The European automotive sector is at a critical turning point, facing rapid technological changes and increasing competition. In January, European Commission President Ursula von der Leyen launched a Strategic Dialogue on the Future of the European Automotive Industry to address these challenges.
Today, the Commission introduced an Action Plan, which allocates €1.8 billion to develop a secure supply chain for battery raw materials, supporting the industry’s growth. To enhance Europe’s leadership in AI-powered, connected, and automated vehicles, a European Connected and Autonomous Vehicle Alliance will foster stakeholder collaboration. Large-scale testbeds and regulatory “sandboxes” will enable the testing and refinement of autonomous vehicle technologies.
“There is so much untapped potential at the global market, when it comes to innovation and clean solutions. I want to see our European automotive industry taking the lead. We will promote domestic production to avoid strategic dependencies, especially battery production. We will stick to our agreed emissions targets, but with a pragmatic and flexible approach. Our mutual aim is a sustainable, competitive, and innovative car industry in Europe that benefits our citizens, our economy, and our environment,” the Commission President said.
These initiatives will be supported by around €1 billion in public-private investments through the Horizon Europe Programme from 2025 to 2027. This Action Plan is the Decarbonise Corporate Fleets Communication, encouraging Member States to adopt greener practices for corporate fleets, representing about 60% of new car registrations.
The Commission recognises the need for flexibility in CO2 targets and plans to propose an amendment to the CO2 Standards Regulation this month. This amendment would allow manufacturers to average their performance over three years (2025-2027), offsetting shortfalls in particular years with excess achievements in others while maintaining overall targets. The Commission will also expedite the review of the CO2 Standards Regulation for cars and vans.
The Commission is working to increase demand for European zero-emission vehicles through an Action Plan offering consumer incentives and enhancing trust in battery health and repairability. Collaboration with Member States will optimise these schemes.
Cost-competitive battery cell production in the EU is essential for meeting battery supply needs and generating value within the supply chain. The Commission will finance the EU battery industry and explore direct production support while establishing component resilience criteria.
To tackle skill shortages and an ageing workforce in the automotive sector, the European Fair Transition Observatory will identify employment disruptions and skill gaps. The Commission plans to enhance the European Globalisation Adjustment Fund (EGF) for quicker company access to support and broader assistance for workers facing redundancy.
Additionally, EC will seek to increase European Social Fund Plus (ESF+) funding for reskilling workers in the automotive sector and use a mid-term ESF+ review to encourage the reallocation of resources.
The Commission aims to bolster the EU automotive industry’s resilience against global competition by implementing trade defence instruments like anti-subsidy measures. Ongoing negotiations with partner countries will improve market access and sourcing opportunities while ensuring that foreign investments benefit long-term competitiveness. Regulatory simplification will also reduce the administrative burden on European automakers.
