EU electric vehicle transition: obstacles and solutions by 2035

The European Union (EU) has set itself a target: the new-car market must be 100% electric by 2035. Yet several organisations warn that, without a coordinated plan, meeting that target could come at a high price: millions of jobs could be lost, the motor industry's competitiveness could weaken, and consumers could have less access to new cars.

These are exactly the three areas addressed by the report from the Centre for European Policy Studies (CEPS), produced in collaboration with the European Automobile Manufacturers' Association (ACEA).

Entitled “Transition to electric vehicles: challenges and tools for moving Europe towards low-carbon mobility”, the document outlines the main barriers to electrifying the automotive sector and sets out a joined-up plan. Its authors say the plan has been designed to ensure Europe meets its emissions-reduction targets without sacrificing industrial strength.

What are the obstacles to electric vehicles?

CEPS identifies several hurdles, with the most apparent being the high price of electric vehicles compared with combustion-engine models. Their average price is €45,000, more than double the €20,000 that most consumers are prepared to pay.

The vehicle battery is the main reason for that cost, accounting for around 34% of an electric vehicle's total price. Batteries made in Europe are also 20% more expensive than those produced in China. This is largely due to heavy reliance on imported critical raw materials, including lithium, cobalt and nickel, which are exposed to geopolitical risks.

These issues are compounded by an insufficient charging infrastructure, particularly beyond major cities, and the urgent need to retrain the workforce. Without this, workers risk being left behind, with significant social consequences.

Finally, the industry faces intense competition from China, where manufacturers benefit from state support and lower costs. High energy prices and the EU's regulatory complexity further hamper competitive vehicle production in Europe.

The solutions? Subsidies and incentives

To prevent economic and social disruption during the electric transition, the CEPS report sets out specific measures across several key areas.

A major focus is support for demand, including subsidies aimed at low-income households and SMEs (small and medium-sized enterprises), harmonised tax incentives, and improved use of the Social Climate Fund and the new emissions trading system for transport (ETS2).

On the industrial side, the report advocates redirecting investment in research and development (R&D) towards strategic technologies such as batteries, automotive software and autonomous driving. It also calls for closer coordination between funding programmes such as Horizon Europe and other regional policies.

CEPS also highlights the challenge of scaling up emerging technologies, proposing stronger instruments such as the Innovation Fund and the involvement of the European Investment Bank (EIB) in venture-capital solutions. It recommends that EU countries simplify and expand state aid.

Lastly, the report stresses the need to speed up the rollout of the charging network by using the Alternative Fuels Infrastructure Facility (AFIF) and European cohesion funds. This would help address regional disparities and make it easier to adopt electric vehicles across the EU.