A major turn! Are these brands no longer discontinuing the sales of fuel-powered vehicles? What's going on?

Recently, several multinational automakers have announced adjustments to their plans to discontinue the sale of fuel-powered vehicles and slowed down their electrification pace. For example, Mercedes-Benz Group said at the end of June that it would adjust its electrification strategy for 2030. Instead of adhering to the goal of "fully switching to all-electric sales in markets where conditions permit," it will adopt a flexible strategy of long-term coexistence of fuel-powered and electric vehicles.

Audi withdrew its original plan to stop the R & D and sales of internal combustion engine vehicles in 2033 in late June and no longer set a clear termination schedule. In addition, automakers such as Ferrari, Toyota, and Honda have taken similar actions. Why did they do so?

Significant differences in the progress of regional markets

Previously, most multinational automakers set around 2030 as an important milestone for achieving their electrification goals. For instance, Audi aimed for 2033, while Mercedes-Benz, BMW, and Volvo targeted 2030, and Nissan set 2025. However, many multinational automakers are now changing their relevant plans.

Mercedes-Benz took steps to postpone its electrification goal a year ago. In February 2024, Mercedes-Benz announced that it would postpone the goal of having electric vehicles account for 50% of its sales in 2025 and would continue to update its internal combustion engine vehicle product lineup in the next decade. In response, Mercedes-Benz explained that it needed to stay focused strategically and flexible tactically and take necessary steps to continuously promote the electrification transformation.

Sixteen months later, Mercedes-Benz further refined its relevant measures, adjusting the plan of "stopping the sale of fuel-powered vehicles in 2030" to "having new energy vehicles (including hybrids) account for up to 50% of sales in 2030." It also stated that, given the slower-than-expected popularization of electric vehicles currently, promoting both fuel-powered and electric vehicles simultaneously was the most rational choice.

Mercedes-Benz has 7 all-electric models in the Chinese market. Screenshot from Mercedes-Benz official website

Audi China also clearly stated that achieving an all-electric product lineup was Audi's long-term goal, but there were significant differences in the development of global markets. "The 'inflection point' in North America is currently shifting significantly backward, while in China, the 'inflection point' of the new energy vehicle market (including hybrid models, extended-range models, and all-electric models) was reached last year. The volatility and diversity of the market require us to provide a differentiated product portfolio in the next few years in the most flexible and stable way possible, covering all-electric models, plug-in hybrid models, and internal combustion engine models."

In addition, Honda announced at the end of May that by 2030, it would reduce the R & D expenses for all-electric vehicle models and software by 30% and lower the proportion of all-electric vehicle sales in the overall sales. Automakers such as Volvo, BMW, and Nissan also adjusted their strategies regarding fuel-powered and electric vehicles in 2024. For example, Volvo cancelled its full electrification strategy for 2030, BMW chose to promote electrification flexibly, and Nissan cut its R & D expenses for electric vehicles and lowered the proportion of electric vehicle sales.

"In the past three to five years, there have been significant differences in the electrification progress of multinational automakers in various regional markets. China has developed rapidly in the entire value chain, with high consumer acceptance, and the market has rapidly transformed to electrification. In contrast, in other national markets, the advantages in the entire value chain are not obvious. Meanwhile, pressure on competitiveness and insufficient supply have led to slower electrification transformation." Zheng Yun, a global senior partner at Roland Berger and the head of the automotive business in Asia, believes that this is the main reason why most multinational automakers, except Chinese automakers, are adjusting their new energy goals.

Cui Dongshu, the secretary-general of the Passenger Car Association, wrote an article on June 30, stating that the imbalance in the global new energy development was extremely obvious. From April to May 2025, the penetration rate of new energy vehicles in China reached 45%, 26% in Germany, 81% in Norway, 30% in the UK, while only 9% in the US and 2% in Japan.

According to the first-quarter financial reports of major multinational automakers, the net profits of automakers such as Volkswagen, BMW, General Motors, Ford, and Mercedes-Benz declined to varying degrees in the first quarter. However, the sales of all-electric vehicles increased by double digits year-on-year, and their proportion in total sales also further increased.

"This is mainly related to the macro - policies of different national markets. For example, the EU is discussing delaying the time to ban the sale of fuel-powered vehicles, so automakers will also make corresponding adjustments under the premise of relevant regulations." Zeng Zhiling, the director of Asia-Pacific automotive market forecasting at Groboda, analyzed to China News Service.

What impact will it have on the global automotive market?

Judging from the adjusted strategies of multinational automakers, each will change its energy route according to the policies and demands of different regional markets. For example, Audi will increase its investment in electrification and intelligence in the Chinese market and continue to invest in fuel-powered vehicles in the European and American markets to ensure that fuel-powered vehicles will still be attractive to customers after 2026.

What impact will this move have on the global market?

"This move will, to a certain extent, slow down the progress of new energy transformation in the global market. From a three - to five - year time frame, the global market will feature traditional fuel, mild - hybrid, strong - hybrid, and all - electric routes. Among them, fuel - powered vehicles will account for a relatively high proportion, and the market shares of mild - hybrid, strong - hybrid, and all - electric vehicles will gradually increase. All - electric and strong - hybrid vehicles will be more dominated by the Chinese market, and the share will be further increased by the overseas expansion of Chinese automakers." Zheng Yun predicted.

Zeng Zhiling said that the past advantage of multinational automakers lay in their globalization, that is, using global procurement and global development to manufacture vehicles to reduce costs. However, this model will not work in the future. For example, if a multinational automaker wants to launch a new vehicle, it needs to develop a powertrain system in the US, an R & D new energy system in the Chinese market, and adopt a different strategy in the EU. This approach will lose the original scale advantage.

The senior management of Volkswagen Group also pointed out the current problems recently. In an article pushed by the WeChat official account of "Volkswagen China" on June 25, a foreign media asked Oliver Blume, the CEO of Volkswagen Group, "What is the biggest mistake made by German manufacturers?" Blume replied, "We have been resting on our laurels for too long. Our business model - that is, R & D and production locally and sales globally - has worked well for decades. But we have been too slow to respond to the changes in the world."

Blume believes that the demands of customers in different regions vary greatly nowadays. "We must step out of our comfort zone, observe more and learn more. Stop endless debates and make up our minds to take action. Nevertheless, German engineering technology is still well - known in the world."

Focusing on the Chinese market, more and more multinational automakers are embracing the Chinese supply chain. On June 27, according to the official website of Lexus, the construction of Lexus' Shanghai new energy factory started, and it is expected to be completed in August 2026 and put into production in 2027. At that time, the products will be locally produced, not only for the Chinese market but also for export to Japan and other overseas markets. On June 20, the pre - sale of the A5L was launched, and Huawei's Qiankun Intelligent Driving System was its core selling point.

Zeng Zhiling believes that it is not difficult for multinational automakers to achieve electrification by embracing the Chinese supply chain as long as they are willing to put aside their pride. However, there are certain obstacles to promoting intelligence in fuel - powered vehicle strategies. "The general consensus in the industry is that the development of intelligence is the general trend. However, intelligence is not friendly to fuel - powered vehicles. The higher the level of intelligence, the greater the difficulty and cost of transforming fuel - powered vehicles. If they do not enter the intelligent camp, the question of whether to develop autonomous driving in the future remains."

He gave an example. The A5L is equipped with Huawei's ADS 3.0 assisted driving system, which is a major revolution for fuel - powered vehicles. "To integrate intelligence into this vehicle, the underlying electrification system needs to be redesigned, which is equivalent to redesigning the vehicle's architecture. Whether the A5L can be as responsive as an electric vehicle in terms of intelligence and how the market will accept it remain to be seen." Zeng Zhiling said.

This article is from the WeChat official account "China News Service" (ID: jwview), author: Gong Chenyuan, editor: Li Xiaoxuan, chief editors: Chang Tao, Luo Kun. Republished by 36Kr with authorization.