Perspectives

On March 5, 2025, the European Commission released its Action Plan for the Automotive Sector, a direct outcome of the Strategic Dialogue on the Future of Automotive Industry initiated earlier this year. The plan’s stated goals are to reinforce the global competitiveness of Europe’s automotive industry while continuing its transition to clean, connected, and digital mobility.

In the context of the ongoing EU-US trade and tariff dispute significantly impacting the European automotive sector, as well as rising geopolitical tensions and mounting uncertainty in global markets, it is particularly important to improve Europe’s resilience in critical automotive supply chains. Given the automotive sector’s crucial role in the EU economy—representing over 6% of total employment and nearly 7% of GDP—the Commission’s strategic move reflects a broader attempt to secure industrial leadership amid external pressures.

Faced with changing international competition and the commitment to decarbonize, the Action Plan proposes a wide array of policy measures: a flexible interim CO₂ compliance regime, substantial investments in domestic battery supply chains, expanded support for retrofitting and fleet conversion, and efforts to develop common software infrastructure for next-generation vehicles. While comprehensive and ambitious, the Action Plan raises questions about its strategic coherence, implementation feasibility, and the readiness of the industry to engage in structural reform.

To unpack the implications of the Action Plan, Lusine Petrosyan from our Brussels team sat down with Christoph Stürmer, Trilligent Advisory Board member and an expert in automotive and e-mobility. With nearly three decades of experience in forecasting, strategy, and sustainability in the sector, Christoph shares his expert take on the strengths, shortcomings, and future direction of EU automotive policy.

Q1: The EU’s Automotive Action Plan has been widely anticipated as a cornerstone for the industry’s transformation. What are your initial expectations of this plan, and do you believe it effectively addresses the core challenges facing Europe’s automotive sector?

Christoph: The EU’s Automotive Action Plan is indeed a significant attempt to consolidate numerous fragmented policies into a single strategy. It is important to note that some of these initiatives are not entirely new, and are simply collected into a unified framework to accelerate progress. That being said, the Plan reflects a somewhat defensive stance, responding to perceived crises in competitiveness and regulatory overreach rather than proactively setting the stage for transformative leadership. Some of the key initiatives, like EV retrofitting and fleet decarbonization, are promising, but the scale of ensuing investment and strategic consistency will be critical to its success.

Q2: The Action Plan provides that compliance with car manufacturers’ CO₂ emissions targets will be assessed based on an average of the performance from 2025 to 2027, instead of every year individually. How does this approach align with global best practices, and what implications does it have for European automakers?

Christoph: The shift to a three-year averaging period mirrors approaches seen in markets like the U.S. and Japan, offering manufacturers greater flexibility to meet targets over time. This adjustment acknowledges the challenges European OEMs face in achieving EV sales targets according to regulatory steps. However, while it provides temporary relief, it also risks delaying necessary investments in electrification and may reduce the urgency to scale up, potentially impacting long-term competitiveness.​

Q3 The Action Plan emphasizes bolstering the EU’s battery production through a €1.8 billion investment. Given the dominance of non-European manufacturers in this space, is this initiative sufficient to establish a competitive European battery industry?

Christoph: The investment is a positive step, signalling the EU’s commitment to developing a domestic battery supply chain. However, considering the scale of investment including by Asian counterparts and the current technological lead they possess, this funding may only scratch the surface A single full-scale battery factory costs anywhere between €3 and 5 billion to build. A more comprehensive strategy, including fostering innovation, streamlining regulations, and facilitating public-private partnerships, is essential to build a resilient and competitive battery industry in Europe.​

Q4: The plan proposes the establishment of a European Connected and Autonomous Vehicle Alliance. How critical is this initiative for the EU’s position in the global autonomous vehicle market?

Christoph: Creating a unified alliance is crucial for standardizing technologies, pooling resources, and accelerating development in the autonomous vehicle sector. It can help the European automotive industry compete with tech giants from the U.S. and China. However, the success of this alliance hinges on effective collaboration among stakeholders, clear regulatory frameworks, and substantial investment in R&D and public smart infrastructure. Without these, the EU risks falling behind in the race for autonomous mobility.​

Q5: The Action Plan includes measures to decarbonize corporate fleets, which account for a significant portion of new car registrations. What impact could this have on the broader adoption of zero-emission vehicles?

Christoph: Targeting corporate fleets is a strategic move, as it can lead to substantial reductions in new-vehicle emissions and stimulate demand for zero-emission vehicles. It also sets a precedent for private consumers, potentially accelerating market adoption. However, the effectiveness of this measure depends on the availability of supporting infrastructure, financial incentives, and the readiness of manufacturers to meet increased demand with suitable vehicle offerings.​

Q6: Considering the comprehensive nature of the Action Plan, are there areas where it could be more ambitious or where it falls short in addressing the automotive industry’s challenges?

Christoph: While the Action Plan covers a broad spectrum of initiatives, it could be more ambitious in fostering innovation and entrepreneurship within the industry. There’s a need for stronger mechanisms to support startups and SMEs that can drive disruptive technologies. Additionally, the plan could place greater emphasis on upskilling the workforce to meet the demands of a rapidly evolving automotive landscape. Also, large investments for scaling innovative technologies are required for securing the industrial basis. Addressing these areas is vital for ensuring the industry’s long-term sustainability and global competitiveness.​

Q7: Looking ahead, how do you see the European automotive sector evolving as a result of this Action Plan? What should the industry and policymakers prioritise to ensure long-term competitiveness and sustainable innovation in the global market?

Christoph: Looking forward, the evolution of the European automotive sector will hinge on how effectively the Action Plan’s measures are implemented and whether they spark real structural dynamic. If the focus remains on patching regulatory gaps and reacting to global competition, the sector risks continuing its slow erosion of market share. What is truly needed is a bolder approach—one that emphasizes cross-sector innovation, stronger support for retrofitting existing fleets, and a more realistic view of software-defined vehicle (SDV) development.

Europe has the talent and the industrial backbone to lead in electric and autonomous mobility, but only if it shifts from short-term protective measures to long-term strategic investment in innovation. The Action Plan is certainly supportive, but to secure true leadership, Europe must move beyond defensive measures and embrace transformative risk.

About the expert

Christoph Stürmer is a member of the Trilligent Advisory Board and an independent expert specializing in automotive and e-mobility, including policy and market developments, market access, business strategy and corporate sustainability. His expertise extends to critical infrastructure, energy security, and battery policy, where he actively contributes to discussions shaping the future of mobility and supply chain resilience.

He began his automotive career at Mercedes-Benz in 1996 and has held senior analytical and strategic roles at IHS Automotive and PwC Autofacts®. He holds a Diploma in Economics and a BA equivalent in Philosophy and is co-author of Premium Power – The Secret of Success of Mercedes-Benz, BMW, Porsche and Audi.

Trilligent provides strategic counsel and regulatory insights on mobility, e-mobility ecosystems, and clean industrial policy in the EU. Don’t hesitate to reach out to us if you’d like to discuss how these developments could impact your business or investment strategy.