Digital Economy Soundbite | AI: driving changes in the automotive industry

Discussions at a European Commission workshop, last month, highlighted both the opportunities and challenges of integrating AI into the European automotive sector. The industry is evolving rapidly, driven by technological advances, global competition, and a shift towards smarter, cleaner, and more connected vehicles. In response, the European Commission has launched two initiatives - the Automotive Action Plan and AI Continent Action Plan - to boost the sector’s competitiveness.

A key focus of the workshop was the role of regulation as an enabler of innovation, reflecting the Commission’s strategic emphasis on reducing regulatory and administrative burdens for businesses. This approach forms part of a broader drive to create enabling conditions for innovation across the sector. Highlights from these sessions include:

• AI systems: The risk-based framework in the EU AI Act applies, classifying certain automotive AI use cases as high-risk and subjecting them to comprehensive compliance requirements before they can be placed on the EU market.
• Autonomous vehicles: Type approval regulations are being amended to allow unlimited series approval initially for vehicles with automated parking systems in 2025, and with further use cases to follow in 2026. Efforts are also underway to harmonise ADAS and ADS testing procedures on public roads across the EU.
• Pro-innovation measures: For AI systems, new measures include the establishment of AI regulatory sandboxes, real-world testing for some high-risk AI systems, and an AI Act Service Desk to support businesses with compliance. For autonomous vehicles, large-scale cross-border testbeds, regulatory sandboxes and European Automated Driving Corridors are being established to enable at-scale pilot deployment.

Stakeholder involvement is critical and the Commission is inviting industry input on its forthcoming Apply AI Strategy, including barriers to AI adoption and practical challenges in implementing the EU AI Act. The consultation closes on 4 June 2025.

Authors: Fiona Ghosh, Partner; Patricia Wade, Expertise Counsel; Imene Hamdi-Cherif, Associate