Europe’s automotive sector has long been a pillar of industrial strength, supporting millions of jobs and supporting innovation across the continent.
But with increasing global competition and rapidly evolving technology, the European Commission says a policy reset is needed.
The newly launched Automotive Package directly responds to manufacturers’ demands for clearer rules, reduced administrative burden and increased flexibility, while reinforcing Europe’s commitment to ambitious CO2 emissions standards.
The package aims to balance environmental objectives with industrial resilience, allowing the EU to maintain both climate neutrality and strategic independence.
Stéphane Séjournet, Executive Vice President, Prosperity and Industrial Strategy, explains:
“We are leveraging all the tools at our disposal: simplification, flexibility, European priorities, targeted support and innovation.
“Together, these measures are our commitment to restoring Europe’s industrial leadership while leading the global transition on climate change.
Maintaining momentum towards clean mobility
At the heart of this initiative is a new commitment to clean transportation. The European Commission has maintained strong market signals in favor of zero-emission vehicles (ZEVs) while reshaping how car manufacturers comply with CO2 emissions standards across different vehicle categories.
The updated framework addresses both demand and supply. On the supply side, CO2 emission standards for passenger cars, vans, and large vehicles will be revised.
On the demand side, we have introduced binding national targets to accelerate the introduction of zero-emission and low-emission corporate vehicles, a sector that is viewed as important due to its high annual mileage and rapid turnover into the second-hand market.
Increased flexibility of CO2 emission standards
One of the most important changes concerns how manufacturers will meet their emissions targets in the coming years.
From 2035, car manufacturers will be required to achieve a 90% reduction in tailpipe emissions. The remaining 10% can be offset by approved measures such as the use of low-carbon steel produced in the EU and alternative fuels, including electronic and biofuels.
This approach further increases technological neutrality. Rather than mandating a single solution, from 2035 onwards, powertrains such as plug-in hybrids, range extenders, mild hybrids and advanced internal combustion engines can be combined to coexist with battery electric and hydrogen vehicles.
Manufacturers will gain additional flexibility towards that deadline. ‘Supercredits’ reward the production of small, affordable electric vehicles manufactured within the EU and facilitate widespread access to electric mobility for consumers.
Toward the 2030 target, the ‘bank and borrow’ mechanism will allow manufacturers to balance their emissions performance from 2030 to 2032.
Recognizing the structural challenges in the commercial sector, the European Commission has also reduced the 2030 CO2 reduction target for vans from 50% to 40%.
Relief measures for large vehicles
Heavy vehicles play an important role in Europe’s logistics and industrial supply chains. The package includes targeted amendments to CO2 emissions standards for trucks and buses, facilitating compliance with the 2030 targets while maintaining long-term decarbonization goals.
The European Commission argues that this pragmatic adjustment will help manufacturers scale up cleaner technologies without disrupting freight operations or inflating costs.
Corporate vehicles as a demand engine
To stimulate demand, the Automotive Package introduces mandatory national targets for zero- and low-emission vehicles in large corporate fleets. Public financial support will increasingly be linked to low-emission vehicles that are ‘Made in the EU’.
The policy is expected to accelerate emissions reductions while improving access to low-emission vehicles on the used market by prioritizing cleaner corporate vehicles.
Investment in Europe’s battery powerhouse
Clean mobility depends on a safe battery supply chain. To reduce dependence on global powerhouses, the European Commission has announced a €1.8 billion ‘battery booster’ initiative.
Of this amount, 1.5 billion euros will be allocated as interest-free loans to European battery cell producers. The program also includes coordinated policy measures to strengthen upstream supply chains, foster innovation and build a resilient EU-based battery ecosystem.
Eliminate red tape and support innovation
Another core element of the package, Automotive Omnibus, focuses on simplicity. By reducing administrative burdens and streamlining vehicle testing procedures, the European Commission estimates that manufacturers could save around €706 million annually.
Measures include reducing secondary regulations, harmonizing vehicle emissions labeling rules and giving electric vans equal treatment in driver rest time regulations.
The new vehicle category of small, affordable electric vehicles (up to 4.2 meters in length) will also enable targeted incentives at local and national level.
Industry reaction
The EU’s automotive sector welcomed the package after a long process of seeking EU support for the industry.
Sigrid de Vries, Director General of the European Automobile Manufacturers’ Association (ACEA), said: “These proposals correctly recognize the need for greater flexibility and technology neutrality if the green transition is to be successful. This is a significant change compared to current law.”
“But the devil can be in the details. We will now review the package and work with our co-legislators to critically strengthen the proposal if necessary.”
A practical path forward
The European Commission wants to chart a realistic path to climate neutrality by restructuring CO2 emissions standards while supporting European manufacturing.
The Automotive Package demonstrates continuity in ambition, but with added flexibility, investment support and regulatory clarity designed to keep the European automotive industry competitive in a rapidly changing world.
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