Overview
On March 5, 2025, the European Commission unveiled an Action Plan for the European Automotive Sector following the launch of a Strategic Dialogue on the future of the European automotive industry on January 30, 2025. The Action Plan highlights the urgency for Europe to stay competitive in the global market on key strategic technologies such as batteries, software, infotainment systems, and autonomous driving. It also emphasizes the risk of Europe falling behind due to less control over raw material inputs and the assertive industrial strategies and state support that benefit overseas competitors.
Among other goals, the Plan aims to boost the demand for electric vehicles (EVs), increase the EU's share in technologies like batteries, and help the automotive industry navigate the green transition. To support these objectives, the Commission has committed to allocate €1.8 billion to create a secure and competitive supply chain for battery raw materials. In addition, the Commission is also planning various initiatives aimed at bolstering battery production within the EU and implementing trade measures to mitigate foreign competition.
Key takeaways from a trade and industrial policy perspective include:
Policies to support the EU battery supply chain
The Commission has laid out several actions aimed at strengthening the EU battery supply chain, including:
- Support to battery manufacturers: The Commission aims to achieve more than 50% European added value along the automotive value chain by 2030. To this end, a Battery Booster package will be introduced, with €1.8 billion allocated over the next two years to support battery manufacturing in the EU. This will be funded through the Innovation Fund for electric vehicle battery manufacturing.
- Direct financial support and State aid: The Commission will explore direct financial support for EU battery producers, potentially combined with State Aid measures. Such support could also become available to overseas players if European companies have entered in partnerships with them that ensure sharing of skills, know how, technical expertise and technology, as well as sufficient added value for the EU.
- European content requirements: The Commission indicates that upcoming legislation will set European content requirements for battery cells and components in EVs sold within the EU. The Commission states that such requirements would be "in line with the Union’s international legal commitments."
- Strategic Projects relating to battery raw materials: In March 2025, the Commission will present, through the Critical Raw Materials Act (CRMA), a list of Strategic Projects covering the production of battery raw materials at all stages of the value chain. Under the CRMA, such projects stand to benefit from various advantages such as streamlined permitting procedures and access to financing.
Trade defence actions
In terms of trade defence measures, the Commission has also announced several significant actions and measures it plans to undertake to protect the EU industry from perceived unfair practices:
- New rules of origin: The Commission plans to establish specific rules of origin within trade defence measures for the EVs ecosystem. Such rules would aim to prevent companies from circumventing EU trade duties by relocating their production, particularly to countries that benefit from preferential access to the EU market.
- Anti-circumvention investigation: In relation to countervailing duties imposed on Battery Electric Vehicles (BEVs) from China, the Commission will assess the need to initiate an anti-circumvention investigation, if it obtains sufficient evidence of practices that undermine the effectiveness of existing measures.
- Engagement on price undertakings: The Commission states that it remains open to engaging with individual producers regarding price undertakings for countervailing measures on BEVs from China, in accordance with the basic anti-subsidy Regulation.
- Use of Trade Defence Instruments (TDIs) in relation to batteries and other parts in the EV supply chain: The Commission is equally committed to make use of TDIs, as well as the Foreign Subsidies Regulation (FSR), to investigate potential unfair practices further up the supply chain, including in the batteries and parts segment.
- Other relevant actions
- Free Trade Agreements and International Partnerships: The Commission will pursue Free Trade Agreements and mutually beneficial international partnerships to enhance market access and sourcing opportunities for critical materials essential to the European automotive industry.
- Conditions on Inbound Foreign Direct Investment (FDI): The Commission, in cooperation with Member States and industry, will propose conditions for inbound foreign investments in the automotive sector, including joint venture requirements, senior management requirements, facilitating agreements that support the needs of EU industry (such as off-take or license services and royalty agreements with foreign partners), licensing of technology or intellectual property, and commitments to supply critical inputs. A priority area for such measures would be the battery sector supply chain.
- Regulatory Simplification: A regulatory simplification package will be implemented to enhance coherence and consistency across different regulatory requirements within the automotive industry.
Overall, the Commission's Action Plan marks a crucial move to ensure the European automotive industry remains competitive on the global stage. By prioritizing key technologies, enhancing trade measures, and providing direct support to the automotive supply chain, the Commission aims to secure resilience for the European automotive sector and address any unfair foreign
