Quick Takeaways
- The EU Automotive Package combines climate ambition with industrial flexibility to keep Europe competitive during the clean mobility transition.
- Targeted CO₂ compliance relief, fleet electrification, and battery supply-chain support form the core of the strategy.
On October 30, the European Commission unveiled the EU Automotive Package, a comprehensive policy framework designed to accelerate the clean mobility transition while safeguarding industrial competitiveness. The initiative reinforces Europe’s long-term climate neutrality goals and responds to industry calls for regulatory clarity, flexibility, and reduced compliance burden across the automotive value chain.
For decades, the automotive sector has been a cornerstone of Europe’s industrial strength, supporting millions of jobs and driving technological progress. As global mobility undergoes structural change driven by electrification, digitalization, and geopolitics, the EU Automotive Package aims to ensure that European manufacturers remain competitive while transitioning toward low- and zero-emission vehicles.
EU Automotive Package Balances Climate Goals and Industrial Flexibility
The EU Automotive Package addresses both supply-side and demand-side challenges facing the industry. On the regulatory front, the Commission proposed revisions to CO₂ emission standards for cars, vans, and heavy-duty vehicles, introducing additional flexibility while preserving a strong market signal toward electrification and clean technologies.
From 2035 onward, manufacturers must achieve a 90 percent reduction in tailpipe emissions. The remaining emissions can be offset through the use of low-carbon steel produced within the European Union or via e-fuels and biofuels. This approach allows multiple propulsion technologies to coexist, including battery electric vehicles, hydrogen vehicles, plug-in hybrids, range extenders, and selected internal combustion solutions.
EU Automotive Package Introduces Targeted CO₂ Compliance Measures
To support near-term compliance, the Commission introduced several mechanisms aimed at easing the transition:
These measures are intended to maintain investment certainty while reflecting market realities, particularly in segments where electrification adoption has progressed more slowly.
Corporate Fleets Play a Key Role in EU Automotive Package Strategy
On the demand side, the EU Automotive Package introduces binding national targets to accelerate the adoption of zero- and low-emission vehicles within corporate fleets. As company vehicles typically cover higher annual mileage, faster fleet electrification is expected to deliver disproportionate emission reductions.
The framework also links public financial support to vehicles that are both low-emission and manufactured within the European Union. Increased availability of such vehicles in first-hand and second-hand markets is expected to broaden access for private consumers while strengthening domestic production.
Battery Booster Strengthens Europe’s EV Supply Chain
A central pillar of the EU Automotive Package is the Battery Booster initiative, backed by €1.8 billion in funding. Of this, €1.5 billion will be allocated as interest-free loans to European battery cell manufacturers, accelerating the development of a fully localized battery value chain.
The initiative is designed to enhance cost competitiveness, secure upstream raw material supply, and reduce dependency on dominant global battery suppliers. Additional policy measures will support innovation, cross-border coordination, and sustainable manufacturing practices across Member States.
EU Automotive Package Cuts Red Tape and Lowers Compliance Costs
The Automotive Omnibus component focuses on regulatory simplification to improve global competitiveness. By streamlining administrative processes and reducing secondary legislation, the Commission estimates annual savings of approximately €706 million for businesses.
Key measures include simplified testing procedures for passenger vans and trucks, harmonized vehicle labeling to improve consumer transparency, and regulatory adjustments that place electric vans on equal footing with combustion vehicles regarding operational rules. Collectively, these reforms aim to free up capital for decarbonization investments while maintaining high safety and environmental standards.
Small Affordable Electric Vehicles Gain Dedicated Policy Support
A new vehicle category under the Small Affordable Cars initiative has been introduced for electric vehicles up to 4.2 meters in length. This classification allows Member States and local authorities to design targeted incentives that stimulate demand for compact electric cars produced within the European Union, reinforcing affordability and regional manufacturing.
The EU Automotive Package builds on extensive consultations conducted through the Strategic Dialogue on the Future of the Automotive Industry, initiated earlier in 2025. By aligning climate ambition with industrial pragmatism, the framework positions Europe to remain a global leader in clean, competitive mobility.
For decades, the automotive sector has been a cornerstone of Europe’s industrial strength, supporting millions of jobs and driving technological progress. As global mobility undergoes structural change driven by electrification, digitalization, and geopolitics, the EU Automotive Package aims to ensure that European manufacturers remain competitive while transitioning toward low- and zero-emission vehicles.
EU Automotive Package Balances Climate Goals and Industrial Flexibility
The EU Automotive Package addresses both supply-side and demand-side challenges facing the industry. On the regulatory front, the Commission proposed revisions to CO₂ emission standards for cars, vans, and heavy-duty vehicles, introducing additional flexibility while preserving a strong market signal toward electrification and clean technologies.
From 2035 onward, manufacturers must achieve a 90 percent reduction in tailpipe emissions. The remaining emissions can be offset through the use of low-carbon steel produced within the European Union or via e-fuels and biofuels. This approach allows multiple propulsion technologies to coexist, including battery electric vehicles, hydrogen vehicles, plug-in hybrids, range extenders, and selected internal combustion solutions.
EU Automotive Package Introduces Targeted CO₂ Compliance Measures
To support near-term compliance, the Commission introduced several mechanisms aimed at easing the transition:
- Super credits for small, affordable electric vehicles manufactured in the European Union
- Banking and borrowing flexibility for passenger car and van CO₂ targets between 2030 and 2032
- Reduced 2030 CO₂ reduction target for vans from 50 percent to 40 percent
- Additional compliance flexibility for heavy-duty vehicle manufacturers toward 2030 targets
These measures are intended to maintain investment certainty while reflecting market realities, particularly in segments where electrification adoption has progressed more slowly.
Corporate Fleets Play a Key Role in EU Automotive Package Strategy
On the demand side, the EU Automotive Package introduces binding national targets to accelerate the adoption of zero- and low-emission vehicles within corporate fleets. As company vehicles typically cover higher annual mileage, faster fleet electrification is expected to deliver disproportionate emission reductions.
The framework also links public financial support to vehicles that are both low-emission and manufactured within the European Union. Increased availability of such vehicles in first-hand and second-hand markets is expected to broaden access for private consumers while strengthening domestic production.
Battery Booster Strengthens Europe’s EV Supply Chain
A central pillar of the EU Automotive Package is the Battery Booster initiative, backed by €1.8 billion in funding. Of this, €1.5 billion will be allocated as interest-free loans to European battery cell manufacturers, accelerating the development of a fully localized battery value chain.
The initiative is designed to enhance cost competitiveness, secure upstream raw material supply, and reduce dependency on dominant global battery suppliers. Additional policy measures will support innovation, cross-border coordination, and sustainable manufacturing practices across Member States.
EU Automotive Package Cuts Red Tape and Lowers Compliance Costs
The Automotive Omnibus component focuses on regulatory simplification to improve global competitiveness. By streamlining administrative processes and reducing secondary legislation, the Commission estimates annual savings of approximately €706 million for businesses.
Key measures include simplified testing procedures for passenger vans and trucks, harmonized vehicle labeling to improve consumer transparency, and regulatory adjustments that place electric vans on equal footing with combustion vehicles regarding operational rules. Collectively, these reforms aim to free up capital for decarbonization investments while maintaining high safety and environmental standards.
Small Affordable Electric Vehicles Gain Dedicated Policy Support
A new vehicle category under the Small Affordable Cars initiative has been introduced for electric vehicles up to 4.2 meters in length. This classification allows Member States and local authorities to design targeted incentives that stimulate demand for compact electric cars produced within the European Union, reinforcing affordability and regional manufacturing.
The EU Automotive Package builds on extensive consultations conducted through the Strategic Dialogue on the Future of the Automotive Industry, initiated earlier in 2025. By aligning climate ambition with industrial pragmatism, the framework positions Europe to remain a global leader in clean, competitive mobility.
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