The following is an opinion piece by Rahma Chikh, Head of EU and Governmental Affairs at European Automobile Manufacturers’ Association (ACEA).
On Friday, the votes in plenary will define the trajectory of European automotive for the next decade. ACEA publishes this today, not to delay that vote, but to ensure it is cast with full awareness of what these texts demand and what remains unbuilt.
From the opening committee discussions to the final trilogue rounds, ACEA worked continuously alongside the parliamentary majority driving these files, Renew Europe, S&D, the EPP and others groups as well as with different coalitions within the Council, to keep one question at the centre of the debate: does Europe’s automotive transition have the implementation realism it needs to succeed?
That question was necessary because the provisional agreements reached on the revision of the CO2 standards for light-duty vehicles and on clean corporate vehicles are no longer
simply climate legislation. They are industrial policies of strategic importance. They will shape investment decisions worth hundreds of billions of euros, determine the future geography of European manufacturing, and influence whether Europe remains an automotive production power or gradually becomes dependent on external industrial ecosystems.
ACEA has participated constructively throughout this process. We contributed to consultations, technical dialogues and strategic exchanges with both Parliament and Council. At times, some of the automotive sector’s concerns were too quickly dismissed as resistance to transition. Yet the final trilogue discussions also demonstrated that a growing number of policymakers now recognise an essential reality: decarbonisation without industrial resilience is not a sustainable transition strategy.
The European automotive sector directly and indirectly supports around 13 million jobs across the Union and accounts for approximately 7% of EU GDP. European manufacturers represented by ACEA have already committed more than €250 billion to electrification and battery technologies, an industry already undergoing one of the largest industrial transformations in its history while simultaneously facing unprecedented global competitive pressure.
The challenge is no longer whether the transition will happen. The challenge is whether Europe can manage it without eroding its own industrial foundations.
The agreements reached this week contain important improvements in that regard.
Most notably, the clean corporate vehicles regulation abandons the idea of direct company-level mandates in favour of national targets for Member States. This distinction matters enormously. The operational conditions facing a leasing operator in the Netherlands are fundamentally different from those facing logistics companies in Romania, Bulgaria or parts of Southern Europe where charging infrastructure remains significantly underdeveloped.
The compromise also recognises something ACEA and many fleet operators have consistently argued throughout negotiations: infrastructure is not secondary to electrification, it is its precondition. The regulation now allows Member States to request reductions of up to 10 percentage points in their national targets where charging infrastructure deployment significantly constrains uptake or where the transition creates serious employment impacts.
That recognition is essential because corporate fleets are central to the success of Europe’s decarbonisation strategy. Around 60% of new passenger car registrations and nearly 90 % of new van registrations in the Union are corporate vehicles. Due to their rapid turnover cycles, those vehicles typically enter the second-hand market within three to five years, substantially increasing the future availability of affordable electric vehicles for European
households. This second-hand market dimension is one of the strongest social arguments behind fleet electrification. But it only works if the market conditions enabling electrification actually exist.
The revised CO2 standards also introduce long-awaited regulatory flexibilities. Multi-year compliance averaging between 2025- 2028 and 2030-2033 better reflects the realities of automotive production cycles and investment planning. Automotive manufacturing decisions are made years in advance and require long-term stability. Compliance systems based
exclusively on annual snapshots create avoidable volatility, investment uncertainty and potentially disruptive market distortions.
Equally important is the growing recognition that decarbonisation cannot be assessed solely through tailpipe emissions. The agreements introduce mechanisms linked to lifecycle emissions, sustainable renewable fuels and low-carbon steel. This reflects a broader industrial truth that Europe can no longer ignore: achieving climate neutrality depends not only on changing vehicles, but also on decarbonising the industrial ecosystems producing them. The agreement on low-carbon steel is particularly significant. The European steel sector produces approximately 146 million tonnes annually and represents around 8% of global steel output. Encouraging the use of low-carbon steel in vehicle manufacturing creates an industrial lead market capable of supporting both decarbonisation and European strategic autonomy.
Yet despite these advances, the final compromises also expose unresolved contradictions at the heart of Europe’s industrial transition strategy.
The first concerns global competitiveness. Chinese manufacturers accounted for roughly 3% of the European electric vehicle market in 2021. By 2025, that figure had approached 10%
and continues to rise rapidly in key market segments. This expansion is not occurring under normal competitive conditions. Chinese manufacturers benefit from vertically integrated supply chains, large-scale state-backed industrial financing, subsidised battery ecosystems and domestic production scales European manufacturers cannot easily replicate. Multiple analyses estimate that Chinese EV production benefits from massive state support up to €10,000per vehicle in some segments. European manufacturers are therefore simultaneously expected to accelerate electrification, absorb major restructuring costs and
compete against heavily subsidised external competitors.
This is why the new “Made in the European Union” conditionality attached to public support after 2030 is politically understandable. Europe increasingly recognises that industrial dependency carries strategic risks. But the agreements still leave one fundamental issue unresolved: nobody yet knows what “Made in the European Union” will actually mean in practice. The criteria will only be defined later through delegated acts linked to the future Industrial Accelerator Act. For manufacturers, suppliers, leasing companies and fleet operators, this creates major uncertainty. Companies are now expected to prepare
procurement strategies and industrial investments for 2029 and 2030 without knowing the criteria that will determine access to public support. The Commission must therefore publish the delegated acts defining “Made in the European Union” criteria before the end of 2027. Anything later risks creating investment paralysis precisely when Europe needs industrial acceleration.
The second unresolved issue is infrastructure deployment. The revised CO2 standards now include a temporary safeguard mechanism reducing excess emissions premiums by 40% if
more than 35% of Member States fail to meet their mandatory infrastructure deployment targets under AFIR. The existence of such a mechanism is politically revealing in itself. It reflects institutional recognition that manufacturers cannot be solely responsible for decarbonisation while infrastructure deployment remains uneven and insufficient. More than one million public charging points have now been deployed across the EU. Yet deployment remains deeply unequal geographically. Several Member States remain significantly behind AFIR trajectories, while freight corridors and peripheral regions continue to face major infrastructure gaps. The AFIR review scheduled before the end of 2026 must therefore include enforceable deployment mechanisms and stronger implementation oversight, not another cycle of reporting obligations without consequences.
The social dimension of this transition must also be treated with greater seriousness. More than 1.7 million jobs in Europe’s automotive supply industry are directly exposed to the transformation of the powertrain ecosystem. The Saarlouis Body & Assembly closure last year eliminated 4,600 direct jobs in a city of 35,000 people with no comparable industrial anchor to absorb that workforce. In Mirafiori, the historic Stellantis complex in Turin that once employed 50,000 workers, production has been reduced to a fraction of its former capacity. These are not statistics. They are communities making irreversible choices about their economic futures on the basis of regulatory signals that must be coherent and credible. The agreements rightly refer to reskilling, labour-market transitions and just-transition safeguards. But Europe has often been far stronger at announcing transition frameworks than financing them adequately. The Industrial Accelerator Act must therefore include a dedicated automotive supply-chain chapter with concrete financing instruments supporting battery manufacturing, supplier adaptation, workforce reskilling and industrial conversion in the regions most exposed.
The automotive industry understands the direction of travel. Climate neutrality remains the long-term objective and electrification will play a central role in achieving it. But Europe
cannot regulate its transition faster than it can build the industrial, technological and infrastructure conditions necessary to sustain it. The agreements reached this week represent genuine movement toward a more pragmatic and industrially aware framework. It will depend on what happens next: delegated acts, infrastructure deployment, financing mechanisms, industrial support and implementation coherence.
The real test therefore starts now.
Leave a Reply