Focused Support for Electric Vehicle Batteries
"We Will Secure Supply Chain Competitiveness"
The European Union (EU) is pushing forward an 'action plan' to revive the stagnant automotive industry within the region.
On the 5th (local time), the EU Commission announced the 'European Automotive Sector Industrial Action Plan' aimed at promoting the eco-friendly transition and securing competitiveness of the automotive industry within the region.
This plan focuses on supporting the battery industry, which plays a key role in the electric vehicle value chain. The Commission introduced a policy package called the 'Battery Booster,' investing 1.8 billion euros (approximately 2.8 trillion KRW) to support the expansion of production lines for battery manufacturers. The goal is to establish a safe and competitive supply chain for battery materials and more.
Alongside the battery industry, the plan also aims to secure competitiveness in autonomous vehicle technology. The Commission stated, "We need to strengthen not only our industrial capabilities in batteries and materials but also the software required for autonomous vehicles." To this end, regulations, dedicated testbeds, and regulatory sandboxes will be established for pre-testing autonomous driving systems (ADS) and advanced driver-assistance systems (ADAS).
The 'European-made' requirement for battery cells and key components will also be codified. The plan envisions gradually expanding specific component usage requirements in connection with upcoming legislation such as the Industrial Decarbonization Promotion Act.
Trade defense measures justified by protecting the regional industry and ensuring fair competition will also be actively utilized. The Commission emphasized, "To enable Europe's automotive industry to respond to fierce competition, we will use trade defense measures such as anti-subsidy actions to protect European companies from unfair competition." It also stressed efforts to attract long-term foreign investment and simplify related regulations to reduce administrative burdens on regional manufacturers.
The Commission also pledged to respond to cases of abuse of preferential origin rules. Preferential origin rules are systems that grant tariff benefits if criteria set by trade agreements such as free trade agreements (FTAs) are met. The aim is to block loopholes where third-country companies like those from China establish production facilities in countries that have FTAs with the EU to receive tariff benefits.
A new EU-wide guideline for electric vehicle incentives is also expected to be established. The Commission explained, "We will cooperate with member states to share best practices and lessons learned from consumer incentive schemes and examine the possibility of an EU-level incentive system." It added that it will also present funding sources that member states can use when providing incentives.
However, while focusing on expanding electric vehicle adoption, the Commission decided to partially relax carbon emission regulations. Originally, the EU planned to lower the average carbon dioxide emission limit for new cars by 15% compared to 2021 starting this year and impose fines if the standard was exceeded, but this penalty will be deferred for three years.
This measure has drawn criticism from some quarters, arguing that it delays the spread of electric vehicles. In response, the Commission stated, "The goal of eliminating carbon emissions from new vehicles across the EU by 2035 remains unchanged. We recognize the need for flexibility regarding carbon dioxide reduction targets and will address this in a balanced and fair manner."
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