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Von der Leyen Wants an AI Overhaul—Can Europe’s Automakers Keep Up?

For years, Europe has been the world’s guardian of combustion know-how—diesel wizardry, autobahn-bred engineering, and meticulously tuned chassis dynamics. But in the race toward electrification and autonomy, the continent has watched China and the U.S. sprint ahead. Now, European Commission President Ursula von der Leyen says that era of hesitation is over.

Her message to automakers is blunt: the future must be built in Europe, and it must be built now.

The Wake-Up Call

Europe’s electric-vehicle sector has spent the last half-decade blinking in the glare of China’s surge. BYD, NIO, and a fleet of aggressive newcomers have flooded the global EV conversation with competitive pricing, dazzling software, and volume. European brands—once the technological tastemakers—risk slipping into reaction mode rather than leading the charge.

Von der Leyen has spent weeks urging Brussels to stop the slide. The Commission is preparing to finalize its 2035 combustion ban decision, but the real dilemma is larger: double down on next-gen tech, or loosen regulations to avoid further industry strain? Meanwhile, mobility’s next wave is already forming.

A New Breed of European Cars

One prong of her vision is refreshingly small. Literally. She’s calling for a new EU class of compact, urban, affordable EVs—“E-cars”—mirroring Japan’s famously efficient Kei cars. These pint-size people-movers would give European automakers space to innovate without chasing luxury margins or SUV profits. If executed, it could reboot Europe’s struggling volume segment and offer consumers a cheap ticket into electrified mobility.

But the second prong is where the stakes get stratospheric.

The AI-First Offensive

Von der Leyen wants Europe to launch a full-scale offensive on AI-powered autonomous vehicles, asserting that autonomy isn’t a far-off dream—it’s already a reality in the U.S. and China. If Europe wants relevance, it needs skin in the game.

A Commission official put it plainly: AI could revitalize Europe’s automotive sector and improve safety across the board. Von der Leyen frames it as an “AI-first, safety-first” approach—linking industrial competitiveness to smarter, safer public roads.

For now, Europe’s AV presence lags behind American robo-taxi pilots and China’s fast-moving experiments. But Brussels sees that gap as opportunity, not defeat.

Cities as Testbeds, Streets as Laboratories

The plan doesn’t stop at building autonomous cars—it includes rewiring Europe’s urban landscape to host them. Von der Leyen revealed that over 60 Italian mayors have already signed on to help create a network of pilot cities ready for driverless mobility.

These cities would serve as continental proving grounds for homegrown autonomous platforms, giving European automakers something they desperately need: real-world deployment at scale.

Von der Leyen wants vehicles that are “made in Europe and made for European streets”—a direct swipe at dependence on foreign tech while acknowledging the need for solutions tailored to Europe’s narrow historic centers, dense populations, and varied traffic ecosystems.

Fighting for an Industry—and for Millions of Jobs

Europe’s automotive sector isn’t just a business; it’s a backbone. It employs millions across factories, suppliers, R&D centers, design studios, and transport networks. Von der Leyen warns that without aggressive innovation, Europe risks losing not only market share but livelihoods.

She argues that AI could help ease congestion, connect remote communities, and safeguard employment by keeping Europe competitive in a rapidly shifting market.

The bottom line? Europe can’t afford another “lost decade.” Too much is riding on it.

“Cars of the Future Must Be Produced in Europe”

Von der Leyen’s closing line has the cadence of a rallying cry—and maybe that’s exactly what it is. Europe once set the gold standard for automotive engineering. Now, it’s trying to prove it can lead the age of autonomy and AI as well.

Whether automakers answer the call—and whether consumers trust a European-built autonomous future—will define the next chapter of mobility.

But one thing is clear: Brussels isn’t waiting anymore. Europe wants back in the race.

Source: Reuters; Photo: Shutterstock, EPA

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Are EU Green Rules Killing Affordable Cars?

Developing a new car for the European market has become a daunting task — not because of innovation demands, but due to the overwhelming pressure of regulatory compliance. As the European Union tightens its grip with ever-stricter rules on emissions, safety, and noise, automakers are warning that excessive bureaucracy is threatening not just vehicle affordability, but also the future of sustainable mobility.

John Elkann, Chairman of automotive giant Stellantis and also of Ferrari, revealed to Automotive News Europe that over a quarter of an engineer’s time at Stellantis is now spent solely on making vehicles compliant with EU rules. “If you look at our engineers, more than 25 percent just work on compliance, so no value is added,” Elkann stated, highlighting the mounting cost — both in labor and innovation.

The burden is only expected to increase. By 2030, cars in Europe will be required to emit an average of just 49.5 grams of CO₂ per kilometer — nearly half the target for 2025–2029. From 2035 onward, new vehicles emitting any harmful substances will be outright banned, marking a total phase-out of combustion engines.

While this legislation aims to steer Europe toward a greener future, it’s also pushing many vehicles — particularly smaller, more affordable ones — off the roads. Rising costs have forced automakers like the Volkswagen Group to discontinue compact city cars such as the VW up!, Skoda Citigo, and SEAT Mii. In 2019, over one million vehicles priced below €15,000 were sold in Europe. Today, that number has shrunk to a mere 100,000.

Elkann sees a solution in looking east — to Japan. He’s advocating for a European version of the Japanese kei car, a class of ultra-compact, lightweight vehicles that make up about 40% of Japan’s market. “There’s no reason why if Japan has a kei car… Europe should not have an E-Car,” he argued.

Former Renault CEO Luca de Meo echoed the sentiment, criticizing the current trend of oversized electric SUVs. “Driving around every day in an electric vehicle weighing 2.5 tons is clearly an environmental nonsense,” he noted earlier this year.

Despite the growing dominance of crossovers, some brands are succeeding with smaller offerings. Dacia, Renault’s no-frills budget brand, has carved out a 5.1% market share in the EU this year, thanks in large part to the lightweight and affordable Sandero. Even its SUVs remain relatively light, with the Bigster maxing out at just 1,400 kilograms.

The core dilemma is clear: in trying to build the greenest cars, regulators may be steering the market toward heavier, pricier models, inadvertently sidelining the very goal of reducing emissions. For many consumers, the choice will become either unaffordable electrics or keeping older, polluting vehicles longer — the opposite of what EU policy intends.

As calls grow for a more flexible, tiered approach to regulation — particularly one that fosters small, efficient urban vehicles — the question remains: will European lawmakers loosen the rulebook to make room for an “E-Car”? Or will red tape continue to strangle innovation and affordability in the name of progress?

If the future of European mobility is to be both green and accessible, something has to give.

Source: Automotive News Europe

News

EU ban on sales of combustion engines from 2035 remains

The EU has announced that it will not abandon its ban on the sale of combustion engine cars from 2035. “We are sticking to the targets for 2035, as well as those for 2025 and 2030,” said Transport Commissioner Apostolos Tzitzikostas.

When the EU announced that it would introduce new CO2 regulations from 2025, threatening heavy fines for those who did not comply, many European manufacturers rebelled. The EU then tried to find a compromise, and the deadline for reducing emissions was extended to 2027. This means that instead of measuring emissions compliance over just one year, averages will be measured over the past two years.

The group that represents manufacturers of electric vehicles and chargers, T&E, opposes the extension of the deadline, believing that the decision will not have a positive effect, because manufacturers will be able to produce less affordable vehicles, which will increase the already unattainable difference between Europe and China. They believe that the EU should be decisive in its goals and not make any concessions. However, how realistic would it be for the EU to make a radical decision?

The transition to fully electric cars is an expensive process and requires a lot of investment. This includes investment in research and development, new supply chains, training and equipping distributors and their workshops. The fact that the deadline had to be extended is an indication that the ten-year target is unrealistic. However, car manufacturers now have just three years to reach the new targets.

Source: Reuters