The automotive industry is advancing toward electrification at a pace that many countries are still unable to match. Manufacturers are already producing electric vehicles, plug-in hybrids, and extended-range models for increasingly broader markets, yet the electrical grids, available generation, and charging infrastructure do not always grow at the same rate.
The International Energy Agency forecasts that global electricity demand will increase by about 40% by 2035. The growth will come from electric mobility, but also from data centers, industry, electric heating, and other activities competing for the same generation capacity and grid.
The issue, therefore, is not just about producing electric vehicles. It’s also necessary to generate the required electricity, transport it, distribute it, and make it available to users at the right time. Building a car factory may take a few years; expanding an electrical grid, installing transformers, constructing new power plants, and deploying charging infrastructure takes more time.
China is adapting its strategy to this reality. In its domestic market, it strongly promotes electric vehicles, but it continues to develop more efficient combustion engines for hybrids, extended-range vehicles, and markets where full electrification will take longer to arrive.
This is not about choosing between electricity and gasoline. It is about preserving both technologies and deciding in each market which may have more potential.
Europe seeks room for transition
The European Union has made the reduction of average CO₂ emissions from new vehicles to zero by 2035 one of the main objectives of its climate policy. The measure does not prohibit the use of existing combustion vehicles nor does it prevent the use of an internal combustion engine car until the end of its life cycle. Its effect focuses on new vehicles registered after that date.
In December 2025, the European Commission proposed to revise this approach. Its proposal maintains the overall climate requirement but reduces the target for exhaust emissions from 100% to 90% and allows the remaining 10% to be compensated with low-emission steel produced in Europe, biofuels, and synthetic fuels.
If the proposal moves forward, some plug-in hybrids, extended-range vehicles, and other solutions with internal combustion engines could retain a limited space in the European market after 2035. However, the reform does not yet equate to a definitive policy. Current legislation retains the 100% target, and the change remains subject to negotiation among European institutions.
The revision responds to several factors. European manufacturers are requesting more time to adapt their factories and supply chains, while sales of electric vehicles are evolving unevenly across countries and segments. Competition from Chinese manufacturers has also increased pressure on an industry facing high energy costs, a complex technological transition, and a significant dependency on Asian suppliers.
Europe is not abandoning electrification. It is trying to gain leeway to implement it without losing industrial capacity along the way.
China electrifies its market
China has followed a less linear policy. The country has vigorously promoted new energy vehicles, a category that includes pure electric vehicles, plug-in hybrids, and extended-range electric models.
By May 2026, pure combustion vehicles had disappeared from the list of the top ten best-selling cars in the country, and the share of new energy vehicles was around 63%. Data from June confirmed this trend: NEVs accounted for 58.5% of total sales, according to figures released by the China Association of Automobile Manufacturers.
It is, therefore, incorrect to describe China as a country resisting electrification. Its domestic market is advancing toward electric cars more rapidly than Europe’s.
What China is doing is preserving other options for the rest of the world.
