BMW CEO Oliver Zipse says EU combustion-engine ban 'no longer realistic'

Europe’s plan to effectively ban the sale of combustion-engine cars from 2035 will lead to a “massive shrinking” of its automotive industry, according to BMW AG Chief Executive Officer Oliver Zipse.

Dialing up warnings that the continent isn’t ready to ditch gasoline and diesel engines, Zipse said Tuesday at the Paris Automotive Summit that the European Union’s plans “are no longer realistic” and that subsidies for electric vehicles are “unsustainable.”

The combustion engine has long been a cornerstone of Europe’s industrial landscape, playing a vital role in its manufacturing prowess. The technology not only gave rise to BMW, Volkswagen AG and Mercedes-Benz Group AG, but also led to a vast supply chain of small and medium-sized enterprises that produce critical components, from pistons to exhaust systems.

That industry is at risk, especially as carmakers shift to electric models that require fewer and different inputs. The shift is proving a challenge for Europe’s auto industry, which has struggled to cope with the removal of government subsidies and intensifying competition from Chinese EV makers like BYD Co.

The ban “could also threaten the European automotive industry in its heart,” Zipse said. The measures will “with today’s assumptions, lead to a massive shrinking of the industry as a whole.”

Automakers also have near-term obligations to worry about, with Brussels tightening fleet-emissions targets next year. If manufacturers fail to sell more EVs, they’ll be on the hook for as much as €15 billion ($16.4 billion) in fines.

BMW and Mercedes are on track to meet the stricter targets, with Volkswagen, Stellantis NV and Renault SA at risk of falling short, according to a recent Bloomberg Intelligence analysis. Companies can buy emissions credits from over-compliant manufacturers such as Tesla Inc. to avoid fines.

Stellantis won’t buy credits, CEO Carlos Tavares said Tuesday at the same summit in Paris. “We will comply with regulation everywhere,” he said.