The European Green Deal, launched in 2019, is an ecological pact that has been, unequivocally, an enemy of European taxpayers and innovation. Its declared goal is to achieve net-zero emissions by 2050 through a dense web of regulations that reach deep into every sector of the European economy. More than any other sector, the automotive industry is being put at risk of an irreversible crash.
Pressuring companies and citizens alike, the pact promotes the renunciation of capitalism, an inevitable sacrifice in the name of green policies. Such binding commitments will have severe economic consequences for a European Union increasingly weakened by its own laws and regulations.
At the heart of the Deal, by 2035, all new cars sold within the European Union are expected to be electric, imposing a total ban on combustion and engine vehicles. The problem is that this goal, far from being an environmental triumph, represents a deeply ideological political intrusion, an act of social engineering with an anti-capitalist character, disguised as green progress but detached from economic reality. The consequences are serious for the European automotive sector.
It is important to recall that this industry is one of the pillars of the European economy, representing over 7% of the EU’s GDP and around 13.8 million direct and indirect jobs.
Yet the sector now faces the prospect of mass layoffs, relocation of production, and a loss of global influence as a direct consequence of this heavy-handed Deal. Core EU countries such as Germany and Italy have already voiced resistance, warning of the economic and social consequences of a forced transition that ignores the continent’s technological and energy realities.
CEO of Mercedes-Benz, Ola Källenius, stated that the EU’s plan to eliminate combustion engines by 2035 would drive the sector “full speed into a wall.” His words, though strong, capture the growing sense of unease among Europe’s leading manufacturers.
The pressure is twofold. Internally, profit margins are shrinking as companies divert billions into forced electrification. Externally, they face fierce competition from China, with brands such as BYD and NIO, backed by an aggressive industrial policy, consolidated supply chains, and technological dominance in batteries. This combination allows Chinese manufacturers to produce at lower costs and scale faster.
Meanwhile, European brands struggle to survive between the high costs of transition and Asian price dumping, which has already led Brussels to impose additional tariffs of 30–40% on Chinese electric vehicles.
The interventionist posture of Brussels remains unchanged, failing to understand that regulation only breeds more regulation, and inevitably creates market distortions that harm both businesses and consumers.
Europe is imposing a single path on manufacturers—electric cars—while the automotive sector itself argues that it is possible to meet environmental goals through multiple technological solutions. Brands such as Mercedes, Porsche, Ferrari, and Stellantis maintain that the transition can and should be technologically neutral, allowing electric, hybrid, e-fuel, and hydrogen vehicles to compete on equal terms. The goal, they say, must be to reduce emissions, not to eliminate technologies for ideological reasons. Instead of encouraging innovation, Brussels dictates by decree what may exist and what must disappear, ignoring the knowledge and experience of those who actually build the industry.
Synthetic fuels, produced from green hydrogen and captured CO₂, are the clearest example of a more appealing alternative: they drastically reduce emissions without leading to the destruction of engines, factories, and jobs, demonstrating that true innovation arises from freedom of choice, not political imposition.
Consumers will also bear the consequences if manufacturers are forced into exclusive electric production. Production costs will rise, as batteries remain expensive components dependent on raw materials whose extraction is dominated by China. The massive investments needed for European factories to convert to electric production, combined with the short-termist tariffs imposed on Chinese producers, will only ever lead to higher prices for consumers.
Aware of the chaos it has created, the European Commission announced in March 2025 a “rescue plan” for the automotive industry, allocating €1.8 billion ($2.07 billion) for battery raw materials and €1 billion ($1.15 billion) by 2027 for innovation. Ironically, this means European taxpayers are paying to repair the damage caused by European policies. The same pact that suffocates the market with unrealistic targets and bureaucracy now presents itself as the savior of a crisis it has provoked.
Even among the Green Deal’s defenders, the incoherence of EU policy is increasingly evident. The Omnibus Simplification Package, presented in February 2025, reduced environmental and sustainability requirements in the name of “competitiveness.” Only a few months later, the approval of the EU–Mercosur trade agreement, which could increase deforestation by up to 25%, confirmed the contradiction of a bloc that preaches ecological virtue while sacrificing coherence in the name of trade.
The European Green Deal today mirrors the contradictions of the European Union itself: a project that presents itself as a symbol of progress but, in practice, represents an economic and civilizational regression. Beneath the rhetoric of the green transition lies a model of central planning that destroys jobs, raises consumer costs, and weakens European competitiveness.
Innovation does not emerge from decrees or subsidies, but from the freedom to create, to experiment, and to compete, precisely what Brussels has been restricting in the name of an increasingly dogmatic ecological virtue.
If Europe truly wishes to lead the energy transition, it must abandon political moralism and trust the intelligence and creativity of its businesses and citizens.
The post The EU’s Green Ideology Is Crashing Europe’s Car Industry was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.
