In an article published in the reputable magazine The Economist, Ola Källenius—CEO of Mercedes-Benz and President of ACEA (European Automobile Manufacturers’ Association)—calls for a revision of electrification plans in three key areas and warns that Europe must change course if it wants to be both environmentally friendly and globally competitive.
For the first time, Källenius, in his dual role as Mercedes CEO and ACEA President, raises a serious warning about forced electrification and its negative consequences.
Using both vivid and clear language, Källenius states:
“The European Green Deal was supposed to become Europe’s ‘man on the moon’ moment.”
The agreement is intended to turn Europe into a “climate-neutral continent by 2050”, but now, he says, “we must avoid getting lost in space.”
Källenius elaborates that the European auto industry has made massive financial efforts, launching hundreds of electric models and investing over €250 billion ($290 billion USD). However, the results fall short of expectations, as customers remain hesitant. Today, electric models account for only 15% of the market—far less than predicted a few years ago.
He notes that while EU CO₂ targets for 2025–2027 allow little flexibility, the broader economic climate has significantly worsened. Källenius warns that banning internal combustion engines could lead to the “Havana effect”—where customers who don’t want EVs simply keep their old, more polluting cars. He compares this to Cuba, where outdated Mercedes E-Class W123s still serve as taxis.
This scenario bodes poorly for the environment, especially considering the average age of a car in the EU is now 12 years—and rising under current legislation.
If people keep their old cars, it will negatively impact climate goals, employment, prosperity, and the entire automotive ecosystem, compounding problems for an already struggling industry.
Källenius further warns that over 40% of European automotive suppliers could become unprofitable by 2025.
Three Key Changes Needed
Källenius also proposes specific solutions, stating that the Green Deal must evolve from idealism to industrial and geopolitical realism, and he believes that corrections are needed in three main areas:
decarbonization, supply-chain resilience, and competitiveness.
He argues that CO₂ penalties for failing to meet targets are hindering economic growth, and these rules should be revised by the end of the year to reflect market flexibility and realities.
Electric mobility should remain a top priority, but not just through the development of new EVs—it must also include expanding the charging station network and reducing electricity prices.
At the same time, hybrid models, range extenders, highly efficient combustion engines, and synthetic fuels must continue to be allowed. China has shown that using multiple technologies in parallel can drive progress. Why shouldn’t Europe do the same?
Källenius declares that Europe’s decarbonization strategy has failed: only 2% of the EU vehicle fleet is electric, while 250 million combustion engine vehicles still run on European roads. Therefore, continued incentives for EV purchases and synthetic fuels are needed.
He also emphasizes the need to strengthen resilience. Asian companies dominate the battery and raw material markets, and it will take years for Europe to achieve battery supply chain independence. In the meantime, Europe must focus on diversifying supply chains and securing raw material access through global partnerships.
Finally, Källenius warns that Europe must brace for new economic barriers from the Trump administration. Regardless of the outcome of negotiations, the short term will bring greater difficulties.
He also calls for simplifying regulations, noting that more than 100 new laws are expected to be implemented in the coming years. A more realistic and streamlined set of measures is needed.
Källenius concludes that the next 12 months will be critical for Europe. Either the continent adapts to current realities, or the auto industry risks stagnating—suffocated by overregulation.
In other words, Källenius is calling for realism. He warns that if current rules and emission limits remain unchanged, the auto industry will face a stark choice: either pay massive penalties or scale back production, all while being squeezed by Chinese competition and U.S. import tariffs.