The fate of Europe’s auto industry will take a decisive turn on March 5th when the European Commission, led by Transport and Tourism Commissioner Apostolos Tzitzikostas, unveils its long-awaited Action Plan. The strategy aims to strike a balance between transitioning to zero-emission mobility and keeping Europe’s struggling car sector economically viable.
The European Automobile Manufacturers Association (ACEA) has sounded the alarm—without urgent action, factory closures and mass layoffs could further erode Europe’s standing against rising Chinese competition. The crisis is already hitting home. Just last week, German automaker Audi announced it would shut down a plant and cut 3,000 jobs.
Manufacturers and suppliers have been lobbying Brussels to address declining competitiveness. Through a Strategic Dialogue with European Commission President Ursula von der Leyen, industry leaders, buyers, and social stakeholders have debated the sector’s future. But so far, the EU has stood firm on strict emissions policies, refusing to adjust the Corporate Average Fuel Economy (CAFE) standards or reconsider the 2035 ban on combustion engine sales.
Now, there’s hope for change. The upcoming Action Plan may ease these rigid rules, which have hurt automakers in Germany, France, and Italy. The industry is pushing for a shift from penalties toward incentives that drive market demand. The slow adoption of electric vehicles—hampered by weak infrastructure and economic constraints—has stalled climate goals. Battery electric vehicle (BEV) market share dropped from 14.6% in 2023 to 13.6% in 2024, far from the expected 25%.
To address this, ACEA is calling for a review of the 2025 CO2 compliance framework to reduce excessive penalties, accelerate new CO2 regulations for all vehicle types, and introduce stronger incentives for zero-emission transport. Trade tensions with the U.S. and China also loom large, threatening Europe’s export-heavy auto sector.
With Asian manufacturers flooding the market with affordable, high-quality vehicles, European brands must fight to reclaim their position. One potential solution? Expanding the use of synthetic and renewable fuels, allowing combustion engines to remain under a more sustainable model. If Brussels embraces this shift, it could prevent millions of cars from being prematurely scrapped while keeping Europe’s auto industry in the race.
