Make it or break it: 2025 is the key year for EU’s automotive

Automotive is one of Europe’s leading industries, employing 13 million people and producing 13 million cars. The sector faces an unprecedented crisis as Chinese carmakers enter the market with cost-competitive electric vehicles (EVs). For example, MG–producing affordable models in different segments—has seen its European sales double for four consecutive years.

As a response, in late 2024, the European Commission imposed import tariffs on Chinese cars to help the industry, which announced 88,000 job reductions–including the thousands of layoffs announced by Volkswagen. 2024 has been an eventful year for European automotive, also considering the slowdown of EV sales and the decision to ban the sale of internal combustion engines by 2035.

In many ways, 2025 can be a defining moment for the future of Europe’s transition to electric mobility. The state of the industry and the many challenges ahead were the core of a panel session organized by the association for electromobility AVERE on the occasion of its rebranding into E-Mobility Europe. The venue? Brussel’s Autoworld Museum, which tells a story or two of Europe’s automaking history.

A plan to help the automotive industry

The newly appointed European Commission has started a strategic dialogue on the future of the automotive industry. This roundtable involves all stakeholders in the value chain and aims to create a comprehensive action plan, which will be unveiled on March 5.

Magda Kopczynska, director general of the Commission’s directorate on mobility, attended the kick-off meeting. “The sense of urgency to act to change things was in the meeting room. There is no doubt about decarbonizing transport, but more concerns arise on the overall strategy to transition.”

According to Sigrid de Vries, director general of the European Automobile Manufacturers Association (ACEA), the market is missing as things stand. “The industry has invested €250 billion in electrification to be on track with targets, but we are experiencing a market failure. There is a need for action even before the actual plan is out,” she said.

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The need to comply with CO₂ targets

2025 is also a key year because automakers must comply with CO₂ targets. They must meet the average of 93.6 grams per kilometer for all new car deliveries in the EU, progressing towards zero emissions by 2035. The industry estimated €15 billion in fines for missing those targets.

E-Mobility Europe advocated keeping these targets while rolling out incentives for buying EVs. Julia Poliscanova, NGOs Transport & Environment’s (T&E) senior director of electric vehicles and batteries, echoed this claim. “Everyone predicted EV sales stagnation in 2024. First, we must stay the course, keep targets as they are, and work on the enabling conditions to help manufacturers comply.”

Volvo is one of the automakers that will comply. “We started investing early in electric cars and disinvesting in combustion engines. As carmakers, we need a stable legislative framework to move on with the transition,” stated Céline Domecq, Volvo Cars’s head of the EU office.

How to stimulate the market

One of the hurdles to broader market adoption of EVs has been the scarcity of affordable options–cheaper than €25,000–to buy. T&E previously stated that carmakers could close the gap to comply with the targets as more of these models, including the Renault R5, Citroen E-C3, and Hyundai Inster, are entering the market this year.

Panelists agreed that much of the action to stimulate EV market adoption needs to happen at the national level. Through tax advantages, bonuses to buy charging points were some of the mentioned options, to be tailored depending on each market’s circumstances. “No matter what kind of incentive, people are more inclined to buy a car with extra benefits,” added Domecq.

According to ACEA De Vries, there is more to be considered. “There should also be a market-driven approach, learning from customers and understanding what they want.”

From left to right: Poliscanova, Kopcinska, De Vries, Domecq, and moderator David Rose - © E-Mobility Europe

Electrifying corporate fleet

One key aspect to tackle is the electrification of the corporate fleet. These vehicles are easily resold, entering the second-hand market and offering more affordable buying options. “Requiring companies to electrify their fleets is a no-brainer, as it represents a large share of the European market. That would solve a lot of the demand problem,” underlined Poliscanova.

Kopczynska replied that the Commission will consider creating a legislative proposal to stimulate national government action.

A framework to stay competitive

The meetings to discuss the Automotive Action Plan will continue in the coming weeks, and the Clean Industrial Deal–as announced in the Competitiveness Compass–will also be presented on February 26.

Recognizing the urgency to act, panel speakers are positive and agree on the need for a stable framework to progress. “We have known the targets for a long time, so let’s work on them. The strategic dialogue is a chance to focus on the right battles,” underlined Volvo’s Domecq.

“The competitiveness of EU’s automotive and industry in general is unquestioned. But we should also think about how to stay competitive in ten years, and having such a long-term framework helps everyone,” highlighted Kopcinska. Before that, the action plan should come with answers to the many questions that need to be addressed at the moment.

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