Cyprus is set to find itself at the centre of one of the European Union’s most politically sensitive industrial disputes in early 2026, when it assumes the rotating presidency of the Council of the EU, with the future of Europe’s automotive sector high on the agenda.

According to a report by POLITICO, Cyprus will have six months to broker a compromise between deeply divided member states following the European Commission’s unveiling of a major automotive policy package on December 16. The proposals include reopening elements of the planned 2035 ban on new combustion-engine car sales and introducing binding national targets for zero-emission corporate vehicle fleets.

The Commission’s move immediately exposed deep fault lines between major EU capitals. Germany and the centre-right European People’s Party welcomed the shift, while left-leaning and green groups warned that it could undermine the EU’s climate ambitions and strengthen the market position of Chinese carmakers.

Although Climate Commissioner Wopke Hoekstra has stated that the 2035 target should remain largely intact, Cyprus will be tasked with shaping the Council’s negotiating position when it takes over the presidency on January 1.

The task will be far from straightforward. Germany is pushing for additional flexibility, including provisions for hybrids and alternative fuels, while France has made clear that allowing pure combustion engines beyond 2035 is a red line. Several Central and Southern European countries have also called for exemptions reflecting their national industrial priorities.

Cyprus, which does not have a major domestic car industry and voted in favour of the 2035 ban in 2023, has pledged to act as an “honest broker.” A presidency spokesperson told POLITICO that the goal is to reach a compromise text capable of securing broad support among member states.

The stakes are considerable. The automotive sector accounts for approximately 9 percent of EU GDP, yet any weakening of the 2035 rules risks clashing with the bloc’s objective of cutting transport emissions by 90 percent by 2050. For Cyprus, the upcoming presidency will test its ability to navigate one of the EU’s most complex industrial and climate policy confrontations, the article concludes.