EU Announces €1.8B Initiative for Automotive Growth

The European Commission has initiated an ambitious action plan to increase the world competitiveness of the European automobile sector. As technology advancements proceed rapidly and competition from abroad grows, the EU is keen on driving innovation forward, safeguarding supply chains, and promoting a move towards cleaner mobility.

The plan follows a strategic discussion launched earlier in the year and introduces steps to promote domestic production, particularly for the battery sector. Among the key initiatives is a €1.8 billion investment to increase Europe's supply chains for batteries and reduce reliance on foreign suppliers. The funds will be directed towards paying for raw material procurements and enhancing the region's electric vehicle (EV) manufacturing capacity.

To initiate the shift to connected and autonomous vehicles, the EU will establish a European Connected and Autonomous Vehicle Alliance. Industry actors will be brought on board in the project, and common software and digital platforms will be developed. Regulatory "sandboxes" will be created to experiment with autonomous vehicle technology in controlled environments. Public-private investment of €1 billion in total for 2025-2027, backed by the Horizon Europe Programme, will fund these endeavors.

The plan also proposes amendments to the CO2 Standards Regulation, offering manufacturers more flexibility in meeting emissions levels between 2025 and 2027. In line with the EU's long-term climate goals, this adjustment addresses concerns of the automotive sector over regulatory constraints.

Recognizing disruptions in the supply chain and shortage of labor, the European Commission will enhance investment in displaced labor and offer more support for reskilling. The European Globalisation Adjustment Fund and European Social Fund Plus will help vehicle workers transition into new technology job opportunities.

For protection of the industry against unequal trading, the EU will enact trade defense measures such as anti-subsidy. Opportunities for sourcing and market access will be addressed in the international partners' negotiations. Regulator streamlinings will also be done to free manufacturers from bureaucratic barriers while making sure that foreign investment in the industry contributes to long-term competitiveness.

The action plan is a product of industry consultations with stakeholders, government officials, and working groups under the leadership of several EU Commissioners. With the changing global automotive scene, these actions are intended to make Europe the innovation leader while having a robust and competitive sector.

Source: European Commission | Credit: Jean-Francois Badias/AP Photo