Quick Takeaways
- Europe signals long-term regulatory certainty for clean mobility while avoiding a single-technology mandate.
- The framework aligns climate ambition with industrial competitiveness, batteries, and supply-chain resilience.
On the same day the European Commission unveiled its EU Automotive Package, the policy framework sent a clear signal to the global automotive industry that Europe remains firmly committed to a clean mobility transition while balancing competitiveness, flexibility, and industrial resilience. The package introduces pragmatic regulatory adjustments aimed at achieving 2050 climate neutrality without undermining the sector’s economic strength.
The EU Automotive Package responds directly to industry concerns over regulatory complexity while preserving strong market signals for zero-emission vehicles. By combining demand- and supply-side measures, the framework offers manufacturers additional compliance flexibility, clearer investment certainty, and targeted support for vehicles and batteries produced within the European Union.
EU Automotive Package balances climate targets and industrial flexibility
For decades, the automotive sector has been a cornerstone of Europe’s industrial base, supporting millions of jobs and driving technological leadership. As global competition intensifies and mobility technologies evolve rapidly, the sector faces mounting pressure to decarbonise while remaining cost-competitive.
The EU Automotive Package maintains ambitious emissions objectives while allowing manufacturers greater technological neutrality. From 2035, new passenger cars will be required to achieve a 90 percent reduction in tailpipe emissions, with the remaining emissions compensated through low-carbon materials or alternative fuels produced within the EU. This approach preserves a role for multiple powertrain technologies beyond full electrification.
Multiple vehicle technologies remain viable beyond 2035
Rather than enforcing a single technology pathway, the policy framework allows several vehicle solutions to coexist. Plug-in hybrids, range extenders, mild hybrids, and internal combustion engine vehicles using low-carbon fuels can continue alongside battery-electric and hydrogen-powered vehicles.
Before 2035, manufacturers producing small, affordable electric vehicles in the EU will benefit from targeted incentives designed to accelerate market adoption. These measures are intended to increase the availability of compact electric models while strengthening Europe’s domestic manufacturing base.
Key flexibility mechanisms include:
Corporate vehicle targets strengthen zero-emission demand
The demand side of the EU Automotive Package focuses on corporate fleets, which account for high annual mileage and faster vehicle turnover. Binding national targets will require large companies to increase adoption of zero- and low-emission vehicles, expanding availability in both first-hand and second-hand markets.
Vehicles benefiting from public financial support must meet zero- or low-emission criteria and be manufactured within the European Union. This approach reinforces emission reductions while supporting European supply chains and industrial sovereignty.
Battery Booster strengthens Europe’s battery value chain
To secure strategic independence in energy storage, the Commission has introduced a Battery Booster programme valued at €1.8 billion. A significant share of this funding will support European battery cell producers through interest-free loans, accelerating scale-up and innovation.
The initiative aims to improve cost competitiveness, secure upstream material supply, and reduce dependence on dominant global players. Coordinated action across Member States is expected to create a resilient, sustainable battery ecosystem fully rooted in the EU.
Automotive Omnibus reduces regulatory burden and costs
The Automotive Omnibus component of the EU Automotive Package targets administrative simplification and cost reduction. By streamlining testing procedures, reducing secondary legislation, and harmonising regulatory requirements, manufacturers are expected to save approximately €706 million annually.
Additional measures place electric vans on equal regulatory footing with combustion vehicles in areas such as driver rest rules, facilitating wider deployment in domestic transport. A new vehicle category under the Small Affordable Cars initiative enables targeted incentives for electric vehicles up to 4.2 metres in length.
Clear labelling and predictable rules support consumer confidence
Updated and harmonised vehicle labelling rules will provide consumers with clearer emissions information at the point of purchase. Combined with regulatory predictability for manufacturers, these measures aim to strengthen market confidence while maintaining Europe’s leadership in sustainable mobility.
The EU Automotive Package builds on extensive industry dialogue and reflects a balanced approach to decarbonisation, competitiveness, and strategic autonomy as Europe navigates the next phase of automotive transformation.
The EU Automotive Package responds directly to industry concerns over regulatory complexity while preserving strong market signals for zero-emission vehicles. By combining demand- and supply-side measures, the framework offers manufacturers additional compliance flexibility, clearer investment certainty, and targeted support for vehicles and batteries produced within the European Union.
EU Automotive Package balances climate targets and industrial flexibility
For decades, the automotive sector has been a cornerstone of Europe’s industrial base, supporting millions of jobs and driving technological leadership. As global competition intensifies and mobility technologies evolve rapidly, the sector faces mounting pressure to decarbonise while remaining cost-competitive.
The EU Automotive Package maintains ambitious emissions objectives while allowing manufacturers greater technological neutrality. From 2035, new passenger cars will be required to achieve a 90 percent reduction in tailpipe emissions, with the remaining emissions compensated through low-carbon materials or alternative fuels produced within the EU. This approach preserves a role for multiple powertrain technologies beyond full electrification.
Multiple vehicle technologies remain viable beyond 2035
Rather than enforcing a single technology pathway, the policy framework allows several vehicle solutions to coexist. Plug-in hybrids, range extenders, mild hybrids, and internal combustion engine vehicles using low-carbon fuels can continue alongside battery-electric and hydrogen-powered vehicles.
Before 2035, manufacturers producing small, affordable electric vehicles in the EU will benefit from targeted incentives designed to accelerate market adoption. These measures are intended to increase the availability of compact electric models while strengthening Europe’s domestic manufacturing base.
Key flexibility mechanisms include:
- Banking and borrowing of CO2 credits between 2030 and 2032
- Adjusted CO2 reduction targets for vans, recognising slower electrification uptake
- Targeted easing of compliance requirements for heavy-duty vehicle manufacturers
Corporate vehicle targets strengthen zero-emission demand
The demand side of the EU Automotive Package focuses on corporate fleets, which account for high annual mileage and faster vehicle turnover. Binding national targets will require large companies to increase adoption of zero- and low-emission vehicles, expanding availability in both first-hand and second-hand markets.
Vehicles benefiting from public financial support must meet zero- or low-emission criteria and be manufactured within the European Union. This approach reinforces emission reductions while supporting European supply chains and industrial sovereignty.
Battery Booster strengthens Europe’s battery value chain
To secure strategic independence in energy storage, the Commission has introduced a Battery Booster programme valued at €1.8 billion. A significant share of this funding will support European battery cell producers through interest-free loans, accelerating scale-up and innovation.
The initiative aims to improve cost competitiveness, secure upstream material supply, and reduce dependence on dominant global players. Coordinated action across Member States is expected to create a resilient, sustainable battery ecosystem fully rooted in the EU.
Automotive Omnibus reduces regulatory burden and costs
The Automotive Omnibus component of the EU Automotive Package targets administrative simplification and cost reduction. By streamlining testing procedures, reducing secondary legislation, and harmonising regulatory requirements, manufacturers are expected to save approximately €706 million annually.
Additional measures place electric vans on equal regulatory footing with combustion vehicles in areas such as driver rest rules, facilitating wider deployment in domestic transport. A new vehicle category under the Small Affordable Cars initiative enables targeted incentives for electric vehicles up to 4.2 metres in length.
Clear labelling and predictable rules support consumer confidence
Updated and harmonised vehicle labelling rules will provide consumers with clearer emissions information at the point of purchase. Combined with regulatory predictability for manufacturers, these measures aim to strengthen market confidence while maintaining Europe’s leadership in sustainable mobility.
The EU Automotive Package builds on extensive industry dialogue and reflects a balanced approach to decarbonisation, competitiveness, and strategic autonomy as Europe navigates the next phase of automotive transformation.
Share: