Research Policy 2026
Dead end ahead? How phase-out policies affect incumbent adaptation to technological change in the automotive industry
Abstract
This study shows how phase-out policies drive and support the adaptation of incumbent firms to technological change, drawing on evidence from the European automotive industry. Recent years have seen growing interest among academics and practitioners in policies aimed at phasing out unsustainable technologies. However, their implementation remains controversial because the effects on key actors—such as incumbent firms—remain poorly understood. To shed more light on this timely question, we conducted a qualitative case study to analyze how the recent EU-level decision effectively banning new registrations of internal combustion engine vehicles beginning in 2035 affects incumbent carmakers in their adaptation to technological change. We offer insights into the causal mechanisms through which phase-out policies affect incumbent adaptation and show how firm-level factors shape policy effectiveness. We demonstrate that phase-out policies can drive incumbent adaptation by redirecting attention, excluding technology trajectories, clarifying forecasts, and facilitating ecosystem coordination. This implies that such policies can effectively accelerate transitions and are less detrimental to incumbents than is often assumed. In fact, these measures represent an effective means of overcoming multiple internal and external sources of inertia, increasing incumbents’ likelihood of surviving technological change. However, firm-level factors—such as progress in adaptation, the coverage of heterogeneous markets, and perceived policy credibility—are both critical to policy effectiveness and linked to incumbents’ political interests and activities. In this regard, policymakers should take particular care in designing phase-out and complementary policies to ensure high credibility and to mitigate political resistance from incumbents.
- DOI
- 10.1016/j.respol.2026.105490
- Sources
- openalex