Europe’s embattled automakers are set to get a breather as they struggle with the transition to emission-free driving, a critical moment that will shape the future of the continent’s transport sector for better or worse. 

The European Union is preparing to soften ambitious rules that would have effectively banned new combustion-engine vehicles from 2035. While the situation is fluid, loopholes are under discussion that could lead to a five-year extension, but other scenarios are being considered, including taking a ban off the table, according to people familiar with the discussions.