But if automakers got regulators to blink once, they may be able to do it again. And that’s bad news for the climate, for technological competitiveness, and ultimately for jobs as well.
50%: America’s Looser Fuel Economy Rules Probably Won’t Save Us Money
Gas Prices
When it comes to going back to gasoline, America has looked at the rest of the world and said, “Hold my beer.” Not only has the Trump administration axed EV tax credits and Biden-era rules driving a more electric market, it recently announced a cut to fuel economy standards—ostensibly, to make new cars cheaper.
But an Automotive News analysis shows that even if new car prices go down by a whopping $900 or so, as the White House has predicted, whatever savings drivers get will be erased by paying more at the pump:
But if the proposal becomes official, companies will ditch fuel-saving technologies and consumers will pay at least $187 more over the lifetime of the vehicle, even with the expected price savings upfront, according to an appendix to NHTSA’s proposal.
The net cost of passenger car and light truck ownership will increase by between $187 and $506 over the vehicle lifetime, driven by a total increase in fuel costs of $1,112 to $1,431 for the 2031 model year, NHTSA said.
When asked about the net losses for individual consumers, a NHTSA spokesperson, Sean Rushton, said the agency’s analysis “does not factor in how the Trump Administration has already saved the American people millions at the pump by unleashing domestic oil production to record highs” and that the Biden administration “jacked up car prices with their illegal EV mandate and anti-energy agenda.”
The NHTSA calculus assumes fuel prices will “generally remain around” $3 to $3.20 per gallon through 2050. It also figures prices will dip below $3 per gallon in 2028.
The Trump administration has blamed the strain of fuel economy regulations and the push to EVs for soaring new-car prices. But as that Automotive News story notes, even federal regulators can’t completely back up that idea. That story is worth a read in full.
75%: BYD Is Moving On Up, Because It Has To
Fangchengbao Bao 5
Chinese automaker BYD has proven this year that it’s going to be a force to be reckoned with in the auto industry for a long time. But even it’s got some growing pains. Its sales are slowing down, primarily at home in China, where competition is fierce and the market is cooling off after years of unprecedented growth.
So if you can’t win on volume, you win on profit margins. That’s why BYD is betting big on its two new upmarket brands: Denza and Fangchengbao. The former is a kind of high-performance Porsche competitor (not to be confused with BYD’s Yangwang, which is doing similar stuff) and the other is an off-road-focused luxury competitor to Land Rover. Here’s more from Nikkei Asia:
The off-road-oriented Fangchengbao began delivering vehicles to customers in November 2023 and plans to expand its lineup to include a sedan in 2026. BYD positions it as an unconventional brand, appealing to a niche not covered by the company’s mass-market autos like the Ocean and Dynasty series.
The Bao series of plug-in hybrid off-road vehicles tout high performance even on rough terrain. The Tai series, designed for both off-road and urban driving, debuted this year.
The Tai 7 is a plug-in hybrid, like the Bao 5, and comparable in size. The model has less power and acceleration than the Bao 5, and its exterior design is simple and geared toward city driving. But its price starts at 179,800 yuan ($25,500), 60,000 yuan cheaper than the Bao 5.
The Tai 7 sold about 20,000 units in October, helping lift Fangchengbao’s sales that month to 31,052 vehicles, a roughly 400% year-on-year increase. The Tai 7 became Fangchengbao’s biggest hit to date.
“We currently have a six- to eight-week waiting period for delivery, so we’re going to increase production capacity to meet demand,” Xiong Tianbo, Fangchengbao’s general manager, told Chinese media.
It may just work. BYD is a smart company when it comes to product planning, branching out into electric kei cars in Japan and plug-in hybrid estate wagons in Europe. It has a penchant for figuring out what buyers want. Now, will they bite outside of China?
100%: If You Drive An EV, Would You Go Back To Gas?
2025 Kia EV6
Photo by: Patrick George
Look, I wouldn’t exactly kick and scream if you dropped a vintage Porsche 911 into my garage tomorrow.
But beyond that, I’ve been driving and testing EVs long enough that I have zero interest in buying a new gas car ever again. I’m pretty much done and happy with that. What about you? Are any of these regulatory moves enough to entice you back to a gas car, or are you staying flexible? Let us know in the comments.
Contact the author: patrick.george@insideevs.com
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