Innovations, EV quotas, and autonomous driving: The EU’s new strategy.
With an ambitious action plan, the European Commission aims to make the domestic automotive industry more competitive. Key initiatives include incentives to expand electric mobility, revised CO₂ fleet targets, advancements in autonomous driving, and stronger battery supply chains. Funding will come from existing EU programs, with additional private investments to be mobilized. EU Commission President Ursula von der Leyen announced the plan on Monday following consultations with industry representatives in Brussels.
The plan includes leasing programs for new and used electric vehicles, particularly to support low-income households, addressing the high upfront costs that remain a barrier to EV adoption. Additionally, the EU will invest €570 million in charging infrastructure and draft legislation mandating a minimum share of zero-emission vehicles in corporate fleets.
More Flexibility for Car Manufacturers
Later this month, the Commission will propose amendments to CO₂ emissions regulations, granting automakers more flexibility. Instead of strict annual targets for 2025, 2026, and 2027, compliance will be assessed over a combined period, eliminating penalties for missing individual yearly goals. The European Automobile Manufacturers’ Association (ACEA) estimated compliance costs to be up to €16 billion, warning that excessive financial strain could reduce investments in research and development.
Innovations and a Potential Rethink of the 2035 Combustion Engine Ban
Alongside relaxed penalties, the Commission is embracing technology neutrality—another key demand from the industry. This shift could also lead to a reconsideration of the planned 2035 ban on new combustion engine vehicle sales. Von der Leyen announced an expedited review of the policy, with EU Transport Commissioner Apostolos Tzitzikostas confirming that it will take place this year rather than in 2026 as originally planned.
Currently, the EU allows exceptions for combustion engines running on synthetic, climate-friendly fuels (E-fuels). However, experts remain skeptical about large-scale adoption, citing limited production capacity, high costs, and significant energy demands.
Boosting Autonomous Driving and Reducing Dependence on China
To strengthen Europe’s position in autonomous driving, the Commission plans to launch an industrial alliance focused on software, chip development, and supporting technologies. Regulatory frameworks will also be adjusted to accelerate the deployment of self-driving vehicles on European roads.
Additionally, the EU aims to enhance the domestic battery value chain and reduce reliance on China. Measures include increased recycling efforts, streamlined investment processes, and simplified permitting for refining raw materials.
Mixed Reactions and the Road Ahead
ACEA and the German Association of the Automotive Industry (VDA) welcomed the Commission’s proposals as positive steps but stressed the need for further legal clarifications and adjustments. However, the environmental organization Transport & Environment criticized the planned relaxation of CO₂ fleet targets, arguing that it would only widen China’s lead in EV production.
The proposals are not yet final. Next, they must pass through the European Parliament and the EU Council for approval.
Photo: MicroStockHub, Kolonko via Canva, Montage Rawmaterials.net