The European Commission has released the Automotive Industrial Action Plan comprising a series of measures to support the transition of the automotive industry up to 2035. While the plan includes some promising steps, it delays CO₂ reductions, raising concerns about the pace of Europe’s transition to zero-emission mobility.
A sector under stress
Europe’s automotive sector is grappling with new challenges. Decarbonisation, digitalisation, and rising global competition are creating deep structural changes in the sector which employs over 13 million people and whose turnover generates over 7% of the European Union’s gross domestic product.
“The plan recognises the importance of the automotive sector in the European economy and the challenges it faces, such as global competition, dependence on raw materials, and the need for innovation,” says Borja Carabante Muntada, Deputy Mayor of Madrid and Chair of Eurocities Mobility Forum.
Amid these challenges, clear and ambitious CO₂ regulations are not just environmental necessities but economic imperatives, ensuring European automakers remain competitive while securing jobs in the green economy and aligning with cities’ fight for clean air.
Leading up to the release of the Action Plan, Eurocities Secretary General André Sobczak took part in the strategic dialogues with the Commission to represent cities’ interests as key allies in the transition. Stockholm’s Vice-Mayor for Transport and Urban Environment and Vice-Chair of Eurocities Mobility Forum, Lars Strömgren says, “A strong regulatory framework for the automotive industry ensures clarity for cities as they implement measures to reach EU climate and air quality goals. Any decline in regulatory ambition could slow down progress towards climate and air quality targets.”
A strong regulatory framework for the automotive industry ensures clarity for cities as they implement measures to reach EU climate and air quality goals.
Weakening rules creates regulatory uncertainty
Building on the Clean Industrial Deal, the Action Plan weakens the regulatory framework for cleaner transport. For example, under the previous plan, carmakers were required to cut annual emissions by 15% by 2025, using 2021 as a baseline. Now, instead of meeting this target in a single year, manufacturers can average their reductions over 2025–2027, effectively postponing compliance.
Strömgren criticises this shift, stating, “Weakening emissions rules for the automotive industry is a step backward for cities working to improve air quality and fight climate change. Stockholm and other European cities need stronger –not weaker– regulations to protect public health and accelerate the transition to clean transport.”
For cities, the delay poses a significant challenge. As more Low Emission Zones (LEZs) come into effect to meet EU climate and air quality targets, robust CO₂ regulations are crucial to ensuring that manufacturers continue investing in zero-emission vehicles. Strong regulatory standards drive automakers to scale up electric vehicle (EV) production, making clean mobility more accessible and affordable. Without clear and enforceable rules, policymakers cannot reliably anticipate EV market trends, which risks disrupting the successful implementation of LEZs.
By shifting the goalposts for carmakers, the Commission creates uncertainty for cities, making it harder to plan and enforce LEZ policies. This announcement comes only a few days after the publication of the 4th Clean Air Outlook by the European Environment Agency, highlighting the need to do more to address the thousands of premature deaths linked to poor air quality in Europe. While cities are prioritising active mobility and public transport, certain groups such as commuters in poorly connected areas, small business owners, and those with mobility challenges still rely on private vehicles
Eurocities Head of Advocacy, Thomas Lymes, explains the importance of EV affordability: “Affordable zero-emission vehicles are essential for those who have no alternative to cars. Among today’s announcements from the European Commission, the measures aimed at boosting demand for zero-emission vehicles are a win-win for both cities and the automotive industry. These measures will complement our efforts to decarbonise mobility in cities while also supporting carmakers during this challenging period.”
Affordable zero-emission vehicles are essential for those who have no alternative to cars.
A binding Greening Corporate Fleets Initiative
One such measure set to accelerate the EV market is the upcoming binding Greening Corporate Fleets Initiative, which is expected to mandate the transition of corporate vehicle fleets to zero-emission models. This initiative supports the demand for zero-emission vehicles while complementing existing regulations on emissions.
Beyond reducing emissions, corporate fleets play a crucial role in making EVs more affordable. As these vehicles enter the second-hand market, they expand access to clean mobility for a wider range of users. By codifying this initiative, the Commission provides a clear regulatory framework, enabling cities to plan effectively and align their mobility strategies with the shift to zero-emission transport.
The initiative is also a major opportunity for EU carmakers, who have a strong presence in the corporate vehicle market. Today, nearly 60% of new cars in the EU are registered by companies, making corporate fleets the largest segment of Europe’s automotive industry. EU-based carmakers are particularly dominant in this market and data shows that companies are more loyal to EU brands when purchasing electric cars than private consumers, reinforcing the strategic advantage of this shift.
Initiatives like the Greening Corporate Fleets Initiative prove that ambitious policy can drive both climate action and economic opportunity. European policymakers must strike this balance between industrial competitiveness, environmental goals, and the needs of cities. Delaying CO₂ targets risks undermining this balance, creating uncertainty for automakers and slowing progress toward zero-emission mobility.
