EU Industrial Action Plan for the European Automotive Sector (COM(2025) 95 final)

Mechanism

COM(2025) 95 final is a horizontal Communication — not a regulation — but it sequences a stack of binding and quasi-binding instruments that the Commission then operationalised through the December 2025 "Automotive Package" legislative proposals (CO2 amendment for cars and vans, Automotive Omnibus simplification dossier, fleet- decarbonisation regulation). The five pillars work together:

1. Innovation and digitalisation. EUR 1bn Horizon Europe earmark 2025-2027 for software-defined vehicles, AI in mobility, chip-to-cloud architectures. Establishes the European Connected and Autonomous Vehicle Alliance in 2025; commits to ≥3 large- scale cross-border AV test beds from 2026. Pulls EU automotive R&D toward the SDV stack where Tesla and Chinese OEMs lead.

2. Clean mobility and battery operational support. EUR 1.8bn Innovation Fund earmark for EU battery cell manufacturers, explicitly designed as an operational-support instrument modelled on the US §45X Advanced Manufacturing Production Credit ("AMPC") — pays per-kWh of cells produced rather than capex grants. Pairs with EUR 350m for next-generation battery R&D. Charging-side: EUR 570m AFIF allocation for heavy-duty corridor hubs (2025-2026). The targeted CO2-standards amendment lets OEMs average compliance across 2025-2027, which directly relieves Stellantis and Volkswagen of an estimated EUR 15-20bn pool-fine exposure for 2025 alone.

3. Competitiveness and supply-chain resilience. Houses the Battery Booster strategy (forthcoming EU industrial-policy instrument for the cell value chain), explicit raw-materials integration with the CRMA (extraction/processing/recycling benchmarks), and a "Made in Europe" preference principle for EU public procurement and corporate fleet decarbonisation. The procurement preference is the most consequential — it replicates the §65% single-third-country cap principle from NZIA into vehicle tenders.

4. Skills and social dimension. Pact for Skills automotive blueprint, EGF (European Globalisation Adjustment Fund) mobilisation for transition-affected workers. Politically load-bearing rather than fiscally large.

5. Level playing field. Reinforces trade-defence vigilance versus Chinese subsidised imports — operationally building on 2024-10-29-eu-china-ev-countervailing-duties (which imposed provisional+definitive countervailing duties of 17-35.3% on BYD, Geely, SAIC, and other Chinese BEV imports). Signals willingness to extend the regime to commercial vehicles and batteries if dumping evidence emerges.

Downstream implications

• First standalone EU sectoral industrial-policy entry for the

automotive value chain in the IPTM register; fills a gap between the horizontal CRMA/NZIA/CID frameworks and the defensive trade-remedy actions on Chinese EVs.

• Operational-support model (EUR 1.8bn IF earmark per kWh)

imports the US §45X mechanism into the EU cell sector, which was previously confined to capex grants under the Important Project of Common European Interest (IPCEI) Battery I/II envelopes. Direct beneficiaries: ACC (Stellantis/Mercedes/ TotalEnergies JV), PowerCo (Volkswagen), Verkor, surviving Northvolt assets post-restructuring.

• The 2025-2027 averaged CO2 compliance window is a quiet but

large fiscal-equivalent: ACEA estimated 2025 stand-alone shortfalls would have triggered EUR 15-20bn in pool fines, which the averaging now defers/eliminates. Effectively a multi-billion EUR transfer from EU climate-rule enforcement to OEM balance sheets.

• "Made in Europe" procurement preference creates a de-facto

domestic-content rule for ~EUR 100bn/year of EU public-sector vehicle purchasing. Disadvantages BYD/MG/Tesla in tenders even where countervailing-duty rates leave them price- competitive.

• Linked to subsequent December 2025 Automotive Package

legislative proposals (CO2 amendment, Automotive Omnibus simplification, fleet-decarbonisation regulation) — those should be filed as separate actions when adopted and linked via responds_to to this Communication.

Open questions

• Final EUR envelope for the "Battery Booster" follow-on

instrument (size, governance, AMPC-style per-kWh rate).

• Whether the Made-in-Europe procurement principle becomes a

binding regulation or remains soft-law guidance to member states.

• Implementation of the EUR 1.8bn Innovation Fund earmark —

whether allocated by competitive call (winner-take-most) or by formula (distributed across surviving cell makers).

• Trade-defence trajectory: whether the Commission opens

follow-on countervailing investigations on Chinese light commercial vehicles, e-buses, or battery cells (as flagged by some commissioners in March-April 2025 statements).