Europe’s ambitious plan to end the sale of carbon-emitting vehicles by 2035 could be the catalyst for a full revival of the continent’s automotive sector — but abandoning the target could cost the region 1 million jobs, according to a new study.
Published on Tuesday by Brussels-based campaign group Transport & Environment (T&E), the report outlines two sharply contrasting futures for Europe’s car industry. One scenario sees a surge in electric vehicle (EV) production and a return to peak manufacturing levels last seen after the 2008 financial crisis. The other — a regression from the zero-emission goal — could result in catastrophic job losses and the collapse of crucial battery investments.
“If Europe sticks to its 2035 phase-out of polluting cars and backs it with an industrial policy to support electric vehicle production, the sector could bounce back to making 16.8 million cars annually — matching its pre-crisis high,” said Julia Poliscanova, Senior Director for Vehicles & E-mobility Supply Chains at T&E.
But should the EU falter in the face of political or economic pressure, T&E warned the consequences could be severe: the loss of 1 million jobs across the automotive supply chain and two-thirds of the continent’s planned battery investments.
The European car industry has long been a cornerstone of the region’s economy, providing millions of direct and indirect jobs. Yet in recent years, the sector has come under strain from rising domestic costs, global supply chain issues, and intensifying competition from the US and China — particularly in the EV segment.
Compounding these challenges is US President Donald Trump’s 25% tariff on car imports, which has prompted several manufacturers to withdraw or revise their production forecasts for 2025. The uncertainty has only heightened concerns around the future viability of Europe’s auto industry, especially if the EU wavers on its climate goals.
In May, the European Parliament approved some softening of CO₂ emission targets following significant industry lobbying. However, it has not yet reversed the central regulation: the ban on sales of new fossil-fuel cars and vans from 2035 remains intact.
According to T&E’s analysis, staying the course on this legislation and coupling it with proactive policies — such as incentives for domestic EV manufacturing, support for charging infrastructure, and robust battery supply chains — could increase the value chain’s contribution to the European economy by 11% by 2035.
Although fears around job displacement in traditional vehicle manufacturing persist, T&E argues that the shift to clean mobility could bring a net employment gain — provided the transition is well-managed.
The study projects that over 100,000 jobs in battery production could be created by 2030, alongside 120,000 jobs in charging infrastructure by 2035. These new roles would not only compensate for the expected reduction in combustion engine-related work but also add to the continent’s long-term industrial strength.
“This is a make-or-break moment for Europe’s automotive industry,” said Poliscanova. “The global competition to dominate electric mobility — from EVs to batteries and chargers — is fierce. Europe must act decisively or risk falling irreversibly behind.”
In contrast, T&E’s worst-case scenario — one in which the 2035 target is weakened or scrapped and no industrial policy is introduced — could see the sector’s contribution to Europe’s economy shrink by €90 billion (£76.5 billion) by 2035. That’s roughly $105.5 billion USD in lost value, alongside severe labour market disruption.
