The European automotive sector has long been a pillar of industrial strength, supporting millions of jobs and anchoring innovation across the continent.
But with global competition intensifying and technologies evolving rapidly, the European Commission says a policy reset is needed.
Its newly presented Automotive Package responds directly to manufacturers’ calls for clearer rules, lower administrative burdens, and greater flexibility – while reinforcing Europe’s commitment to ambitious CO2 emission standards.
The package aims to balance environmental targets with industrial resilience, ensuring the EU remains both climate-neutral and strategically independent.
Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy, explained: “This package will be a lifeline for the European automotive industry.
“We are pulling every lever at our disposal – simplification, flexibility, European preference, targeted support and innovation.
“Together, these measures are our commitment to restoring Europe’s industrial leadership while leading the global transition on climate.
Maintaining momentum towards clean mobility
At the heart of the initiative is a renewed commitment to clean transport. The Commission has kept a strong market signal in favour of zero-emission vehicles (ZEVs), while reshaping how carmakers comply with CO2 emission standards across different vehicle categories.
The updated framework addresses both supply and demand. On the supply side, it revises CO2 emission standards for cars, vans and heavy-duty vehicles.
On the demand side, it introduces binding national targets to accelerate the uptake of zero- and low-emission corporate fleets – an area seen as critical due to high annual mileages and faster turnover into the second-hand market.
Greater flexibility in CO2 emission standards
One of the most significant changes concerns how manufacturers meet emissions targets in the years ahead.
From 2035, carmakers will be required to achieve a 90% reduction in tailpipe emissions. The remaining 10% can be offset through approved measures such as the use of low-carbon steel produced in the EU, or alternative fuels, including e-fuels and biofuels.
This approach introduces greater technological neutrality. Rather than mandating a single solution, it allows a mix of powertrains, such as plug-in hybrids, range extenders, mild hybrids, and advanced internal combustion engines, to coexist alongside battery-electric and hydrogen vehicles beyond 2035.
In the run-up to that deadline, manufacturers gain additional flexibility. ‘Super credits’ will reward the production of small, affordable electric vehicles made in the EU, encouraging broader consumer access to electric mobility.
For the 2030 targets, a ‘banking and borrowing’ mechanism will allow manufacturers to balance emissions performance between 2030 and 2032.
Recognising structural challenges in the commercial sector, the Commission has also lowered the 2030 CO2 reduction target for vans from 50% to 40%.
Targeted relief for heavy-duty vehicles
Heavy-duty vehicles play a vital role in Europe’s logistics and industrial supply chains. The package includes a targeted amendment to CO2 emission standards for trucks and buses, easing compliance with 2030 targets while preserving long-term decarbonisation goals.
The Commission argues this pragmatic adjustment will help manufacturers scale up cleaner technologies without disrupting freight operations or inflating costs.
Corporate fleets as a demand engine
To stimulate demand, the Automotive Package introduces mandatory national targets for zero- and low-emission vehicles in large corporate fleets. Public financial support will increasingly be tied to low-emission vehicles that are ‘Made in the EU.’
By prioritising cleaner corporate vehicles, the policy is expected to accelerate emissions reductions while improving access to affordable low-emission cars in the second-hand market.
Investing in a European battery powerhouse
Clean mobility depends on secure battery supply chains. To reduce reliance on dominant global players, the Commission has announced a €1.8bn ‘Battery Booster’ initiative.
Of this, €1.5bn will be allocated as interest-free loans to European battery cell producers. The programme also includes coordinated policy measures to strengthen upstream supply chains, encourage innovation and build a resilient, EU-based battery ecosystem.
Cutting red tape and supporting innovation
The Automotive Omnibus, another core element of the package, focuses on simplification. By reducing administrative burdens and streamlining vehicle testing procedures, the Commission estimates manufacturers will save around €706m per year.
Measures include fewer secondary regulations, harmonised labelling rules for vehicle emissions, and equal treatment of electric vans under drivers’ rest-time regulations.
A new vehicle category for small, affordable electric cars – up to 4.2 metres in length – will also allow targeted incentives at the local and national level.
Industry reaction
The EU automotive sector has welcomed the package following a long process of calling on the EU to support the industry.
Sigrid de Vries, Director General of the European Automobile Manufacturers’ Association (ACEA), said: “These proposals rightly recognise the need for more flexibility and technology neutrality to make the green transition a success. This constitutes a major change compared to the current law.
“However, the devil can be very much in the details. We will now study the package and work with co-legislators to critically strengthen the proposals where needed.”
A pragmatic path forward
By reshaping CO2 emission standards while backing European manufacturing, the Commission hopes to chart a realistic path to climate neutrality.
The Automotive Package signals continuity in ambition, but with added flexibility, investment support and regulatory clarity designed to keep Europe’s car industry competitive in a fast-changing world.
