ACEA warns EU regulation is stifling EV market

The EU automotive sector is at risk of losing out to overseas competitors and faces serious financial penalties because EU regulators are not responding to changes in market conditions, the European Automobile Manufacturers’ Association (ACEA) is warning.

The body, which represents Europe’s 15 major car, truck, van and bus makers, is calling for urgent action, saying policymakers and regulatory bodies are failing to address what it calls “a continuous trend of shrinking market share for battery electric cars in the EU”.

It wants the European Commission to bring forward the CO2 regulation reviews for light-duty and heavy-duty vehicles, currently scheduled for 2026 and 2027 respectively, to 2025.

“The industry cannot afford to wait for the review of the CO2 regulations in 2026 and 2027, we need urgent and meaningful action now to reverse the downward trend, restore EU industry competitiveness and reduce strategic vulnerabilities.​ For heavy-duty vehicles, an earlier review will also be absolutely critical to ensure vital conditions like infrastructure for trucks and buses are scaled up in time,” ACEA stated.

Regulatory delays, ACEA warns, mean the EU’s automotive sector faces “the daunting prospect of either multi-billion-euro fines, which could otherwise be invested in the zero-emission transition, or unnecessary production cuts, job losses, and a weakened European supply and value chain at a time when we face fierce competition from other automaking regions.”

ACEA data shows the year-to-date EU battery-electric market share has dropped from 13.9% last year to 12.6% this year, while sales volumes have fallen 8.4% in an already declining market. Registrations for the month of August highlighted a spectacular drop in the two biggest markets for BEV cars: Germany (-68.8%) and France (-33.1%).

“As a result, the zero-emission transition is highly challenging, with concerns about meeting the 2025 CO2 emission reduction targets for cars and vans on the rise. The current rules do not account for the profound shift in the geopolitical and economic climate over the past years and the law’s inherent inability to adjust for real-world developments further erodes the competitiveness of the sector,” ACEA said.

The trade body points to observations in Mario Draghi’s recent report on the Future of European Competitiveness that “the automotive sector is a key example of lack of EU planning, applying a climate policy without an industrial policy”.

ACEA argues that vehicle technology and the availability of zero-emission vehicles are not the  bottlenecks in meeting EU’s 2050 transport decarbonisation targets, “but unfortunately, the other necessary elements for this systemic shift are not in place”. 

These include slow progress in developingcharging and hydrogen refilling infrastructure, as well as a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a secure supply of raw materials, hydrogen and batteries. Economic growth, consumer acceptance, and trust in infrastructure have not developed sufficiently either, ACEA says.

To address these challenges, ACEA is advocating a package of short-term relief for the 2025 CO2 targets for cars and vans, as well as a fast-track, comprehensive, and robust review of the CO2 Regulations for both cars and trucks, plus targeted secondary legislation, which it says will “get the zero-emission transition firmly on track and secure Europe’s industrial future.” ​