The European Commission has unveiled a new Automotive Package to help the EU car industry navigate the transition to electric mobility. This comes as global competition intensifies and technologies evolve rapidly. Consequently, policymakers are aiming to balance ambitious environmental goals with industrial resilience.
Supporting Europe’s Automotive Industry
The automotive sector has long been a cornerstone of Europe’s economy, providing millions of jobs and driving innovation. However, manufacturers have called for clearer rules, reduced administrative burdens, and more flexibility. In response, the Commission designed this package to support industry while maintaining strong CO2 reduction commitments.
Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy, explained: “This package will be a lifeline for Europe’s automotive industry. We are pulling every lever – simplification, flexibility, European preference, targeted support, and innovation – to restore industrial leadership and lead the global green transition.”
Clean Mobility Remains a Priority
At its core, the package reinforces the shift toward zero-emission vehicles (ZEVs). Meanwhile, the updated CO2 framework addresses both supply and demand. On the supply side, emission standards for cars, vans, and heavy-duty vehicles are revised. At the same time, binding national targets aim to accelerate the uptake of low- and zero-emission corporate fleets, which are critical due to high mileage and fast second-hand turnover.
Greater Flexibility in CO2 Standards
One key change allows manufacturers more flexibility in meeting emissions targets. From 2035, carmakers must reduce tailpipe emissions by 90%, with the remaining 10% offset through approved measures such as low-carbon steel or alternative fuels like e-fuels and biofuels. Thus, multiple powertrain technologies—including plug-in hybrids, mild hybrids, and hydrogen vehicles—can coexist alongside battery-electric cars.
In addition, ‘super credits’ will reward small, affordable electric vehicles produced in the EU, helping expand access to clean mobility. For 2030 targets, a ‘banking and borrowing’ mechanism allows manufacturers to balance emissions performance between 2030 and 2032.
Recognising structural challenges in the commercial sector, the Commission lowered the 2030 CO2 reduction target for vans from 50% to 40%. Similarly, heavy-duty vehicles will see eased standards, helping logistics operators scale up cleaner technologies without disrupting operations.
Driving Demand through Corporate Fleets
To encourage adoption, the package introduces mandatory national targets for low- and zero-emission corporate fleets. Moreover, public funding will increasingly prioritize EU-made low-emission vehicles. As a result, emissions reductions are expected to accelerate while increasing the availability of affordable electric cars on the second-hand market.
Investing in a European Battery Ecosystem
A resilient EV transition depends on secure battery supply chains. Therefore, the Commission announced a €1.8bn ‘Battery Booster’ initiative, including €1.5bn in interest-free loans for European battery producers. Additionally, coordinated policies will strengthen upstream supply, stimulate innovation, and develop a self-reliant EU battery ecosystem.
Cutting Red Tape and Encouraging Innovation
The Automotive Omnibus aims to simplify regulations, streamline vehicle testing, and harmonize emission labelling. Consequently, manufacturers could save an estimated €706m annually. The package also introduces a new vehicle category for small electric cars up to 4.2 metres, enabling targeted incentives at both local and national levels.
Industry Reaction
The EU automotive sector has welcomed the package. Sigrid de Vries, Director General of ACEA, stated: “These proposals recognise the need for flexibility and technology neutrality. However, the details matter. We will work with co-legislators to strengthen the proposals where needed.”
A Pragmatic Path Forward
By reshaping CO2 standards, supporting EU manufacturing, and promoting innovation, the Commission hopes to maintain Europe’s competitiveness. Ultimately, the Automotive Package represents a realistic, flexible path toward climate neutrality while ensuring a strong industrial future.
