European Commission, the Action Plan for the automotive industry

The European car industry is a vital sector of our economy, providing 13 million jobs and contributing 7% of the EU’s GDP. As the sector is facing challenges like new technologies, increasing competition and a changing geopolitical context, President von der Leyen launched in January 2025 the Strategic Dialogue on the Future of the Automotive Industry. The dialogue brings together representatives of the industry, social partners, representatives of infrastructure and civil society to find common solutions. Building on work of the Strategic Dialogue, the Commission has presented an Action Plan for the automotive industry. The Commission has designed the Action Plan to have a thriving car industry that creates jobs, drives growth, and protects the environment for generations to come.

Main elements of the Action Plan

The Action Plan aims to make the car industry strong, sustainable and competitive, with the following concrete actions.

Innovation and digitalisation

A new European alliance for connected and autonomous vehicles will bring together key European automotive stakeholders, to develop the next-generation of cars. Large testing areas and regulatory 'sandboxes' will provide innovators with the freedom to test and improve their autonomous vehicles technologies.

The Commission will further develop the rules for autonomous vehicles, and with private partners invest in a joint public-private investment of around €1 billion by 2027, backed by the Horizon Europe Programme, to drive the Action Plan forward.

The Commission has also published a Communication on clean corporate fleets, highlighting successful examples and encouraging EU countries to take further actions to make company vehicle fleets mor eco-friendly.

Shift to zero emission vehicles

To increase flexibility, the Commission will propose amending the CO2 Standards Regulation for cars and vans. This would allow manufacturers to meet the targets by averaging their performance over a three-year period (2025-2027) and to offset any shortfalls in one or two years with excess achievements in the other year(s), while still aiming for the 2025 targets.

In parallel, the Commission is taking steps to boost the demand for European zero-emission vehicles, by:
•    providing incentives to encourage people to switch to zero-emission vehicles
•    accelerating the roll-out of charging stations through a Clean Transport Corridor Initiative
•    strengthening consumer trust with measures, such as better battery repair options
•    encouraging social leasing schemes for new and used zero-emission vehicles, to make sustainable transport accessible to all

Ensuring supply chain resilience

The EU needs a self-sufficient supply chain and cost-competitive battery production.  To achieve this, the Commission will continue supporting the EU battery industry and strengthening European production. It may also provide direct support to battery producers.
To avoid strategic dependencies, the Commission intends to allocate €1.8 billion to create a secure and competitive supply chain for battery raw materials.

Improving skills and addressing the social dimension

To address skills shortages, mismatches and an ageing workforce in the automotive sector, the Commission will:
•    expand the European Globalisation Fund support, to help companies and workers when needed
•    increase European Social Fund Plus (ESF+) funding to support workers who want to reskill and look for new job opportunities 
•    use the mid-term review of ESF+ to encourage EU countries to reprogramme more funding for the car sector 
•    strengthen support for workers in strategic sectors, like the automotive industry, focusing on upskilling and reskilling

In addition, the European Fair Transition Observatory, will develop and collect data, to identify future job risks and skills gaps.

Boosting the industry’s resilience to compete successfully on the global stage

To make the EU automotive industry more competitive, the Commission will ensure a level playing field by using trade defence instruments, such as anti-subsidy measures. The Commission will also continue negotiations with partner countries, to enhance market access and sourcing opportunities. The Commission will propose measures to ensure that foreign investments in the EU automotive sector strengthen the industry’s long-term competitiveness. Finally, it also plans to simplify regulations to reduce the administrative burden on European car makers.

Regulation Review Moved Up to 2025

In response to pressure from some member states and car manufacturers, the European Commission has announced its intention to bring forward the review of EU legislation on vehicle emissions to the third and fourth quarters of this year. "I want to announce on this occasion that we have decided to move up the scheduled review of European legislation on harmful vehicle emissions to the third-fourth quarter of 2025, instead of 2026," said Transport Commissioner Apostolos Tzitzikostas during a press conference in Brussels. The reference is to the regulation by which the European Union has decided to ban petrol and diesel cars from 2035 onwards.

Opening to Synthetic and Biofuels

At the same time, the Commissioner has opened the door to the use of new technologies that are as zero-emission as electric cars. "We have already stated that synthetic fuels have a role to play in ensuring climate neutrality (to be achieved by 2050). We will also assess whether other technologies can play a role (…) However, we want to reiterate on this occasion that we have no intention of changing the 2035 target."

This stance aligns with countries like Italy, which in recent months have fought to have biofuels—rather than just the synthetic fuels promoted by German manufacturers—considered clean. That said, the European Commission’s position remains open-ended for now. Any changes to legislation will depend on both political debate in the Council and Parliament and the levels of technological innovation achieved in the coming years. The demand and production of biofuels continue to grow. The demand for renewable diesel in Europe is expected to reach 11 million tons by 2030, tripling from 4 million in 2023. Similarly, European biodiesel production is estimated to reach 11.3 million tons in 2025, compared to 3.5 million in 2020. Many states are calling on the EU to embrace a diversified portfolio of sustainable technologies, including, by 2035 and beyond, hybrid vehicles—both plug-in and range-extender—powered by non-fossil fuels.

It is foreseeable that in the coming months, various stakeholders will work towards aligning their positions to find the right mix of solutions that will enable the achievement of environmental sustainability goals based on technological neutrality. A unique “European” model, distinct from all others.