In an interview with WELT, Mahle CEO Arnd Franz criticizes the EU’s policy on phasing out combustion engines by 2035. The reason for his criticism is a Brussels proposal that allows for flexibility regarding hybrids and range extenders, but which, in his view, lacks a clear direction. As a Stuttgart-based supplier, Mahle is at the heart of this transition, as many of its products rely on combustion engines. Franz sees a high risk to jobs, since electrification requires less personnel while the market simultaneously shrinks. He cites specific consequences: the company’s revenue fell from €11.7 billion to approximately €11.3 billion, and Mahle also cut around 3,500 jobs worldwide in twelve months, including about 600 in Germany. (welt:21.02.26)
Mahle CEO calls for simple rules and genuine technological openness
Franz rejects the Brussels approach, describing it as “petty, bureaucratic, and lacking clarity.” He demands clear guidelines instead of burdening companies with detailed regulations. Europe must achieve its climate goals, but it shouldn’t favor just one type of propulsion system. Otherwise, it will lose further ground in global competition.
Franz doesn’t expect batteries to completely dominate the market by 2035, while pointing to limitations in terms of market and infrastructure. In his view, pure battery-powered cars will achieve “little more than 50 percent market share” in Europe. He sees the remainder primarily in hybrids with high electric driving proportions. A rigid percentage target, therefore, carries the risk of failing, either technically or with customers.
Internal combustion engines after 2035 – Mahle CEO focuses on CO₂-free fuels
Franz doesn’t want to automatically ban pure internal combustion engines, but he ties this to CO₂ neutrality. For this to happen, Europe must “defossilize” fuels and quickly bring biofuels and synthetic fuels to market. He sees leverage here because the refueling network already exists. Additional investments will still be necessary, but overall fuel consumption could decrease as the electric share increases.
Franz turns the infrastructure objection on its head by citing refueling stations as an advantage. CO₂-neutral fuels could be offered there with manageable effort. He cites Brazil as an example, where “around 50 percent of passenger car traffic is climate-friendly thanks to ethanol.” For him, this demonstrates that alternatives can be scaled if policymakers and the market allow them.
Shrinking European Market, Growth in Asia, and New Limits to Jobs
Franz justifies Mahle’s strategy with hard market data, which is why the company is only investing to a limited extent in Europe. Europe’s vehicle market shrank by a third between 2018 and 2024. Mahle is “certainly not investing in battery cells” because that ties up billions. Franz sees growth in Asia, particularly in China, India, Korea, and Japan.
While Mahle sees a base level of revenue in Europe, Franz anticipates further pressure on staffing. He warns that if policymakers don’t further relax the ban on combustion engines, it will “cost a massive number of jobs again.” According to him, two-thirds of the more than 28,000 employees in Europe depend on the combustion engine business. The Mahle CEO also emphasizes that new fields cannot compensate for every job loss, because employment intensity is decreasing.
Subsidies, Demand, and Political Pressure in Baden-Württemberg
Regarding the new electric car subsidy, Franz says: “I’d be surprised if it were effective.” He considers the old environmental bonus “certainly not” effective, and he also observes a wait-and-see attitude in the automotive industry. “There’s no champagne corks popping,” he says, and he doesn’t expect a rapid surge in demand. He believes that increased demand will arise more readily from higher disposable income, meaning lower taxes and levies.
Franz links this to the state’s economic situation, while simultaneously calling for “a jolt” for Baden-Württemberg. The state has barely grown for years, and car production has fallen by a quarter since 2019, dropping from 830,000 to 630,000 vehicles. He demands a strategy for AI, photonics, defense, biotechnology, and robotics, and also wants more economic expertise in government, says the Mahle CEO.