On 5 March 2025, the European Commission presented its Industrial Action Plan for the European automotive sector. COM(2025) 95 brings together initiatives on innovation and digitalisation, zero-emission mobility, supply chains, employment and international competitive conditions. Businesses need to distinguish measures that concern existing law from those that still require proposals, funding decisions or further legal instruments.
Position covered: 6 March 2025. The Action Plan is a Commission communication. It does not itself amend existing regulations or, on its own, create new obligations or funding entitlements. The announced procedures and legal instruments require separate monitoring.
The Action Plan uses five areas of action
The Commission organises its measures into five areas: innovation and digitalisation; clean mobility; competitiveness and resilient supply chains; skills and the social dimension; and a level playing field and business environment. The Plan therefore connects industrial, climate, digital, trade and employment policy.
A Commission communication is neither a regulation nor a directive. It describes policy objectives, planned proposals and the intended use of existing instruments. For each item, businesses should establish whether a legal basis already applies, a legislative proposal is announced or only a funding or industry initiative is being prepared.
CO₂ flexibility for 2025 to 2027 still requires adoption
The Commission intends to propose an amendment to the Regulation governing CO₂ emission performance standards for new passenger cars and light commercial vehicles. Manufacturers would be able to assess compliance over 2025, 2026 and 2027 together and offset an exceedance in one year with better performance in another.
On 6 March 2025, this flexibility has been announced but is not yet law. Fleet planning, pooling, product mix and contract volumes must not be treated as if the amendment had already been adopted. At the same time, manufacturers and suppliers should prepare scenarios for a three-year assessment and calculate the effects on call-offs, prices and capacity.
Software-defined and autonomous vehicles receive a dedicated focus
A European alliance for connected and autonomous vehicles is intended to bring together key market participants. Large test sites and regulatory sandboxes are planned, and the Commission intends to develop rules for autonomous vehicles further. A joint public-private investment of around EUR 1 billion, supported by Horizon Europe, is envisaged by 2027.
These announcements do not replace type-approval, safety, data-protection or liability requirements. Development and cooperation agreements should allocate responsibilities for software, data access, intellectual property, updates, testing, documentation and fault correction. Participation in a sandbox does not disapply rules outside its legal framework.
Batteries, raw materials and trade become part of sourcing strategy
The Commission intends to continue supporting European battery production and is considering direct support for manufacturers. EUR 1.8 billion is to be allocated to a secure and competitive supply chain for battery raw materials. The Plan also identifies charging infrastructure, demand for zero-emission vehicles, battery repair options and greener corporate fleets.
For international trade, the Commission envisages trade-defence instruments, negotiations on market access and sourcing, and measures concerning foreign investment. Procurement and sales should therefore assess origin, capacity, price mechanisms, funding conditions and possible trade measures separately. Announced funds should be included in firm planning only once the relevant funding basis and award are established.
Review points for OEMs, suppliers and technology providers
- Record existing law, announced legislative changes and funding initiatives separately.
- Model fleet CO₂ compliance both annually and under a possible three-year assessment.
- Allocate software, data, testing and update duties in development agreements.
- Review battery and raw-material sourcing for origin, capacity and price risks.
- Monitor EU funding calls, trade measures and investment rules selectively.
Related insight
Official sources
- European Commission: COM(2025) 95 of 5 March 2025
- European Commission: overview of the Action Plan for the automotive sector
This article states the position on 6 March 2025. The legal and economic effect of individual measures depends on further proposals, legislative procedures, funding terms, authority decisions and specific implementation.
Review automotive regulation and supply agreements strategically