Legal development

Driving a Balance between Competitiveness and Sustainability for the EU Automotive Industry

By Claus Zimmermann, Roman Brtka, Rafael Baena and Giovanna Ventura

16 May 2025

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    On March 5, the European Commission released its Industrial Action Plan for the Automotive Sector, a key contributor to Europe’s economy in both GDP and jobs. Building on the Strategic Dialogue launched in January by President von der Leyen, the plan seeks stakeholder input to support the sector as it faces global supply chain risks, geopolitical challenges, and rapid transformation toward clean mobility and digitalization.

    The plan covers the full value chain, with actions to boost domestic production, reduce strategic dependencies, and support the green transition. It also emphasizes protecting European companies from unfair competition through stronger trade defense measures and efforts to secure market access and sourcing opportunities amid rising global protectionism.

    Listen to Ashurst’s experts for an in-depth analysis of the Action Plan and major European initiatives.

    Highlights from the discussion:

    1. Innovation and digitalisation as key drivers for stakeholders – the focus will be on software-enabled, AI powered connected and autonomous vehicles and various legal questions arising with regard to cybersecurity and the access and use of vehicle data, which needs to be solved.
    2. A more assertive stance against unfair competition – the EU intends to improve the level playing field and enhance the opportunities for EU OEMs and the value chain, especially in the batteries segment, by using its trade defence instruments and the Foreign Subsidies Regulation (FSR) with ex officio investigations and exploring different ways to directly support the European production.
    3. New legal challenges for contracts and transactions, but also some opportunities from global trade disruptions, in particular the rapidly changing tariffs environment – growing need for in-depth supply chain due diligence, in a multi-sourcing context, requires contracts to reflect due diligence obligations, audit rights and exchanges of information, also in a vertical relationship. These require careful analysis and contractual regulation.

    Key strategic actions for businesses:

    1. In line with the EU's goal to achieve climate neutrality by 2050, the Action Plan aims to boost clean mobility by a more coordinated approach including the acceleration of the charging infrastructure, incentive schemes, transparent consumer information and decarbonization. At the same time, some flexibility with regard to the emission targets is granted to tackle the challenges of the current decline of battery vehicles.
    2. Assess risk exposure by reviewing sourcing, potentially diversifying the origin of raw materials and key automotive components, aligning customs, and staying vigilant for potential new trade remedies investigations (in the EU and UK) or new non-tariff barriers.
    3. For investors, deal structuring must anticipate regulatory frictions, especially in cross-border transactions. JVs, acquisitions, and other transactions in the EU require thorough planning in a multi-layer regulatory framework, including merger control, the FSR or Foreign Direct Investment screening. In-house counsel and legal advisors need to ensure that contracts are resilient, compliant, and adaptable.
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