MUNICH, Germany — Europe’s automakers are walking a tightrope at this year’s Munich auto show: introducing cutting-edge EVs while pleading for leniency in transitioning from combustion engines.  

Mercedes-Benz unveiled the all-electric version of its best-selling GLC SUV, which is slated to go on sale next year. BMW is touting its new electric iX3 SUV. Both have ranges of more than 720 kilometers and fast recharging times.

They’re aimed at cutting off the Chinese EV-makers recording rapid gains in the European market.

“I’m convinced we’re on a journey towards zero emission, hence why we’re investing massively into state-of-the-art electric technology in cars,” Mercedes CEO Ola Källenius told reporters at the show. 

At the same time, car executives are begging the EU to have mercy on them over its rule banning the sale of new CO2-emitting cars from 2035.

Industry wants Brussels to show greater leniency by allowing hybrid vehicles and alternative fuels to ensure at least a limited future for the combustion engine. It’s getting strong backing on that from conservative politicians, including the European People’s Party in the European Parliament.

Executives will be making that argument on Friday when Commission President Ursula von der Leyen meets with the auto industry in yet another summit to figure out how to save the troubled sector.

The Commission needs to take a “more market-oriented approach” in the 2035 regulation, Källenius said.

The argument is not without merit.

Car sales in Europe are lower than they were before the pandemic. Chinese automakers have the best tech and batteries, and European brands continue to lose market share in China, which was once a cash cow for them. On top of that, U.S. President Donald Trump has unleashed a global trade war that is costing the sector billions even after Brussels struck a trade deal with Washington. 

Sales of electric vehicles are lower than expected, Källenius and his peers complain, and sticking to the emissions targets will make them less competitive.

Political maneuvering 

But those carmaker grumbles are far from sure to elicit any movement from the Commission, especially after von der Leyen broke her silence on the matter during her State of the European Union speech on Wednesday.

“No matter what, we all know the future will be electric, and Europe will be a part of it,” she said while announcing the launch of the EU’s Small Affordable Cars Initiative.  

The words were barely past her lips when MEPs erupted in a chorus of boos, particularly those in the EPP. 

Although carmakers and their political backers were aghast, climate campaigners saw hope.

“Von der Leyen’s clearest message today was that Europe’s future is electric,” Chris Heron, the secretary-general of E-Mobility Europe, said after the speech. “That’s a welcome sign the Commission wants to lock in investment certainty around the 2035 target.”

In a media briefing Thursday, the Commission refused to give further details on the EV effort, saying there would be more information after the Friday summit.

The industry was given a reprieve from this year’s tougher emissions targets following the last dialogue with von der Leyen, but the fate of the 2035 ban is a political discussion that will largely be determined by EU capitals.

“Instead of looking at what [carmakers] say, we have to look at what countries say much more than we did before,” said Jean-Philippe Hermine, a director with the IDDRI French think tank.

China in the wings

While EU carmakers lobby Brussels, their Chinese rivals are making headway in Europe despite the levy the bloc imposed on EV-makers as punishment for getting subsidies from Beijing.

China’s electric car market is the world’s largest, and BYD has overtaken Tesla as the world’s leading EV producer.

Chinese electric car producers were strutting their stuff in Munich, with brands including BYD, Changan, Xpeng and Leapmotor, which has a partnership with Italian-French-American automaker Stellantis, all displaying models.

They were also clear that the EU’s duties are not dissuading them from entering Europe, though the taxes are shifting the types of models they’re importing. 

Hybrids are not included in the duties, making them an attractive alternative to all-electric versions.  

In each of their media pitches, the Chinese brands said they were dedicated to being “in Europe, for Europe.”  

But for the most part, that means taking a model sold in China and tweaking the tech and components to abide by European regulations, rather than building models from the ground up with European audiences in mind, said Pedro Pacheco, an auto expert at consulting firm Gartner. 

The real test of whether Chinese carmakers see Europe as a viable long-term market is if they create products designed for Europeans.

That’s already starting to happen.

BYD has announced that the first model to roll off production lines at its Hungarian factory next year will be the Dolphin Surf, an electric station wagon — a nod to European consumer preferences, given that station wagons are not popular in other markets. 

“BYD is in Europe to stay,” said Stella Li, BYD’s executive vice president.