European Union

European Union

Launches Action Plan to support the net-zero transition of the automotive industry

05 Mar 2025

On 5 March 2025, the European Commission adopted the Industrial Action Plan for the European Automotive Sector to strengthen the competitiveness and resilience of the European Union automotive industry and support its transition to zero-emission and digital mobility. The plan combines financial support at the level of the European Union, risk-sharing instruments, regulatory facilitation and coordination platforms to stimulate investment across the automotive value chain, including batteries, clean vehicle technologies, software and supply chains.

The plan mobilizes several quantified funding instruments of the European Union. It provides a €1.8 billion Battery Booster Package under the Innovation Fund to support battery cell manufacturing and related value chain activities, including up to €1.5 billion in interest-free loans for battery producers and additional grant support for upstream and midstream capacity. It foresees around €1 billion under Horizon Europe (2025–2027) for automotive research and innovation, including connected and autonomous driving and next-generation vehicle technologies, of which roughly €350 million is earmarked for advanced battery research and development partnerships. To support enabling infrastructure, the plan allocates about €570 million through the Alternative Fuels Infrastructure Facility for charging infrastructure, notably for heavy-duty vehicles. It also includes about €90 million for automotive workforce upskilling and reskilling under European Union skills programmes.

In addition to direct financial support, the plan introduces regulatory sandboxes and cross-border testing facilities, promotes public–private alliances and joint undertakings, and signals greater regulatory predictability and flexibility in compliance pathways. The aim is to reduce investment risk and crowd in private capital.

Nature of measure:
  • Facilitation
  • Promotion
  • Other regulatory changes
  • Incentives
Type:
  • Promotion and facilitation (Investment facilitation , Investment incentives, Investment promotion)
Industry:
  • Services (Electricity, gas, steam and air conditioning supply, Transportation and storage)
Inward FDI:
Yes
Outward FDI:
No
Sources: