Scope
This article presents a joint EU vision for Research and Innovation (R&I) to enhance the technological competitiveness of the EU automotive sector. It guides the R&I dimension in the EU Action Plan for the Automotive Industry, published in 20251.
It was developed by a broad representation of European automotive stakeholders, in close coordination with the European Commission, and supported by the three associations representing the private side of the Horizon Europe Co-programmed Partnerships in the field of automotive, in the context of the Memorandum of Understanding (MoU) on the cooperation and collaboration to enhance the research and innovation contribution to the Industrial Action Plan for the European automotive sector signed in September 20252.
This plan’s objective is to have a thriving automotive industry in Europe that creates jobs, drives growth, and protects the environment. Research and Innovation (R&I) has a central role in this plan, fully aligned with other immediate actions to support the EU automotive industry in this accelerated transformation.
Context
The automotive industry is vital to the European economy, as it contributes approximately €1 trillion (7%) to the EU’s gross domestic product. Global vehicle registrations in 2024 reached 92 million, and the fastest-growing regions for new vehicle registrations are outside the EU.
Comparing import and export statistics, vehicles generated in 2024 a positive trade surplus of 94 billion Euro (export: 178 billion Euro), while for automotive components, the EU trade balance turned negative in 2025 when including batteries and electronics3. The automotive sector provides more than 2 million direct and 13 million indirect jobs in the EU, accounting for 8% of the EU workforce4. In addition to its positive impact on employment and the economy, the automotive sector is an innovation powerhouse for Europe, with multiple side effects and cross domain benefits, and the capacity to develop a large and diverse innovation ecosystem.
The sector faces increasing challenges, including high investment requirements for new technologies, growing competition from other regions, and a shifting geopolitical landscape that is impacting trade. Over the period 2018 to 2024, vehicle production in the EU fell significantly, dropping from around 16 million units in 2018 to roughly 11.4 million in 2024, a decline of almost 30%. In 2024, EU vehicle production fell by 6% for cars and 9% for commercial vehicles.
Although the trade surplus remained high, it was 6% lower than in 20235. Competition is intensifying, and the industry is under pressure in an increasingly unpredictable trade environment. Despite these obstacles, the automotive sector remains the leading investor in R&D, with €85 billion invested in 2023—twice as much as the next sector.
Objective
In this new reality, sustainability, energy and digital empowerment are vital for Europe’s competitiveness. The transformation must be supported by strengthening Europe’s industrial base, including the adaptation of the supply chains and the workforce. The automotive sector’s R&I policy and investments all over Europe must be guided by their impact on the economy, environment, and society to ensure leadership across all aspects of the mobility ecosystem:
Economic Prosperity: A competitive, resilient, and sovereign European automotive industry is essential to maintain prosperity. Innovation must reinforce Europe’s industrial leadership and strategic autonomy in the global mobility landscape.
Environmental Impact: Caring for the planet requires a cradle-to-cradle life cycle approach and the widespread adoption of the circular economy, ensuring that mobility solutions are resource-efficient and regenerative while maximising the use of renewable energy sources and eliminating air pollution.
Societal Impact: Putting people first means ensuring that mobility is affordable, accessible and inclusive, serving the needs of all citizens – urban and rural population, regardless of age, physical ability or financial means. This includes a strong commitment to Vision Zero, aiming to eliminate road fatalities and serious injuries, while enabling safe and equitable mobility for everyone. Also required are (higher) education and focused skills development programmes to guarantee an adequately trained workforce and high-quality jobs.
“Our mutual aim is a sustainable, competitive, and innovative car industry in Europe that benefits our citizens, our economy, and our environment.”9
Our goal: innovations that generate positive impacts across these three dimensions. Europe must aim to provide preferred options for the safest and cleanest mobility solutions for all, delivered by a robust, globally competitive and future-ready automotive sector.
More can be read here: trimis.ec.europa.eu