Transition to zero-emission mobility: The EU’s plan to save Europe’s car industry

By Pune Media On Mar 5, 2025

In a new action plan to boost Europe’s car industry, the European Commission pledged to support EV battery manufacturing, one of five flagship initiatives. Brussels also gave more flexibility for meeting this year’s CO₂ targets.

The European Commission has announced an action plan to support the European car industry’s access to key strategic technologies, including batteries, software and autonomous driving, along with cutting regulatory burdens.

The Commissioner for Sustainable Transport and Tourism, Apostolos Tzitzikostas, presented the plan on Wednesday.

It lists five flagship initiatives to support the ailing car industry, which provides 7% of the EU’s GDP and employs around 14 million people across the bloc.

However, the sector has been struggling due to supply chain risks, high energy costs and overreliance on critical supplies.

To address the latter, the Commission has announced a fund of €1.8bn to create a secure and competitive supply chain for battery raw materials.

Securing a safe supply of batteries and the raw materials in them is one of the key issues the industry is facing while transitioning to zero-emission vehicles.

“We will promote domestic production to avoid strategic dependencies, especially for batteries production,” Commission President Ursula Von der Leyen said on Wednesday.

Furthermore, the European Commission emphasised the need for European carmakers to become market leaders in AI-powered, connected and automated vehicle making. To support this, they pledged funding of €1bn over the 2025-2027 period.

A further €570m is going to finance the creation of charging points.

The action plan lays out further support to upskill and reskill workers in the industry and promises further support to SMEs.

More flexible but essentially unchanged clean mobility targets

The Commission is sticking with its clean mobility targets, setting in stone the level of emissions new cars and vans can produce for 2025, 2030 and 2035.

Currently, the goal is to progressively lower the emissions of the new vehicles until 2035, from which moment on, only zero-emission models can be produced.

“We will stick to our agreed emissions targets but with a pragmatic and flexible approach,” Von der Leyen said.

After many calls from the carmaking industry, and amid slowing EV sales in Europe, the Commission promised a new amendment.

If adopted, it would give car manufacturers three years instead of one to meet their compliance targets (emissions limits), by averaging their performance for 2025-2027. If they underperform in one year, they can make it up in the next.

Despite currently sticking with the targets, the Commission has plans to review the rules around CO2 emission standards in the second half of 2025, sooner than expected.

Meanwhile, the Commission pledged to help boost the demand for European zero-emission vehicles and published a new proposal to decarbonise corporate vehicles. These represent 60% of new car registrations.

Boosting European carmakers on the global stage

The US is threatening Europe with a 25% trade tariff which is a looming threat to the continent’s car industry, while competition from China on the global stage has also squeezed European carmakers’ profits.

To help change the tide for European carmakers, the Commission pledged to “ensure a level playing field” by using a mix of instruments. These include anti-subsidy measures, as well as free trade agreements.

The Commissioner named India as one of the “like-minded” countries the EU could potentially have beneficial trade agreements with.

Mixed reaction to the Action Plan from the industry

The European Automobile Manufacturers’ Association (ACEA) said in a statement that though they welcomed the action plan, “key elements are still missing.”

“Ambitious actions to boost infrastructure, demand incentives, and measures to reduce manufacturing costs are needed for cars, vans, trucks and buses,” the ACEA said.

Sigrid de Vries, Director General of ACEA, also added: “The proposed flexibility to meet CO2 targets in the coming years is a welcome first step towards a more pragmatic approach to decarbonisation dictated by market and geopolitical realities. It holds the promise of some breathing space for car and van makers, provided the much-needed demand and charging infrastructure measures now also actually kick-in.”

E-Mobility Europe said in a statement: “We regret that Europe’s 2025 CO2 limits have been weakened, risking a dampening of short-term EV sales, worsening investment predictability, and harming best performers.”

ChargeUp Europe Secretary General, Lucie Mattera, also expressed concern, saying: “Today the European Commission reiterated the 2035 zero emission goals. While the flexibilities introduced are a mistake that creates confusion in the interim, there are already over 11 million EVs on European roads, and the transition is well underway.”

Responding to the common criticism that there aren’t enough charging points, which drags down demand, she said: “The EV charging infrastructure sector is growing every day, delivering higher speed and improved, seamless EV charging experiences.”

The key issue with the new charging infrastructure is getting access to the grid, which provides electricity.

This could take many months, if not years in some cases.

To address this, the commissioner said that Brussels would publish recommendations for the member states to shorten waiting times.

The Commission is also looking at whether it should become mandatory for member states to set these demands as a top priority so permits can be approved faster.

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