European carmakers warn EU risks losing auto edge without stronger policy package

Europe’s car manufacturers have urged policymakers to strengthen upcoming automotive legislation, warning that the region risks losing its global competitiveness unless climate targets are better aligned with economic realities.

The call came after a meeting of the Light-Duty Vehicle Board of the European Automobile Manufacturers’ Association (ACEA) in Brussels on Thursday, where industry leaders assessed the conditions needed for Europe to maintain its position as a leading automotive manufacturing hub.

“Europe risks losing its edge, both as an attractive place to invest and as an industrial location, with significant consequences for jobs and innovation unless we can find a better way to synchronise climate ambition, business reality, and global competitiveness,” he said.

The association warned that current EU climate targets for passenger cars and vans could expose manufacturers to heavy fines unless demand for electric vehicles rises sharply.

Under current rules, the market share of battery-electric vehicles (BEVs) would need to triple within four years for carmakers to stay within emissions limits. ACEA argues that one way to avoid penalties would be to extend the compliance averaging period from three to five years, covering 2028 to 2032, and broaden the list of mechanisms manufacturers can use to meet targets.

Industry representatives said additional flexibility is needed beyond incentives for small or EU-made electric vehicles.

ACEA also raised concerns about the commercial van sector, describing the market as “very precarious”.

While overall van sales have declined, electrified vans — including battery-electric and plug-in hybrid models — account for just over 10% of new registrations. According to the association, this makes current emissions targets unrealistic without adjustments.

ACEA is proposing a 35% CO₂ reduction target for vans by 2030 and an 80% reduction by 2035, alongside more flexible averaging rules between 2025–2029 and 2030–2034.

The industry group also criticised the EU’s planned 2035 framework, which would effectively require a 100% emissions reduction threshold for vehicles to avoid penalties.

ACEA argues that the threshold should instead be lowered to 90% and accompanied by more workable compensation mechanisms, including credits for low-carbon steel and sustainable renewable fuels.

Manufacturers also questioned the design of the EU’s proposed Clean Corporate Vehicle initiative, which aims to accelerate electric vehicle adoption among fleet buyers.

ACEA warned that relying primarily on mandates rather than incentives could undermine the policy’s effectiveness.

The association said it welcomes efforts by the European Commission to simplify regulations through an “automotive omnibus” initiative, but stressed that the simplification effort must go further.

Industry leaders are now examining the Commission’s forthcoming Industrial Accelerator Act, which aims to boost industrial resilience across the bloc.

“The key question,” ACEA said, “is whether it will genuinely strengthen resilience and protect jobs, or whether it will add new costs and complexity for automotive manufacturers.”

If the latter happens, the group warned, higher compliance costs could drive up vehicle prices and reduce overall market demand across Europe.