BMW and Toyota jointly test renewable gasoline: challenging the EU's single path to electrification

The "Technological Openness" Debate in Europe's Auto Industry

As the EU sets a policy anchor of banning new fossil-fuel car sales by 2035, BMW and Toyota have chosen to launch a low-key but significant test on roads in southern Spain — 20 production vehicles with internal combustion engines will run entirely on 100% renewable gasoline supplied by Repsol. This is not simply product validation, but a substantive challenge to the EU's single technology pathway of electrification.

Europe's auto industry is under dual pressure: on one hand, Chinese EV brands are rapidly penetrating with cost advantages; on the other, the EU is pushing domestic manufacturers toward full electrification through mechanisms like the Carbon Border Adjustment Mechanism (CBAM) and stringent CO₂ standards. Against this backdrop, BMW and Toyota are trying to prove to Brussels that the internal combustion engine is not destined to disappear, and that renewable fuels can serve as a complementary path to electrification, not an opposing option.

The Industrial Logic of Renewable Gasoline: Low-Cost Decarbonization and Protection of Existing Assets

The Repsol Nexa 95 renewable gasoline used in this test is a "drop-in" fuel that requires no modification to engines or refueling infrastructure. For Europe's massive fleet of existing internal combustion vehicles (approximately 250 million units), this offers an immediately available means of carbon reduction. Stefan Heller, head of BMW Group's VEEF project, emphasizes: "Technological openness is a core pillar of the BMW Group's strategy." Toyota has long argued that a single technology cannot adapt to the diverse infrastructure and consumer needs across different regions.

From a commercial perspective, renewable gasoline avoids the huge investment in charging networks and the supply chain risks for battery raw materials required by EVs. Bosch's "digital fuel twin" system leverages vehicle telematics, gas station data, and fuel card transaction information to establish a full chain traceability from production to consumption — this provides a technical foundation for the EU to potentially grant carbon credits based on actual fuel usage rather than vehicle type in the future. If this model gains policy recognition, it would fundamentally challenge the logic behind Europe's forced electrification push.

EU Policy Debate: The Controversy Over Technology Neutrality for the 2035 Target

The European Commission has clearly set a zero-emission requirement for new passenger cars sold by 2035 under its "Fit for 55" package, but the recognition of renewable fuels has always been a sensitive issue. In 2023, Germany pushed for an e-fuel exemption clause, and member states eventually reached a compromise: vehicles using synthetic fuels could continue to be registered after 2035, provided the fuels themselves are carbon neutral. The Repsol renewable gasoline used in this BMW-Toyota test comes from biomass and other renewable raw materials compliant with the EU's Renewable Energy Directive, not synthetic e-fuels, making its regulatory boundary even more ambiguous.If test data proves that renewable gasoline can achieve at least a 70% carbon reduction in real-world use (compared to fossil gasoline), policymakers may face stronger pressure to incorporate a broader range of renewable fuels into the EU’s automotive emission reduction framework, rather than focusing solely on electrification. This is not only about environmental effectiveness but also about European energy security: renewable gasoline can utilize existing refining and distribution infrastructure, reducing dependence on imported battery materials (lithium, cobalt, nickel), aligning with the EU’s strategic autonomy goals.

Reshaping the Competitive Landscape: The Combined Strategy of German and Japanese Automakers

The alliance between BMW and Toyota is symbolic—a German luxury car manufacturer and Japan’s global sales leader are jointly shaping a “non-electrification” decarbonization narrative. Previously, Porsche had heavily invested in synthetic e-fuels (building a plant in Chile), and racing series like F1 have also shifted to sustainable fuels. However, this test moves the scenario from the racetrack to everyday transportation, using bio-based renewable gasoline that is easier to scale, making the business model closer to practical decarbonization.

For the European automotive industry, this represents a differentiated competitive path: in some markets (such as regions in Eastern and Southern Europe with weak charging infrastructure), renewable fuels can extend the life cycle of internal combustion engines, while helping European automakers maintain their traditional technological advantages in combustion engines, avoiding a fully homogenized price war with Chinese EVs. Toyota particularly emphasizes “regional differences,” suggesting that Europe does not need to completely copy the California or China model.

Long-Term Trends: Multi-Path Coexistence in the Energy Transition

Even as EV costs decline rapidly, hundreds of millions of internal combustion engine vehicles will still be on the road globally over the next decade. If technologies such as renewable gasoline, biofuels, and synthetic fuels gain policy support, they can form a “fuel diversification” landscape. Whether Europe embraces this diversification will determine the transformation costs and competitiveness of its automotive industry.

The empirical data from the BMW-Toyota test will be submitted to regulators and industry organizations. If the EU, in its post-2025 policy revisions, increases carbon credit recognition for renewable fuels, it could give rise to a brand-new fuel certification and trading market—Bosch’s digital tracking system is precisely paving the way for this. By then, Europe’s green transition narrative may shift from “technology lock-in” to “technology portfolio.”

However, challenges remain: the large-scale production of renewable gasoline is limited by feedstock supply and cost (currently retail prices are higher than fossil gasoline); the full lifecycle carbon reduction varies by feedstock source; and the physical limits of internal combustion engine efficiency mean that electrification remains the theoretically most efficient path. But as BMW and Toyota suggest: correcting the balance of European policy may be more economically rational than eliminating all internal combustion engines.