The European Commission is set to unveil an automotive action plan designed to stimulate demand for electric vehicles (EVs) within the European Union. The proposal also includes measures to increase local content requirements for car battery production, according to a draft of the proposals seen by Reuters.
The plan, slated for release on March 5, is aimed at assisting EU car manufacturers in electrifying their fleets and staying competitive with more advanced rivals in China and the U.S. The draft document, which was reviewed by Reuters on Friday, outlines recommendations for the 27 EU member states. These include actions to accelerate EV adoption in company car fleets, which represent approximately 60% of the new car market within the bloc.
Additionally, the Commission intends to collaborate with EU nations to determine the most effective strategies for incentivizing EV purchases. It also proposes exempting zero-emission heavy-duty vehicles from road charges. This initiative comes in the wake of a 5.9% decline in new EV sales during 2024, as reported by the EU automakers’ association ACEA. The association attributed the drop partly to an insufficient charging infrastructure, along with Germany’s recent termination of subsidies and a shortage of affordable EVs.
The Commission’s draft recognizes that the European automotive industry is at risk of losing market share in EV technology and is facing higher costs for EV components, particularly batteries. Batteries account for 30-40% of the value of a standard car. The draft proposes to increase requirements for European content in battery cells and components used in EVs sold within the EU.
The EU executive is also exploring ways to support companies engaged in battery production within the EU. This may extend to foreign firms, provided they collaborate with EU companies to facilitate knowledge and technology sharing. Furthermore, the Commission intends to propose conditions for foreign investments in the automotive sector and to provide financial support for battery-recycling facilities.
EU carmakers, already grappling with factory closures and preparing for potential U.S. tariffs, have urged the Commission to provide relief from potential fines that could reach 15 billion euros ($15.6 billion) if their fleets fail to meet CO2 emission limits by 2025. The draft, however, did not specify any financial relief measures.
According to Julia Poliscanova, Senior Director of vehicles and e-mobility at campaign and research group T&E, the focus should be on electrifying corporate fleets and localizing battery manufacturing. She stated, “Instead of creating uncertainty, the plan should stick to the promising measures on electrifying corporate fleets and localising battery manufacturing.”
($1 = 0.9604 euros)
(Reporting by Philip Blenkinsop; additional reporting by Giulio Piovaccari in Milan; editing by Mark Heinrich)
