Europe’s auto OEMs look to IAA for survival

European automotive manufacturers can no longer take anything for granted as shrinking markets, new technologies, intense competition, rising production costs, increasing regulatory requirements and new international trade disagreements challenge the established order.

The continent’s largest OEM, Volkswagen Group is reducing its car production from a pre-pandemic level of 12 million cars a year to nine million, and is well on track to axe 50,000 jobs from its German workforce by 2030. Six of its vehicle plants have been discontinued, and doubts swirl around four more, with further job cuts on the agenda.

Desperate to defend manufacturing jobs and expertise within the European Union, the European Commission initially imposed import tariffs on Chinese electric car imports, and in March published its proposed Industrial Accelerator Act.

The IAA is intended to strengthen the competitiveness of EU manufacturing while accelerating industrial decarbonisation aims, with specific elements designed to boost European clean-tech and auto manufacturing by introducing, among other policies, “Made in EU” and low-carbon requirements for public procurement and support schemes. 

The European Automobile Manufacturers’ Association (ACEA) wants EU policymakers to refine the legislation further to provide even more support to Europe’s automotive industry.

Among its key proposals are stronger incentives to make “Made in EU” manufacturing commercially attractive, a narrower geographical scope covering the EU27 and the UK, while also protecting existing investments in countries such as Turkey and Morocco.

Even knowing which technology horse to back is a challenge for OEMs and investors, as the industry progresses towards zero emission motoring. Battery electric powertrains are on course to dominate the car and van markets, but heavy duty trucks face a different set of operating criteria. Payload, range, high capacity charging infrastructure and charging downtime are all proving to be brakes on truck electrification, spurring innovation in the market.

Octopus Energy and CATL, for example, have announced a joint venture to develop a European network of battery-swapping hubs where electric heavy goods vehicles will be able to swap their traction batteries in a handful of minutes. The first Swaptopus hub is due to open in 2027, with 30 more planned.

Electric vehicle sales have outpaced overall market growth for Traton Group, whose brands include Scania, MAN, International (Navistar), and Volkswagen Truck & Bus. The group increased its total vehicle unit sales by 4% year-on-year in the second quarter of 2026, but its electric vehicle sales were 67% up, led by MAN and Scania. But the sales of 1,050 battery-powered commercial vehicles, have to be seen in the context of total sales volumes of 82,900 vehicles.

In Europe’s new car market, battery electric cars accounted for one in five new sales over the first five months of the year, up from 15.3% during the same period in 2025, according to ACEA. A total of 950,521 new BEVs were registered between January and May.

Among Europe’s eight largest manufacturers, Stellantis (including Leapmotor in which it owns a 21% stake) was the only OEM group to increase its market share during the first half of this year. The automotive group registered 1.37 million vehicles across the EU30 region during the first six months of 2026, a rise of 7.3% compared with the same period last year, and representing a 0.3 percentage point boost to its market share to 17.4%.