The move, which is intended to help achieve Europe's climate objectives, has also been defined as a "necessity" in the face of competition from China and the United States.
The European Union has approved a plan to end the sale of vehicles with combustion engines by 2035 in Europe in a bid to reduce CO2 emissions to zero.
The plan, first proposed in July 2021, was announced by the 27-member bloc early on Wednesday. It is intended to help achieve the continent's climate objectives, in particular, carbon neutrality by 2050.
The measure will mean a de facto halt to sales of petrol and diesel cars as well as light commercial vehicles and a complete shift to electric engines in the European Union from 2035.
At the request of countries including Germany and Italy, the EU-27 also agreed to consider a future green light for the use of alternative technologies such as synthetic fuels or plug-in hybrids.
Environment ministers also approved a five-year extension of the exemption from CO2 obligations granted to so-called "niche" manufacturers, or those producing fewer than 10,000 vehicles per year, until the end of 2035.
The clause, sometimes referred to as the "Ferrari amendment", will benefit luxury brands in particular.
These measures must now be negotiated with members of the European Parliament.
"This is a big challenge for our automotive industry," acknowledged French Minister of Ecological Transition Agnes Pannier-Runacher, who chaired Tuesday night's meeting in Luxembourg.
But she said it was a "necessity" in the face of competition from China and the United States, which have bet heavily on electric vehicles seen as the future of the industry.
These decisions will "allow a planned and accompanied transition", the minister said.
Cars are the main mode of transport for Europeans and account for just under 15 percent of total CO2 emissions in the EU. It is also one of the main gases responsible for global warming.
In response to manufacturers' concerns about insufficient consumer demand for 100 percent electric cars, the Commission has recommended a major expansion of charging stations.
"Along the main roads in Europe, there must be charging points every 60 kilometres (37 miles)," said European Commission President Ursula von der Leyen last year.
Manufacturers regularly complain about the lack of such infrastructure, especially in southern and eastern European countries.