Jamie Spencer
The European Commission is set to unveil new measures next week aimed at stimulating demand for electric vehicles (EVs) in the European Union while introducing local content requirements for car battery production, according to a draft proposal.
EU’s Automotive Action Plan
The Commission will publish its automotive action plan on March 5, focusing on supporting EU car manufacturers in electrifying their fleets and competing with more advanced rivals from China and the U.S.
New EV sales in the EU declined by 5.9% in 2024, according to the EU automakers’ association ACEA. The drop has been attributed to a lack of charging infrastructure, Germany’s abrupt end to EV subsidies, and a limited availability of affordable electric vehicles.
Challenges Facing European EV Producers
The draft proposal acknowledges that the European automotive sector risks losing market share in EV technology due to higher production costs. One of the key cost challenges is batteries, which make up 30-40% of an EV’s total value.
To address this, the EU plans to introduce increasing European content requirements on battery cells and components used in EVs sold within the bloc. The Commission will also explore support for EU-based battery producers, with financial aid potentially available to foreign firms partnering with European companies to facilitate knowledge sharing and technology transfer.
New Investment Conditions and Battery Recycling Support
As part of its broader strategy, the Commission is set to propose conditions for foreign investments in the automotive sector. The draft plan also highlights financial support for battery recycling facilities, aiming to enhance the EU’s self-sufficiency in critical EV components.
CO2 Emission Fines and Auto Industry Demands
European automakers, already dealing with factory closures and facing potential U.S. tariffs, have urged the Commission to provide relief from fines that could reach €15 billion ($15.6 billion) if fleet-wide CO2 emission targets are not met in 2025.
While the draft does not specify financial relief measures, Italian auto lobby group ANFIA has called for bolder action, including the cancellation of these fines for European manufacturers.
EU’s Push for a Competitive EV Market
The upcoming policy package underscores the EU’s commitment to securing its position in the global EV market. By reinforcing battery production, regulating foreign investments, and addressing industry concerns, the Commission aims to strengthen Europe’s automotive sector against increasing international competition.
Keywords: EU electric vehicles, European Commission, EV demand, battery production, automotive action plan, CO2 emissions, EV subsidies, battery recycling, foreign investment, EU car industry
