The European Commission was able to reach a new compromise with member states that would maintain its 2035 new ICE vehicle ban, while introducing some new changes to its Fit for 55 plan.
After documents obtained by Reuters last week indicated that five EU member states would oppose the 2035 new ICE vehicle ban, many were worried that the proposal would stall in the Commission. However, with Italy moving to drop a request to postpone the ban by five years, the plan stands, though significant changes were implemented in order to appease both sides of the debate.
According to Automotive News Europe’s contact with European leaders, there will be many caveats introduced to the new proposal that will head to negotiations between the European Commission and the EU Parliament:
- First and most prominently, the 2035 new ICE vehicle ban will remain. However, smaller manufacturers will receive an undisclosed extension to stop selling ICE vehicles.
- Germany’s proposal of allowing new ICE vehicles that burn carbon-neutral fuels past 2035 will be included in the new proposal.
- The governments also agreed that the “European Emissions Trading System” will remain in place and will continue to pursue ever-lower carbon emissions (this is the system that allows the sale and trade of carbon credits/permits). However, the carbon credit market that will regulate the emission of heating and road transport fuel will be delayed for an unknown amount of time. A “Climate Fund” will also be established to help households pay for this new carbon credit program.
- The carbon market will be reformed with multiple changes. Most notably, the allowable carbon emissions will be reduced by 61%.
- In order to limit future carbon credit price variability, a mechanism will be put in place that would release 75 million new carbon credits into the market if the average sale price of credits goes higher than 2.5 times the average of the price from two preceding years. Lawmakers also hope this will limit market speculation.
- The Commission also decided to cut the “Social Climate Fund” from 72 billion euros to 59 billion euros. This fund is dedicated to helping households afford many carbon-reducing products, including new efficient heating and cooling systems, personal renewable energy systems, reduced emission mobility products (including electric vehicles), and more.
Overall, representatives seemed happy with the changes made. Many who opposed the postponement of the new ICE vehicle ban celebrated that it was kept in the proposal, while those who initially proposed the postponement noted that the extension given to smaller manufacturers was necessary.
Many from both sides, as well as manufacturing groups, maintained that the development of infrastructure is still very much needed and that Europe must dedicate itself to becoming more resource independent in terms of materials used in electric vehicles and other carbon-reducing technologies.
Many auto manufacturers have already backed the 2035 new ICE vehicle ban, including VW, Mercedes, Ford, and Volvo. However, some have raised more concerns than others. BMW CEO Oliver Zipse said in a statement to Automotive News Europe:
“To be very clear: the automobile industry will fully contribute to the goal of a carbon-neutral Europe in 2050, but the decision of the Council raises significant questions which have not yet been answered, such as how Europe will ensure strategic access to the key raw materials for e-mobility.”
With negotiations on the Fit for 55 EU carbon neutrality plan going to negotiation soon, it will be interesting what the final form of this legislation will look like. Still, these changes mark a significant step towards achieving compromise, and ultimately, carbon neutrality.
What do you think of the article? Do you have any comments, questions, or concerns? Shoot me an email at william@teslarati.com. You can also reach me on twitter @WilliamWritin. If you have news tips, email us at tips@teslarati.com!
News
Tesla dispels reports of ‘sales suspension’ in California
“This was a “consumer protection” order about the use of the term “Autopilot” in a case where not one single customer came forward to say there’s a problem.
Sales in California will continue uninterrupted.”
Tesla has dispelled reports that it is facing a thirty-day sales suspension in California after the state’s Department of Motor Vehicles (DMV) issued a penalty to the company after a judge ruled it “misled consumers about its driver-assistance technology.”
On Tuesday, Bloomberg reported that the California DMV was planning to adopt the penalty but decided to put it on ice for ninety days, giving Tesla an opportunity to “come into compliance.”
Tesla enters interesting situation with Full Self-Driving in California
Tesla responded to the report on Tuesday evening, after it came out, stating that this was a “consumer protection” order that was brought up over its use of the term “Autopilot.”
The company said “not one single customer came forward to say there’s a problem,” yet a judge and the DMV determined it was, so they want to apply the penalty if Tesla doesn’t oblige.
However, Tesla said that its sales operations in California “will continue uninterrupted.”
It confirmed this in an X post on Tuesday night:
This was a “consumer protection” order about the use of the term “Autopilot” in a case where not one single customer came forward to say there’s a problem.
Sales in California will continue uninterrupted.
— Tesla North America (@tesla_na) December 17, 2025
The report and the decision by the DMV and Judge involved sparked outrage from the Tesla community, who stated that it should do its best to get out of California.
One X post said California “didn’t deserve” what Tesla had done for it in terms of employment, engineering, and innovation.
Tesla has used Autopilot and Full Self-Driving for years, but it did add the term “(Supervised)” to the end of the FSD suite earlier this year, potentially aiming to protect itself from instances like this one.
This is the first primary dispute over the terminology of Full Self-Driving, but it has undergone some scrutiny at the federal level, as some government officials have claimed the suite has “deceptive” naming. Previous Transportation Secretary Pete Buttigieg was vocally critical of the use of the name “Full Self-Driving,” as well as “Autopilot.”
News
New EV tax credit rule could impact many EV buyers
We confirmed with a Tesla Sales Advisor that any current orders that have the $7,500 tax credit applied to them must be completed by December 31, meaning delivery must take place by that date. However, it is unclear at this point whether someone could still claim the credit when filing their tax returns for 2025 as long as the order reflects an order date before September 30.
Tesla owners could be impacted by a new EV tax credit rule, which seems to be a new hoop to jump through for those who benefited from the “extension,” which allowed orderers to take delivery after the loss of the $7,500 discount.
After the Trump Administration initiated the phase-out of the $7,500 EV tax credit, many were happy to see the rules had been changed slightly, as deliveries could occur after the September 30 cutoff as long as orders were placed before the end of that month.
However, there appears to be a new threshold that EV buyers will have to go through, and it will impact their ability to get the credit, at least at the Point of Sale, for now.
Delivery must be completed by the end of the year, and buyers must take possession of the car by December 31, 2025, or they will lose the tax credit. The U.S. government will be closing the tax credit portal, which allows people to claim the credit at the Point of Sale.
🚨UPDATE: $7,500 Tax Credit Portal “Closes By End of Year”.
This is bad news for pending Tesla buyers (MYP) looking to lock in the $7,500 Tax Credit.
“it looks like the portal closes by end of the year so there be no way for us to guarantee the funds however, we will try our… pic.twitter.com/LnWiaXL30k
— DennisCW | wen my L (@DennisCW_) December 15, 2025
We confirmed with a Tesla Sales Advisor that any current orders that have the $7,500 tax credit applied to them must be completed by December 31, meaning delivery must take place by that date.
However, it is unclear at this point whether someone could still claim the credit when filing their tax returns for 2025 as long as the order reflects an order date before September 30.
If not, the order can still go through, but the buyer will not be able to claim the tax credit, meaning they will pay full price for the vehicle.
This puts some buyers in a strange limbo, especially if they placed an order for the Model Y Performance. Some deliveries have already taken place, and some are scheduled before the end of the month, but many others are not expecting deliveries until January.
Elon Musk
Elon Musk takes latest barb at Bill Gates over Tesla short position
Bill Gates placed a massive short bet against Tesla of ~1% of our total shares, which might have cost him over $10B by now
Elon Musk took his latest barb at former Microsoft CEO Bill Gates over his short position against the company, which the two have had some tensions over for a number of years.
Gates admitted to Musk several years ago through a text message that he still held a short position against his sustainable car and energy company. Ironically, Gates had contacted Musk to explore philanthropic opportunities.
Elon Musk explains Bill Gates beef: He ‘placed a massive bet on Tesla dying’
Musk said he could not take the request seriously, especially as Gates was hoping to make money on the downfall of the one company taking EVs seriously.
The Tesla frontman has continued to take shots at Gates over the years from time to time, but the latest comment came as Musk’s net worth swelled to over $600 billion. He became the first person ever to reach that threshold earlier this week, when Tesla shares increased due to Robotaxi testing without any occupants.
Musk refreshed everyone’s memory with the recent post, stating that if Gates still has his short position against Tesla, he would have lost over $10 billion by now:
Bill Gates placed a massive short bet against Tesla of ~1% of our total shares, which might have cost him over $10B by now
— Elon Musk (@elonmusk) December 17, 2025
Just a month ago, in mid-November, Musk issued his final warning to Gates over the short position, speculating whether the former Microsoft frontman had still held the bet against Tesla.
“If Gates hasn’t fully closed out the crazy short position he has held against Tesla for ~8 years, he had better do so soon,” Musk said. This came in response to The Gates Foundation dumping 65 percent of its Microsoft position.
Tesla CEO Elon Musk sends final warning to Bill Gates over short position
Musk’s involvement in the U.S. government also drew criticism from Gates, as he said that the reductions proposed by DOGE against U.S.A.I.D. were “stunning” and could cause “millions of additional deaths of kids.”
“Gates is a huge liar,” Musk responded.
It is not known whether Gates still holds his Tesla short position.
Tesla dispels reports of ‘sales suspension’ in California
New EV tax credit rule could impact many EV buyers
