CCMI/249

Automotive Industry Action Plan

OPINION

Consultative Commission on Industrial Change

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Industrial Action Plan for the European automotive sector

(COM(2025) 95 final)

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Rapporteur: Gonçalo LOBO XAVIER

Co-rapporteur: Guido NELISSEN

1.Conclusions and recommendations

1.1The EESC acknowledges the vital importance of the automotive industry as a strategic pillar of the European economy, in terms of both employment and industrial added value, and underlines the need to ensure a competitive and sustainable future for the sector.

1.2The Committee supports the climate objectives of the European Green Deal and the transition to zero-emission mobility, and stresses that this transformation must be accompanied by robust social and economic measures to avoid exacerbating inequalities between regions and social groups within the EU.

1.3The EESC calls for a comprehensive European strategy for a fair and competitive transition in the automotive sector, based on investment in skills, innovation, infrastructure and the circular economy and a special focus on small and medium-sized enterprises (SMEs).

1.4The Committee believes that social dialogue, and the active involvement of workers will be key to the success of the transformation process and calls for stronger support for collective bargaining, the informing and consultation of workers, and sectoral dialogue, with constructive outcomes.

1.5The EESC stresses the need to support the most affected regions and the most vulnerable workers, particularly those in SMEs and subcontracting networks in many Member States, through targeted reskilling programmes, public and private investment, and the mobilisation of EU funds.

1.6The EESC urges the European Commission to ensure the right balance between regulatory stability/consistency and targeted flexibility, particularly in areas such as CO₂ targets and sustainable fuels, and to urgently increase strategic autonomy in critical raw materials, in order to foster long-term planning and maintain industry confidence.

1.7The EESC also emphasises the need for a coordinated European industrial strategy to address the structural challenges facing the entire automotive supply chain, including dependence on critical raw materials, unfair competition from China – related not only to direct imported vehicle schemes but also to production systems – and geopolitical tensions affecting supply chains.

1.8Recommends speeding up the deployment of charging infrastructure for electric vehicles, ensuring even coverage across all EU regions to prevent disparities in access to sustainable mobility.

1.9Stresses the importance of investment in education, and in research and development (R&D), particularly in battery technologies and automotive software, in order to restore European leadership in these key areas.

1.10 Calls for the harmonisation of standards and regulations related to autonomous and connected vehicles, to support the testing and deployment of these vehicles on public roads and ensure consumer safety and trust.

1.11Encourages the diversification of trade partnerships and the strengthening of relations with third countries, with a view to reducing dependence on specific markets and enhancing the resilience of the sector.

1.12Recommends the establishment of targeted support programmes for SMEs in the automotive sector, to improve their access to finance, innovation, and international markets and, as mentioned, to facilitate skilling and reskilling programmes.

1.13As the action programme only addresses the upstream sector, the EESC calls for an action programme for the downstream sector as the aftermarket also has an important role to play in the decarbonisation of transport while being confronted with the same challenges as the other parts of the automotive value chain.

1.14Finally, the EESC calls for better coordination and exchange of best practices of all initiatives in support of electrification of transport, both financial as non-financial (like ‘smart cities’).

2.Challenges ahead

2.1For many decades, the EU automotive industry, spurred on by world-class engineering and a highly skilled workforce, has been on a successful trajectory. It was one of the leading sectors during the second industrial revolution and became a global leader and a driver for jobs and economic growth.

2.2Still today the automotive industry and its vast supply chain remain a key strength of Europe’s industrial fabric. The automotive industry is also at the heart of the twin digital and green transitions. The sector employs 3.5 million people (over 11% of European manufacturing employment), of which 2.4 million in car production and automotive suppliers, and the rest in other sectors such as chemicals and textiles. Connected to the production of cars is a vast downstream ecosystem employing 4.5 million people in maintenance, repairs, dealerships, service stations, and roadworthiness testing. The sector has an extraordinarily high R&D intensity as it spends 15% of its gross value added on R&D – which represents 32% of total R&D spending in the EU – and enjoyed a considerable trade surplus of EUR 89.3 billion in 2024. But disruptive times are ahead for the automotive industry, which is undergoing a major transformation. The Western world has reached ‘peak auto’ while new entrants (from the Asia Pacific region, the US and the IT sector) aggressively seize market share from established players. Geopolitical tensions are on the rise disrupting supply chains and international trade. Vehicle technology is changing at an unprecedented pace while digital business models are disrupting the aftermarket.

Four megatrends will shape the future of the industry:

a)From globalisation to regionalisation: the wider trend towards globalisation from the previous decades is stalling because of geopolitical tensions, protectionist measures, and the shortening of supply chains, with China becoming the growth engine for EVs and batteries. These developments are making globalisation strategies more complex and support a trend towards local-for-local products.

b)From human to artificial intelligence: the number of ADAS (advanced driver assistance systems) is increasing and has brought us on a journey towards on-demand self-driving cars. This trend will be supported by AI technology

c)From hardware to software: cars will be increasingly built around software platforms, and software-enabled features are likely to become the dominant purchase criteria. This also includes the digitalisation of the aftermarket (both the way it is organised and the way cars are maintained).

d)From ICEs (internal combustion engines) to EVs. The growing share of EVs is leading to structural shifts along the value chain, including integration into the energy system. 

2.3To deal with these unprecedented challenges, on 5 March 2025, the European Commission introduced an Industrial Action Plan for the European automotive sector. The plan builds on initiatives such as the Mobility Transition Pathway and the Draghi report and is based on the outcome of the Strategic Dialogue on the Future of the European Automotive Industry.

With 41 actions, the action plan is very comprehensive. As many of the proposed instruments are announcements and intentions, its implementation will require strong commitment from decision-makers and stakeholders at all levels, and the way the industry adapts to the fast-changing automotive landscape will also be pivotal.

3.Digitalisation: the road to the next automotive paradigm

3.1The automotive sector is moving from hardware to software, and from mechanics to electronics. Data and data-driven innovation are becoming increasingly important and can generate significant (effectiveness and sustainability) benefits: automation of driving, increased efficiency of logistics and the entire value chain, optimisation of (production) processes, predictive maintenance with digital twins, and the digitalisation of the end-of-life process. As a result, digital and technology companies are increasingly attracted by the mobility ecosystem. But also, traditional automotive manufacturers are being challenged to invest in automotive software technology, which is reshaping the industry and will ultimately lead to the deployment of AI-powered connected and autonomous vehicles.

3.2Although the European automotive industry is leading in terms of overall R&D, it is lagging in ICT R&D. The EU also lacks large digital players (compared to the US) and new entrants in the industry (compared to China). This is affecting the EU leadership position in the industry.

3.3The digital transformation should become a competitive advantage for the European automotive industry. To reduce the current gap regarding ICT R&D and to unlock the full potential presented by connected and automated mobility, the EU should:

-develop roadmaps and investment programmes to spur on the business case for taking the industry from vehicles with driver support features to fully connected and automated (CAV) vehicles;

-organise industrial collaboration (such as the proposed European Connected and Autonomous Vehicle Alliance) across the ecosystem (including the downstream sector) so as to align with and develop common computing platforms, AI solutions, standards and open-source software, in order to reduce the dependency on big tech and avoid costly fragmentation;

-create favourable demand conditions for connected and automated vehicles. Although CAVs create value for end users (seamless connectivity, predictive maintenance, automatic updates, zero accidents, infotainment), there is lack of consumer acceptance related to safety concerns, reliability of software and the price of CAV features;

-establish a (harmonised) regulatory framework to provide regulatory support for large-scale testing of CAVs; to create legal certainty for companies, customers and society (e.g. defining where the liability lies in the event of accidents); and to support the deployment of CAVs on the road;

-assess the broader social and economic impact on the mobility system of CAVs and new mobility concepts (on-demand mobility, mobility as a service, integration of the car into the grid, integration of collective and private transport); promote alternative business models such as platform cooperatives for urban mobility services;

-give due attention to the impact of digital technologies on production processes and work organisation;

-further develop/deploy critical digital infrastructures exchanging real-time and high-quality data and information with vehicles to enable higher levels of automation, safety and efficiency;

-develop a harmonised approach and a clear timeline for the type-approval of autonomous vehicles;

-accelerate specific legislation opening up access to in-vehicle data in a fair, secure and effective way for all players in the automotive ecosystem (an Auto Data Act);

-invest in simplification without compromising on EU leadership in sustainability.

4.The rise of clean mobility

4.1In 2023, EVs accounted for 22.3% of new car registrations in Europe (14.6% battery electric vehicles (BEVs), 7.7% plug-in hybrid electric vehicles (PHEVs)). Key challenges are the relatively higher price for EVs, the lack of grid capacity, the low profitability of BEVs, uncertainty regarding the repairability of EVs, the low residual value of EVs (due to fast technological developments), and the uneven spread of charging infrastructure. European original equipment manufacturers (OEMs) and suppliers are also relying heavily on PHEV technology, which is a transitional technology that has weaker long-term prospects compared to BEVs.

4.2In the EESC’s view, the EU must enhance the transition towards clean mobility by:

-Addressing consumer hesitancy by reducing the green premium on EVs by means of both financial and non-financial incentives, whilst offering legal certainty and guarantees.

-Creating a unified approach to electromobility to address the growing divide between fast-moving and lagging markets. Coordination of demand incentives should provide visibility to the sector about future development of demand.

-Avoiding a divide between those citizens that can afford to drive/own an electric car and those that will have to stick with an ageing ICE that will be increasingly penalised and taxed. This could be addressed by using the revenues from the Social Climate Fund and the EU’s new emissions trading system (ETS2) to develop social leasing schemes.

-Developing an affordable EU EV platform to aggregate demand for small EU-made EVs is another solution.

-Investing massively in charging infrastructure. The forthcoming Sustainable Transport Investment Plan should take decisive action in scaling up the financing for charging infrastructure. Swift implementation of the Alternative Fuels Infrastructure Regulation must deliver on the ambition of installing fast charging stations for trucks every 60 km along the EU’s main transport corridors.

-Decarbonising corporate fleets offers a fast-track opportunity to accelerate EV adoption, as they account for 60% of new car registrations in Europe.

-Developing fair, transparent and clearly displayed pricing systems for public charging stations while improving their interoperability.

-Reinforcing and digitalising grid infrastructure (smart grids) to mitigate the risk of the increasing load from EV charging overwhelming the existing energy infrastructure, including smart charging (V1G) and vehicle to grid (V2G) technologies.

-Developing the circular economy as a core pillar of the automotive transition. This includes designing vehicles and components for reuse, repair, and recycling (eco-design), closing the ecological loop (recycling) and mainstreaming lifecycle assessment (LCA) into public procurement and incentive schemes.

-Helping consumers to make informed decisions, e.g. by introducing a car eco-pass or a repairability index for cars, and recognising the ‘right to repair’.

-Carrying out full lifecycle assessment of the environmental impact of EVs and the industrial processes linked to their production, to ensure that decarbonisation targets are met without increasing environmental harm elsewhere in the value chain, including outside the EU.

-Avoiding stranded assets (including human capital and technological capabilities) by developing programmes (including providing support to worker buy-outs) for the transition to clean technologies of the many suppliers dependent on ICE-focused operations, particularly in economically vulnerable regions.

5.Addressing the workforce transition

5.1Transforming production processes and supply chains will profoundly affect the employment structure of the automotive industry. The transformation risks creating unemployment in automotive regions, as well as pushing SMEs in the ICE supply chain out of business. Indeed, BEVs are less labour-intensive as they have fewer components than ICEs. On top of this, demand for cars is stagnating. Demand for metal and machinery workers will therefore decline. In 2024, Eurofound’s European Restructuring Monitor registered 104 restructuring announcements affecting 94 597 workers (of which 35 000 at VW).

5.2At the same time, the automotive industry is lacking digitally skilled labour at all levels.

However, new jobs will be created in the electromobility value chain (electronics, batteries, grids, mobility services, digital technologies, AI) but probably in another place, at another time and for completely different skillsets.

5.3To prevent many workers being left behind and to enable the transformation of the automotive industry, large-scale and targeted support plans are required to help workers adapt to the new technologies and to ensure a smooth job-to-job transition for every worker affected. This is also of paramount importance to avoid social tensions and maintain political stability.

5.4To prepare the workforce for the green and digital transformation of the sector, the EESC considers it important to:

-anticipate and manage change in a timely manner (e.g. through the proposed European Fair Transition Observatory and the changes in the EGF);

-establish EU-wide and cross-sectoral reskilling and upskilling programmes with a special focus on regions heavily reliant on the automotive industry (through the Social Climate Fund, an NZIA-type initiative for batteries, or a Just Transition Fund 2.0 for the automotive industry). Good coordination of all reskilling efforts across the automotive supply chain, cooperation with other industries and the diverse national labour markets will increase the efficiency of training programmes. Follow-up on initiatives such as DRIVES, the Automotive Skills Alliance and the recent Union of Skills is needed to support continuous professional development;

-address the shortage of workers with suitable digital skills (with a special focus on gender imbalances) by, for example, developing better synergies between industry and technical universities, promoting STEM-related education/training, expanding in-work training schemes and promoting life-long learning;

-pay special attention to the many independent SMEs in the downstream sectors by providing up-to-date training tools and by supporting apprenticeship systems, in which the sector has a long tradition;

-develop an EU skills passport and harmonise EU certification schemes (including micro credentials and informally acquired competences) to ensure that skills are properly documented and transferable within the EU;

-establish meaningful social dialogue and timely information/consultation at all levels to address the challenges of the transition and find constructive solutions;

-address the regional dimension through a coordinated mobilisation of all stakeholders (the social partners, research institutes, regional development agencies, training providers, automotive clusters, etc.);

-address new OSH risks due to electrical hazards and new pollutants;

-create a SURE 2.0 fund to support furlough schemes to keep workers on board during periods of downtime.

6.Competitiveness

The EU automotive industry faces unprecedented challenges to its competitiveness. European OEMs have long relied on China as a growth engine, but exports to China have dwindled while imports from China are surging (including imports from Western car producers in China). The EU is also confronted with a rapidly growing trade deficit in parts and components. The tariffs imposed by Trump are putting in danger European exports of 750 000 cars to the US. The US automotive industry also enjoys the benefits of leading tech companies driving progress in AI, autonomous driving, and connectivity. Moreover, European carmakers have been slower than most Chinese competitors in transitioning to EV technologies, while Japan and South Korea have established an early lead in battery technology.

Finally, the European automotive ecosystem remains heavily dependent on third countries for essential components and technologies such as batteries, semiconductors, rare earths and critical digital infrastructure.

6.1To restore the competitiveness of the European automotive industry, it will be important to develop actions regarding:

-addressing unfair trade practices through a robust and pro-active use of trade defence instruments. More stringent checks on imports of automotive components are also needed to assess whether they comply with European standards such as REACH;

-strengthening regional industrial ecosystems for key technologies (e.g. batteries, chips, software, AI);

-making use of instruments such as IPCEIs (Important Projects of Common European Interest), the Strategic Technologies for Europe Platform (STEP), and the European Investment Bank to support large-scale, pan-European investments in automotive innovation and industrial deployment;

-reforming competition policy to allow strategic alliances and mergers that create European players of sufficient scale to compete globally, especially in digital and green automotive technologies;

-promoting exports. New trade agreements need to be concluded, while existing negotiations must be expedited, including the ratification of the EU-Mercosur agreement (with strong sustainability chapters);

-reducing the cost gap with China by using standardised hardware and software platforms and heavily standardised battery packs, as well as by bringing energy costs into line with our main competitors;

-attracting foreign direct investment can contribute to strengthening the automotive ecosystem. However, these investments must be made conditional on technology transfer, integration into local value chains, and the creation of R&D or design centres;

-enhancing administrative efficiency and simplification, with a special focus on SMEs. Provide lead times for new regulations that are in line with the product cycle of new cars. Moreover, improving regulatory coordination inside the EU is of the utmost importance as the complexity of the EU’s decision-making processes is leading to inefficiencies and complicating governance;

-supporting reshoring and friend-shoring strategies for critical supply chains, e.g. by developing a comprehensive local content policy for the automotive sector and its strategic components. The rules-of-origin framework provides a solid instrument for use not only in trade policies but also in public procurement, incentive schemes (social leasing), and FDI screening. Local content rules should also inhibit the circumvention of tariffs by setting up ‘screwdriver plants’ to assemble knock-down kits.

Brussels, 10 July 2024.

The president of the Consultative Commission on Industrial Change

Pietro Francesco DE LOTTO

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