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Brussels has promised to potentially help Europe’s struggling auto industry by using pan-European subsidies to boost demand for electric vehicles.
Teresa Ribera, executive vice-president of the European Commission, told the Financial Times at the World Economic Forum in Davos that officials were still “shaping” options for an incentive program.
“It makes sense to see how we could find, from a pan-European perspective, how to facilitate measures instead of going through national subsidies,” Ribera said. She warned of a “race where we could pit one national model against another.”
German Chancellor Olaf Scholz revealed on Tuesday that the Commission was considering an EU subsidy program he had proposed. The German government abruptly abandoned its own program in 2023, leading to a fall VE sales.
Many EU member states offer incentives for electric vehicles, but conditions vary widely and several member states offer no purchase subsidies, according to the Association of European Automobile Manufacturers.
One of the challenges for Brussels would be to design a system that would comply with WTO rules while avoiding subsidies given to Chinese automakers, whose market share is growing rapidly.
Ribera admitted that there was a “complicated balance” to find between rapid electrification and “a mismatch with the ability of European brands to provide in terms of quantity and quality what we would like to see evolve on our roads”.
The commissioner, responsible for Europe’s “green industry” strategy, said a possible incentive program would be one of several measures to support a sector deemed vital to the European economy. European automakers “needed a global vision on how to update their capabilities and catch up with what is already in demand around the world,” Ribera said. In contrast, US President Donald Trump pledged this week to end “unfair subsidies” for electric vehicles.
Ribera, a socialist and former Spanish deputy prime minister, ruled out delaying the 2035 deadline to end new sales of internal combustion engines because the auto industry wanted “predictability and clarity.”
“It makes no sense to reopen the debate when it provides some certainty and would punish those first who took it seriously without any potential benefit to those who have yet to move,” she said.
But she said she was open to flexibility on annual targets for electric vehicle sales and on the fines that automakers face if they fail to meet them. Ribera said there was an “open conversation” with automakers about further commitments they could make in terms of investment.
Automakers have complained that paying fines will only hamper their plans to invest in electric vehicles, while buying credits from Chinese electric vehicle makers helps Chinese competitors.
Ribera said it was important to “ensure that this legislation is applied in a way that facilitates the main objective” of phasing out gasoline and diesel engines.
She also said she was open to extending technology transfer requirements for foreign automakers who want to establish manufacturing facilities within the EU. Brussels said last year it would require foreign companies that received EU grants for battery development to share technology with local partners.
There is a “good lesson to learn” from China, which set strict requirements for joint ventures and technology sharing when European automakers set up factories there 30 years ago.
Beyond the automotive sector, Ribera said she was ready to expand the measures that the Commission could take for the benefit of European industry.
Ribera said she would review local content requirements to protect European turbine makers facing fierce competition from Chinese companies.
Shares of European wind turbine makers were hit hard by Trump’s early policy announcements, including suspending the leasing of new offshore projects.
Ribera insisted the EU would stay the course on decarbonization, despite Trump’s decision to abandon the 2015 Paris agreement on reducing emissions, of which she was an architect.
The devastating fires in Los Angeles showed that the United States was already experiencing great costs from the effects of climate change, she said.
“The world is much bigger (than the United States) and many other partners and stakeholders understand why it is important to stay united,” she said.