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EU Set to Unveil EUR35B Auto Support Package on Dec 16

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  //automotive-transportation.news-articles.net/co .. nveil-eur35b-auto-support-package-on-dec-16.html
  Published in Automotive and Transportation on Sunday, December 7th 2025 at 16:32 GMT by reuters.com

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EU Eyes Dec 16 Package to Rescue and Revitalize its Auto Industry – A Comprehensive Summary

On 7 December 2025, Reuters reported that the European Union is poised to unveil a major support package for the continent’s automotive sector at the upcoming European Council meeting on 16 December. According to an industry source, the proposal would be a coordinated effort to shore up European car makers’ competitiveness while aligning the sector with the EU’s ambitious climate goals. This briefing distills the key elements of the planned package, the context behind it, and the potential implications for stakeholders across the automotive ecosystem.

1. Why a New Package Is Needed

The EU’s automotive industry has faced mounting pressure from a confluence of forces:

• Climate‑related regulations – The EU’s Green Deal, the 2021 Climate Law, and the forthcoming “Euro 7” emission standards mandate a 55 % reduction in CO₂ per vehicle by 2030 and a 100 % shift to zero‑emission vehicles by 2035.
• Supply‑chain bottlenecks – Global shortages of critical raw materials, especially lithium, cobalt, and nickel, have hampered battery production. The industry also contends with a heavy reliance on Chinese battery makers.
• Competition – US and Chinese automakers are investing aggressively in EV technology and infrastructure, threatening to erode European market share.
• Public‑sector policy gaps – While the EU has launched the European Battery Alliance and the Hydrogen Strategy, industry insiders argue that these initiatives still lack the scale and fiscal support necessary to keep European manufacturers at the cutting edge.

Against this backdrop, the industry source warned that “the auto sector’s survival hinges on a decisive EU‑wide plan that marries financial incentives with strategic investments in technology and supply chains.”

2. Core Pillars of the Proposed Package

The planned package, projected to amount to roughly €35 billion over the next decade, would be assembled through a blend of grants, tax incentives, and market‑shaping measures. The pillars include:

The industry source added that the package would be “designed to be phased in, with an immediate €5 billion stimulus to jump‑start the transition, followed by incremental support tied to emission‑reduction milestones.”

3. Strategic Objectives and How the Package Fits the EU’s Climate Agenda

a. Keeping European OEMs Competitive

By directly addressing the battery supply chain, the EU intends to blunt the competitive advantage that Chinese and US manufacturers currently hold. The funding earmarked for battery R&D and plant expansion would help European OEMs (e.g., Volkswagen, PSA, Stellantis, BMW) secure a larger slice of the global battery market.

b. Accelerating the EV Transition

The EV adoption incentives are aimed at offsetting the upfront cost premium of electric cars. The subsidies and tax incentives would help bring the price parity threshold to a level where consumers view EVs as a default rather than a premium option.

c. Fostering the Hydrogen Sector

Hydrogen is deemed essential for heavy‑duty transport (trucks, buses, marine). By subsidising hydrogen refueling infrastructure, the EU hopes to accelerate the deployment of fuel‑cell buses and long‑haul trucks, thereby meeting the 2030 emission targets for the logistics sector.

d. Strengthening Circularity

Sustainable vehicle end‑of‑life management is increasingly central to the EU’s circular economy agenda. Funding for recycling technologies and take‑back schemes would help achieve the EU’s target of a 55 % waste‑to‑recycling ratio for cars by 2035.

4. Potential Challenges and Criticisms

While industry stakeholders largely view the package as a win‑win, critics highlight several concerns:

• Fiscal Burden – EU member states worry that €35 billion could strain budgets, especially in the post‑pandemic economic climate.
• Implementation Complexity – Coordinating between the European Commission, national governments, and industry consortiums could lead to bureaucratic delays.
• Risk of Market Distortion – Some argue that subsidies could distort competition, potentially disadvantaging small OEMs or foreign entrants that lack EU subsidies.

The industry source noted that “a clear roadmap, transparent criteria for funding, and a robust monitoring framework will be essential to ensure the package delivers tangible results without distorting markets.”

5. Looking Ahead

If the EU proceeds with the proposed support package on 16 December, the automotive landscape could shift dramatically in the coming years. A rapid increase in domestic battery capacity would reduce the industry’s reliance on Chinese supply chains, while the EV incentives could accelerate market penetration of electric cars, nudging the EU closer to its 2035 zero‑emission target. Simultaneously, the hydrogen subsidies would lay the groundwork for a new fleet of green trucks and buses.

The automotive community, regulators, and the public will be watching closely. A successful rollout could position Europe as a global leader in clean mobility, while a misstep could exacerbate the competitive gap already widening between European and non‑European automakers. The next few weeks will be critical as the EU refines its strategy, clarifies its funding mechanisms, and prepares to present a cohesive proposal to the European Council.