Subaru to end gasoline car sales in Europe by 2027

The move matters less for Subaru’s volume than for what it says about the cost of staying in the market. Subaru sold only 23,000 vehicles in Europe last year, giving it a 0.2% share, but even a niche brand is being pushed to abandon gas cars as Brussels tightens compliance standards. The EU has set a fleet-average CO2 target of 93.6 grams per kilometer for vehicles built between 2025 and 2034, a 15% cut from 2021 levels, while new driver-assistance and emergency-braking requirements kick in in 2026.

For investors, the shift highlights the margin and capital-allocation pressure on legacy carmakers trying to serve Europe with mixed powertrains. Subaru is already leaning on Toyota-developed EVs for its near-term European lineup, but it also said it is building its own next-generation EV tech separately from Toyota, including a new battery, electric motor system and over-the-air update architecture. That suggests the company sees control of EV platforms as critical to preserving its brand identity and pricing power as regulation narrows the room for combustion-engine sales.

The decision also fits a broader industry pattern: automakers are using Europe as the first major test case for whether they can sell smaller, more affordable EVs profitably while meeting tougher safety and emissions rules. Subaru’s European exit from gas cars may not move the market by itself, but it is another sign that the legacy ICE business is losing viability in one of the world’s most regulated auto markets.

The key question now is whether Subaru can keep its small but loyal European customer base through the transition without giving up share to larger rivals with deeper EV lineups and more scale.