Post by Università Bocconi

Can environmental policies slow down the transition they are meant to accelerate? Nicoletta Corrocher (Bocconi) together with Marco Guerzoni (University of Milano-Bicocca), Anna Novaresio (CNR) and Tommaso Pierangeli (World Economic Forum), explores a paradox shaping the future of #SustainableMobility. The study shows that policies designed to reduce emissions do not automatically drive a shift toward electric vehicles. Instead, they can unintentionally strengthen internal combustion engines. This dynamic mirrors what happened in the 19th century, when steam power was expected to replace sailing ships. Rather than disappearing, sailing ships improved rapidly, extending their relevance. The same risk exists today in the automotive industry. When environmental regulations are moderate, firms tend to invest in incremental innovation. They improve combustion engines, reduce emissions and optimize efficiency. This may appear as progress, but it can delay the transition by making existing technologies more competitive. Only when policies are sufficiently stringent, and combined with strong demand and technological advancement, does a true shift toward #ElectricVehicles take place. As Professor Corrocher explains, policy design is crucial. If rules are too weak, they fail to trigger change. If they focus primarily on improving existing technologies, they risk reinforcing them instead of enabling new ones. Regulation alone is not enough. The transition depends equally on consumer demand and technological progress. Electric vehicles must become accessible, reliable and competitive. This requires investments in batteries, charging infrastructure and cost reduction. Without these elements, demand remains limited and companies continue to prioritize established technologies.  The current European debate on the 2035 phase-out of combustion engines highlights this tension. If targets appear uncertain or negotiable, industrial strategies may adjust accordingly. In a globally integrated sector, policy signals influence investment decisions across markets, shaping the pace of #Decarbonization. The study points to a broader lesson. Environmental policy cannot rely only on restrictions. It must combine clear and credible targets with incentives, infrastructure development and support for innovation. Without a coherent strategy, there is a risk of technological lock-in, where the past is optimized instead of replaced.  The automotive industry stands at a crossroads. The direction it takes will depend not only on technological capability, but on the consistency and credibility of public policy choices.