transport & mobility

4 things the auto industry should look out for in the new EU term

Brussels has fully swung into election mode in preparation for the weekend of 6-9 June, and speculation on the next Commission’s priorities and leadership is the talk of the town. Despite a great deal of uncertainties, a series of key files for the auto sector will surely be on the agenda, and where there is a lot at stake. Here, we’ll discuss probably the 4 most important of such files, going over the main sticking points, the positions of important institutional and private stakeholders, as well as the potential outcomes.

1. Revision of the CO2 Standards for light-duty and heavy-duty vehicles

The CO2 Standards for cars and vans was one of the flagship laws of the European Green Deal, making the EU a trailblazer in the transition to zero-emission road transport, with a target of 0g CO2/km for new cars and vans sold from 2035. The CO2 Standards for trucks and buses are also highly ambitious, aiming to almost entirely decarbonise new fleets by 2040. These files were the subject of heated debates in Brussels and national capitals, with the Parliament and Member States narrowly backing both in the end. One of the most significant controversies was around e-fuels, with both Regulations including non-binding provisions calling for future legislation on these. Both Regulations also have review clauses, for cars and vans in 2026 and for heavy vehicles in 2027. 

 Industry Commissioner Thierry Breton has stated the Commission should approach the 2026 review with ‘no taboos‘ and that the 2035 mandate could be overturned if necessary. ECR’s election manifesto calls to keep internal combustion engines alive and CDU, the EPP’s largest party, has openly decried the mandate and is making it one of its key campaign pledges. Industry groups that failed to convince lawmakers to include stronger wording on e-fuels will surely try to leverage the review clauses to make their case again.  

Whether the files will be reopened or not will depend on a host of factors. Firstly, new Commission leadership will be very important, as the new President and Climate Commissioner will probably have the last word on whether an amendment should be proposed. Secondly, the possible rightward shift of the Parliament could increase pressure on the Commission to act on majority support to delay the mandate or include new provisions on e-fuels. Lastly, after a few years of strong growth, the EV market is cooling off. If this slump persists or worsens, it could lead political groups or companies previously favourable to the mandate to reconsider their stance.

2. Access to in-vehicle data, functions and resources

A Regulation to ensure access to in-vehicle data, functions and resources has been in the pipeline since 2022 and is expected to be released during the new Commission’s term. As vehicles become increasingly connected and, in the future, software-defined, the amount of data generated by the vehicle, as well as in-vehicle functions and resources, is growing at a rapid rate. These can be essential for things like maintenance, safety, insurance and entertainment systems, and there is therefore massive potential for monetisation. 

Different stakeholders have a stake to gain or lose when it comes to access to this information. On one side is a loose coalition of automotive suppliers, dealers and repairers, insurers, and consumer groups, among others. They claim vehicle manufacturers, who own and control this data, are withholding access from independent service providers, leading to imbalanced market conditions. For example, only manufacturers would be able to provide predictive maintenance, and they could allow the owner to easily book an appointment at a manufacturer-affiliated garage.  

Vehicle manufacturers and the digital technology industry argue that having to give away such data would give an unfair advantage to third-party service providers, as they have not shared the costs of developing these new technologies and functions. There is also a concern for the potential disclosing of trade secrets. This position has been defended by Industry Commissioner Thierry Breton, whilst Commissioner for Competition Margrethe Vestager has been closer to the suppliers’ and consumer groups’ position. These internal disagreements mean the proposal has been delayed for over a year and a half. 

What precise requirement the final law will include remains to be seen, and will depend not only on the Commission’s proposal but also on the different sensibilities across the Parliament and Council. Member States like Germany and pro-industry political groups like EPP or ECR are likely to favour car manufacturers, while left-leaning MEPs will likely favour the more consumer-friendly approach with more open access to data.

3. Regulation on circularity requirements and end-of-life vehicles

With approximately 12 million end-of-life vehicles (ELVs) scrapped annually in the EU, the auto industry’s environmental impact cannot be ignored. As the automotive landscape evolves with the rise of EVs and cutting-edge technologies and materials like batteries, plastics, carbon fibre, and electronics, new challenges emerge, like scaling recycling infrastructure and maximising material recovery.  

The Commission’s ELVs Directive proposal of July 2023 obliges car manufacturers to comply with circular design requirements, prioritising minimum recycling, reusability, and recoverability. The proposal mainly focuses on plastics and imposing restrictions on substances of concern. Lastly, the introduction of National Extended Producer Responsibility schemes signifies a big shift, placing financial responsibility for waste vehicles squarely on manufacturers. 

The details will become clear after the elections, as the Lead Rapporteur decided to postpone work to the next mandate. The reasons for this delay remain uncertain: they could stem from the lack of time, as asserted by the Rapporteur, as the Commission published the proposal only 11 months before the end of the term, or a lack of support for the Commission’s proposal, as argued by Renew and Green MEPs. Political groups and stakeholders have already expressed their initial positions. The Greens call for more ambitious measures, while liberals and socialists generally support the Commission’s proposal. In contrast, right-wing parties and industry associations representing the car and plastic industries argue that the Commission’s proposal is overly ambitious, citing technical infeasibility for recycled content targets. Again, a key factor here will be the expected rightward shift in Parliament, which could lower the ambition level of the file.

4. Greening Corporate Fleets Initiative 

In February 2024, the Commission launched a public consultation on an initiative aimed at accelerating the adoption of zero-emission vehicles (ZEVs) in corporate fleets in order to get a better understanding of the state of play, the challenges faced by the industry and the potential areas where the Commission could take decisive action.  

Throughout 2023, key stakeholders presented their take on what the Initiative could look like and what provisions it should contain. A coalition of NGOs and logistics companies published a letter advocating for a Regulation that would mandate all corporate cars and vans to be ZEVs by 2030, something that the Greens have openly supported as well. Transport & Environment doubled down by releasing an analysis forecasting the positive impact of this mandate on both CO2 emissions reduction and the increased adoption of new and used ZEVs, since corporate fleets account for nearly 60% of new car sales. 

However, uncertainty looms over the initiative’s future, as the Commission has yet to confirm whether a legislative proposal will follow or what form it might take. In the case of a Regulation or a Directive with specific binding targets, the proposal would likely affect corporate fleets above a certain size, with an open question of whether SMEs should be included. Conversely, a non-binding act (e.g. Recommendation) would render the initiative toothless. This would also negatively impact the overall adoption rate of ZEVs as it would reduce the availability of second-hand vehicles that are more affordable for private customers.

Despite claims of reduced regulation in the next EU term, it’s clear the automotive sector faces significant regulatory scrutiny. Apart from everything mentioned here, there are also other important files like the Car Labelling and Fuel Quality Directives which may be revised, and of course all the pending secondary legislation under Euro 7. Industry must stay alert and prepare for these paramount initiatives that will continue to shape its transition towards zero-emission and digitalised road transport. 
Ignacio Guibert
Senior Consultant
Maria Muñoz
Michele Grigoletto
Roberto Giménez

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