The European Commission presented the Automotive Package to support the transition to clean mobility in the automotive sector. The package establishes an ambitious policy framework aimed at achieving climate neutrality by 2050 and strategic independence, while offering manufacturers increased flexibility and simplified rules at the request of industry. The automotive sector has long underpinned Europe’s industrial strength, sustaining millions of jobs and driving technological innovation. As the industry evolves, the package reinforces the market signal for zero-emission vehicles and offers flexibility for meeting CO2 targets. It also promotes vehicles and batteries produced within the European Union. A corporate vehicles initiative will drive adoption of zero- and low-emission vehicles, and the automotive omnibus is projected to save approximately €706 million per year through cost reductions and streamlined regulations, providing greater investment certainty.
Commission President Ursula von der Leyen commented, “Innovation. Clean mobility. Competitiveness. This year, these were top priorities in our intense dialogues… As technology rapidly transforms mobility and geopolitics reshapes global competition, Europe remains at the forefront of the global clean transition.”
On the supply side, the package reviews CO2 emission standards for cars and vans and proposes targeted amendments for heavy-duty vehicles. From 2035, carmakers must achieve a 90% reduction in tailpipe emissions, with the remaining 10% offset through low-carbon steel manufactured in the EU or approved e-fuels and biofuels. This approach allows plug-in hybrids, range extenders, mild hybrids, and internal combustion engine vehicles to contribute alongside battery-electric and hydrogen vehicles beyond 2035. Before 2035, “super credits” will incentivize small affordable electric vehicles made in the EU. Additional flexibility includes banking and borrowing of targets between 2030 and 2032 and a reduction of the 2030 CO2 vans target from 50% to 40%.
The package also sets binding national targets for corporate fleets, ensuring that large companies adopt zero- and low-emission vehicles and that publicly supported vehicles are made in the EU. It introduces the Battery Booster, allocating €1.8 billion to develop an EU-made battery value chain, including €1.5 billion in interest-free loans for cell producers and policy measures to enhance competitiveness, secure supply chains, and foster innovation. Administrative burdens will be eased under the Automotive Omnibus, reducing legislation and streamlining testing for new vans and trucks. The introduction of a small affordable cars category will enable targeted incentives for EVs up to 4.2 meters in length, and car labeling rules will be updated to provide clear emissions information for consumers.
Battery booster strategy: Six key pillars
1. Financial Support to Scale Up Battery Manufacturing
- Battery Booster Facility: €1.5 billion in interest-free loans from the Innovation Fund to support EU battery cell producers during the costly ramp-up phase.
- €1 billion in grants (2024) for EV battery cell manufacturing.
- Top-up of €200 million to the InvestEU program for loan guarantees.
- Long-term support planned under the European Competitiveness Fund (2028+).
2. Building a Resilient Upstream Value Chain
- 32 strategic raw materials projects in the EU and 10 outside, especially for lithium, nickel, graphite.
- €300 million to support critical raw material projects (e.g., lithium, cobalt, nickel).
- RESourceEU Action Plan to mobilize €3 billion in 12 months for the raw materials value chain.
- Export ban on black mass to non-OECD countries from Dec 2026 to promote in-EU recycling.
- Upcoming Circular Economy Act (Q3 2026) to simplify cross-border circular activities.
3. Securing Industrial Sovereignty and Level Playing Field
- New conditions proposed on foreign direct investments (FDI) to ensure value-added for EU economy (e.g., tech transfer, EU supply chain integration).
- Greater scrutiny under the Foreign Subsidies Regulation to counter unfair trade practices.
- Strategic partnerships like the EU-Japan MoU on battery recycling and skills.
4. Boosting Demand for EU-Made Batteries
- Introduction of “Made in EU” content requirements for public funding eligibility (including EVs and BESS).
- Net Zero Industry Act mandates resilience criteria in all new EV subsidy schemes from January 2026.
- Battery diplomacy and defense applications (e.g., drones) to further stimulate demand.
5. Investing in Research, Innovation, and Skills
- Up to €925 million via the Batt4EU Horizon Europe partnership (2021–2027).
- Specific R&I focus on new battery chemistries, recycling, and production technologies.
- Skills development supported via Net Zero Industry Academies and the European Battery Alliance Academy.
- A Strategic Energy Technology (SET) Plan to align R&I efforts and investments across Member States.
6. Coordinated EU-Wide Implementation
- Launch of a Competitiveness Coordination Tool (CCT) to align funding and policies across EU, Member States, and regions.
- CCT pilot for batteries will facilitate coordination on skills, investments, and demand-side measures.
- First call for Battery Booster Facility support planned for Q1 2026.
Source: EU Commission
