EU Auto Action Plan: First real impulses, but necessary reforms and fundamental policy changes missing

The EU Commission's Action Plan presented in Brussels shows the first long-overdue steps in the right direction, but lacks an overall strategy and the necessary fundamental policy change. There is no doubt that, on the basis of the first real impulses, further measures, adjustments and an improvement of the general framework are now urgently required.

"The measures taken so far show that the EU is finally gradually moving closer to reality and is promising appropriate adjustments. The plan is the result of an initial analysis of reality, which the industry representatives involved also made very clear in the dialogue. Obviously there is a lack of framework conditions for achieving the fleet limits and the successful ramp-up of electromobility - whether with regard to charging infrastructure, energy prices or raw material supplies. In addition, the measures are a necessary consequence of the geopolitical developments of the past few months. The fact is: it is not about making concessions, but about strengthening competitiveness and recognizing that the right framework conditions are also necessary for the successful ramp-up of electromobility. A more pragmatic approach is now due to achieve the goals set," VDA President Hildegard Müller explained.

Avoiding penalties in this phase is appropriate and fair

"The world has changed a lot in recent years in many ways: massive geopolitical shifts, the global rise of protectionism and the ongoing economic weakness not only in Germany. Imposing penalties on the automotive industry in these times would be irrational and counterproductive - while at the same time this industry has to and wants to invest huge sums in the future. The entire process and the associated necessary framework conditions for customer acceptance and the ramp-up of e-mobility were initially underestimated politically and then massively neglected. This situation has now hopefully been seriously recognized and must lead to real corrections," Müller said.

 Phase-in would make more sense than banking and borrowing mechanism

"The current requirements place a considerable burden on manufacturers - especially with regard to possible fines for non-compliance with the limits. The approach now planned by the EU Commission of a banking and borrowing mechanism over a period of three years is helpful, but does not go far enough," VDA President Hildegard Müller emphasized. This mechanism allows manufacturers to transfer or anticipate CO₂ savings from one year to other years. However, a gradual introduction ("phase-in") of stricter limits would be more effective, as has already been successfully used in previous target adjustments.

In addition, the planned adjustments to the utility factor of plug-in hybrids (weighting factor that reflects the proportion of electric journeys) should be suspended from 2025. "It is now important to implement the corresponding relief measures quickly. The Council and Parliament must be involved immediately and adopt the recommendations," Müller said.

However, given the global challenges, the still inadequate framework conditions and the currently sluggish demand for electric cars, there is a need for further action and discussion. Müller: "It is essential that the reviews of the existing regulations for passenger cars and commercial vehicles (review processes) are brought forward to 2025. Only on this basis it can be guaranteed that the necessary adjustments to the framework conditions are made: in particular in the expansion of the charging and H₂ tank infrastructure, but also in the development of electricity prices, the power grids, the supply of raw materials, the supply of semiconductors and battery production." For trailers, however, a sufficient data basis must first be created before a review.

"Without bringing forward the reviews - in other words, without an honest assessment - and the associated greater commitment to the framework conditions, the EU will jeopardize the achievement of its own climate goals. That is why bringing forward the review processes is essential," Müller demanded. The announcement in today's press conference by EU Commissioner Tzitzikostas to bring forward the process to this year must now be followed by concrete actions and plans.

Commission rightly also focuses on commercial vehicles

The Action Plan rightly focuses more on heavy commercial vehicles. They are the backbone of the European economy, which is why the special challenges facing the commercial vehicle industry must be more widely recognized. There is a particularly large need to catch up in the expansion of charging and H₂ tank infrastructure.

"The recognition of truck charging infrastructure as part of the critical infrastructure and accelerated approval procedures promised as part of a 'European Clean Transport Corridor Initiative' are the first important building blocks to achieve the necessary acceleration. Rapid implementation is now essential," Müller emphasized. The planned revision of the Eurovignette Directive to further exempt emission-free trucks from tolls is also positive.

At the same time, further important adjustments to the CO₂ fleet regulation for heavy commercial vehicles are required. The current level of threatened fines should be reduced to a level comparable to that for cars and vans, while at the same time taking into account the costs to be incurred for the transformation of the commercial vehicle industry. For all vehicle groups (especially trailers and buses), a differentiation of possible fines is also necessary in order to do justice to the characteristic differences of the commercial vehicle industry.

SMEs are not sufficiently included and taken into account

Not only in the composition of the dialogue formats, but also in the results, industrial SMEs were not sufficiently taken into account. "This is a mistake that must be corrected in the further process," Müller said. "The many medium-sized companies are not only the backbone of our prosperity, but their success and future prospects are the basis for a successful future for the German and European automotive industry and thus also for growth, prosperity and jobs in numerous regions." There is an urgent need for greater political involvement for these companies, which are often too large according to the SME definition and too small for the capital market.

 Underpinning technological openness with concrete measures

Commission President von der Leyen has expressly emphasized the principle of technological openness - but so far without drawing the necessary conclusions from it. "It is important to actually implement technological openness. This also includes giving greater consideration to the role of plug-in hybrids beyond 2035. In addition, the average CO₂-reducing effect of renewable fuels must be taken into account. None of these points have been taken into account in the plan so far. In addition, a legal framework must be created that makes it possible to classify vehicles with so-called carbon-neutral fuels as CO₂-free," Müller demanded.

Praise for measures regarding charging infrastructure and power grids

In addition to the necessary improvements already made, the planned measures with regard to charging infrastructure are to be expressly welcomed: "The fact that the EU Commission intends to define charging infrastructure and its grid connection as an overriding public interest is a decisive step forward. The same applies to the announcement that charging infrastructure will be prioritized for grid connections and that forward-looking investments will be made in the underlying grid infrastructure," Müller supported. These measures must now be implemented in the Member States with the highest priority. The same applies to intelligent and bidirectional charging functions, which the Commission rightly wants to strengthen.

Future fields were identified and brought into focus

The EU has also rightly recognized that automated and autonomous driving, semiconductors, software, artificial intelligence, batteries and the circular economy are among the key future fields of the automotive industry. They offer enormous potential for the international competitiveness of European manufacturers - and being a leader in these areas is crucial for the European automotive industry, which is active in these areas with high investments. "It is right that the European Commission wants to quickly stimulate investment in these areas. However, the bureaucracy for applications and documentation must be significantly reduced - this is the only way to ensure that the programs can also be used in an agile manner," Müller said.

Promoting a software platform for software-defined vehicles based on open source, as formulated in the plan, is another key step to strengthen the economy. However, in order to exploit the full potential of these programs, bureaucratic hurdles must be removed - this also applies to the battery subsidy programs.

"It is crucial that not only individual companies are supported here, but that the framework conditions along the entire battery value chain are decisively and sustainably improved. In particular, this requires competitive energy prices, including the extension of electricity price compensation to battery and semiconductor production, sustainable promotion of research and innovation, and measures to combat the shortage of skilled workers," Müller said.

Free and fair trade instead of local content requirements

In view of the many geopolitical challenges, the Commission's plan also addresses the issue of resilience. "The fact is: a strong internal market and free, fair and rules-based trade are essential for the success of the European automotive industry. However, Europe's desired resilience must not be burdened with excessive regulation and local content requirements. Rather, the EU Commission should focus on open markets and fair trading conditions in its own interest. The use of trade protection instruments should only take place in close coordination with the industry concerned, as should the consideration of attaching conditions to foreign direct investment. The consideration of the rules of origin in trade agreements must be based on economic realities and on the trading partners - they cannot replace good industrial policy and competitive framework conditions," Müller warned.