Powertrain technology must not be constrained by regulations, especially as legacy automakers in Europe are facing unprecedented competition from Chinese automakers.

That’s the message given to WardsAuto in an exclusive interview with Mahle CEO Arnd Franz at IAA Mobility 2025 in Munich, Germany.

It echoes his previous calls for the European Union to scrap its planned ban on sales of new internal- combustion-engine vehicles from 2035.

However, this time he stresses his company’s work with all global automakers to improve powertrains across the technologies currently available and those to come, such as Mahle’s “Future Hybrid System” range-extender concept system displayed for the first time at the show.

This concept system claims to encourage acceptance of e-mobility by relieving consumers’ range anxiety by providing a maximum driving range of up to 839 miles (1,350 km) depending on vehicle model and battery size. It has a single integrated compact unit construction, with potential to be retrofitted depending on vehicle dimensions; Mahle says series production will begin within two years.

The company also unveils its latest Ethanol Power cell unit, vowing to reduce CO2 emissions and fuel consumption for sustainably fueled internal-combustion engines.

“Some of these things that we're showing today illustrate our multi-powertrain approach, like the range extender concept for battery-electric vehicles, like our thermal management module, but also like sustainable engine and powertrain solutions with combustion engines,” Franz tells WardsAuto. He points to Mahle’s global footprint and the need to provide powertrain solutions for multiple markets.

Yet, Europe is in danger of allowing foreign automakers to dominate its markets if regulators hold to mandates that hand the advantage to companies that specialize in just one technology, such as the Chinese battery-electric-vehicle makers.

“Of course, the Europeans have some issues to solve with the regulation (banning ICE propulsion) and we believe there is a way around fixing those things and changing the regulation (to allow) sustainable combustion engines,” Franz insists.

The U.S. is a major focus for Mahle’s future business growth with no such federal rules on powertrain choices. He points to the company’s long history building powertrain solutions in North America since the 1970s, contributing to passenger car and trucking sectors as well as in the sports arena of NASCAR and NHRA (National Hot Rod Assn.)

“And we've just made an announcement that we're going to expand our production in Tennessee in one of our very traditional plants in Morristown where we're going to industrialize electrical compressors,” Franz says.

The company employs nearly 5,000 workers at the site and is accelerating its vocational training program to boost skills among employees to meet the challenges of future technologies.

Franz points out that the U.S. makes a business development case for a global company to protect its future, “even if Europe(ans) are, in my terms, silly enough to stick to this ban on ICE,” he adds.

On this topic Franz says EU regulators must consider the reality of what consumers want and existing challenges for people to switch to BEVs must be addressed.

“I think the reality check is here today, here right now,” he insists. “Whether it includes the production of green electricity, whether it’s the availability of charging stations, whether it’s the dependency on battery technology and battery materials, whether it’s the dependency on heavy rare earths for permanent magnets.”

He is adamant that if regulators do not address these issues now, the economic pain will be far greater if the ICE ban is enforced in 10 years’ time. “The consumer has preferences, and some consumers have BEVs as a preference and other consumers want hybrids or range-extended BEVs as a preference,” Franz adds.

On global trade, he is confident that punitive tariffs between trading partners is only a temporary aberration.

“It's a great instrument to negotiate things and, and possibly, it will spark some more direct investment (in the U.S.) if the tariffs stay,” says Franz. “However, I rather fear that it will put a little fog over the competitiveness of the U.S. manufacturing industry.”