The European automotive industry is at a pivotal moment, facing pressure from rapid technological advancements, changing market dynamics and intensifying global competition.
As the industry moves towards cleaner, smarter and more connected mobility, urgent action is needed to maintain European leadership in automotive innovation.
In response, the European Commission introduced a comprehensive plan of action designed to increase competitiveness, strengthen supply chains and accelerate the transition to sustainable mobility.
This roadmap aims to prevent the industry in the future by fostering collaboration, innovation and resilience in increasingly challenging landscapes.
The chairman, Ursula von der Reyen, explained: I want to see our European automotive industry take the lead.
“We will promote domestic production, particularly to avoid strategic dependencies on battery production. We will stick to agreed emissions targets, but have a practical and flexible approach.
“Our mutual aim is Europe’s sustainable, competitive, innovative automotive industry, which benefits citizens, the economy and the environment.”
A transition to accelerate innovation and clean mobility
The EU automotive sector is lagging behind in key areas such as artificial intelligence, connectivity and autonomous vehicle technology.
To address this, the new action plan includes the formation of the European Connected and Self-Driving Vehicle Alliance, a coalition of industry stakeholders working to develop the next generation of vehicles.
This initiative will promote collaboration on shared software and digital hardware. This is essential for the future of connected mobility.
Additionally, a large-scale testing environment and regulatory “sandboxes” have been established, providing space for innovators to improve and deploy autonomous vehicle technology.
The joint public-private investment worth 1 billion euros, supported by the Horizon Europe programme, will support this transition between 2025 and 2027.
The committee further strengthens its transition to cleaner mobility, encouraging member states to its green company fleet, which accounts for around 60% of new vehicle registrations.
DeCarbonise Corporate Fleets Communication highlights best practices and recommends further action to promote the adoption of zero-emission vehicles.
Improved flexibility in CO2 compliance standards
Automakers have expressed concern about strict CO2 targets and are urging the committee to propose a more flexible compliance framework.
Future revisions to CAR and VANS of CO2 standards regulations will allow manufacturers to average emissions performance over three years (2025-2027).
This flexibility allows short-term setbacks in emission reductions to balance the compliance period while maintaining ambitious targets.
To boost the market for zero-emission vehicles, the Action Plan will introduce measures aimed at increasing consumer confidence.
These include enhanced battery health surveillance, improved repairability, and optimized incentive schemes tailored to European consumers.
Strengthen supply chain and workforce support
For the European automotive sector, ensuring a safe and competitive supply chain of battery raw materials is important.
The EU has committed 1.8 billion euros to strengthen battery material sourcing and domestic production, reducing strategic dependencies on non-European suppliers.
Additionally, the Innovation Fund will provide further financial support to strengthen the EU’s battery industry and its ability to maintain a strong production base.
Workforce issues are also a priority. With an aging workforce and expanding skills, European Fair Transition Observatory will help guide future workforce planning by assessing employment trends and skill shortages.
To help workers affected by industry changes, the Commission has expanded the European Globalization Coordination Fund for Displaced Persons (EGF) to make its scope faster and more widespread.
Additionally, the European Social Fund Plus (ESF+) will provide additional financial support for the automotive sector reskills and luxury programs, leaving workers equipped for future employment opportunities.
Strengthen global competitiveness
As global competition intensifies, the EU aims to strengthen the resilience of the automotive industry.
The Commission will use trade defense equipment, including prevention measures, to protect European manufacturers from unfair competition.
At the same time, trade negotiations with partner countries will continue, ensuring opportunities for improved market access and procurement for the European automotive industry.
The initiative will also focus on streamlining regulations and reducing the management burden on automakers.
Additionally, measures are proposed to ensure that foreign investment in the EU automobile sector contributes to long-term competitiveness, rather than undermining European profits.
Industry reaction
In response to the EU initiative, the European Automobile Manufacturers Association (ACEA) has expressed support for the focus of its Action Plan to simplify regulations and improve Europe’s competitiveness, including autonomous driving.
ACEA Director Sigrid de Vries added: “Action plans identify many important areas that require immediate work.
“The proposed flexibility to meet CO2 targets over the next few years is a welcome step towards a more practical approach to decarbonisation determined by market and geopolitical realities.
“It holds some breathing space promises for cars and van manufacturers, provided that much needed demand and charging infrastructure measures are also actually kick-in.”
Roadmap for a more powerful European automotive industry
The European automotive industry is at a turning point, requiring critical action to maintain competitiveness and innovativeness.
The EU is implementing a comprehensive action plan and positioned it to lead clean mobility, advanced vehicle technology and robust supply chains.
By promoting collaboration, ensuring regulatory flexibility and investing in its workforce, Europe has made great strides in the future automotive sector and maintains its position as a global leader in the industry.
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