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What the Electrification Action Plan means for transport

July 31, 2026

T&E's in-depth review of the EU Commission's Electrification Action Plan

Electrification is the clearest way to cut energy demand, increase Europe's competitiveness and lower energy prices.

The European Commission’ electrification plan puts direct electrification of transport and other sectors front and centre. Increasing EV sales - cars, vans, buses and trucks as well as ships and planes - are a clear indicator that direct electrification will be the main tool to reduce fossil fuel imports and reduce the emissions of road transport. But electrification will also have a role in the shipping and aviation sector.

Batteries on wheels

A growing role for electricity in all sectors of the economy - replacing oil and gas - will not be possible without cheap and reliable electricity. The EV as a ‘battery on wheels’ can become the cornerstone for solving Europe’s grid bottleneck challenge by providing the needed flexibility.

By allowing the storage of electricity in vehicles when there is wind and sun and using it at times when there’s none, it can solve one of the fundamental issues of homegrown renewables.

The electrification plan offers a bold and comprehensive approach to scaling up Vehicle-to-Grid (V2G). The plan gives member states the freedom to experiment with V2G via so-called ‘regulatory sandboxes’.

The Commission will soon adopt the network codes that will be essential for enabling EVs to respond to grid signals, while the proposal on network charges incentivises smart and bidirectional charging, creating electricity markets that reward flexibility.

Finally, the proposal to accelerate the roll-out of smart meters will provide the necessary data for smart charging and V2G.

Apart from creating enabling conditions, the Commission does not forget about EVs 'V2G-readyness. In other words, are they capable of converting the DC power of the EV battery into AC power to be re-injected into the grid?

The action plan doubles down on an idea originally proposed in the Automotive Package to mandate “smart and bidirectional charging functionalities” in all new EVs. Specifically, the Commission establishes the legal basis to do this via the type approval regulation. Even though the Automotive Package is not yet adopted, the Commission has committed to developing a proposal to introduce V2G requirements for new EVs by the end of 2027.

What is missing

The Commission commits to proposing “technical requirements to enable interoperability such as standardized communication protocols”. This is a useful first step, but these technical requirements also need to include a hardware component.

Every EV will need to be equipped with a bidirectional onboard charger to avoid EV drivers needing to make an additional investment in a much more expensive bidirectional charger outside the vehicle. A basic unidirectional charger costs roughly €500, whereas a bidirectional charger costs at least €4000 and often substantially more. Unless every EV integrates the bidirectional charging capability, V2G is unlikely to scale up (more details in T&E briefing).

The EU institutions need to conclude the Automotive Package swiftly. T&E invites the European Commission to include a strong ‘hardware’ focus when elaborating technical requirements for V2G under the type approval framework.

Electricity markets and grids

Linked to the Action Plan is a proposal to amend the EU Electricity Market Design Regulation (Regulation (EU) 2019/943), focusing on network charges, also known as grid tariffs. The proposal shows a high level of ambition, proposing changes that have been much-discussed in the past, but never materialised.

Grid operators are incentivised to both build new cables and seek non-wire solutions, such as batteries, flexibility, digitalisation, and grid-enhancing technologies like V2G. If implemented properly, consumers will be incentivised to engage in flexible consumption, using electricity when it is cheap and avoiding expensive demand peaks.

Grid operators will need to provide greater transparency on how grid tariffs are calculated. ACER - the EU agency that oversees energy regulators - will also publish a best practice report on tariff methodologies, while electricity market regulators will be required to promote the use of ‘non-wire, smart and digital solutions’ like V2G. To allow for the benchmarking of European grids, ACER will develop and regularly publish smart grid indicators to track the uptake of innovative grid technologies and digital solutions.

Electrification will require more investments in European grids. Most investments in grid infrastructure are financed by network charges, which are added to consumers’ electricity bills. As investments in grids go up, the cost of electricity will go up for consumers, slowing down rather than accelerating electrification. This is why the Commission clarifies under what conditions state funds can be used to finance grid investments. This puts the ball in the member states’ court to use taxation revenues instead of network charges.

The proposal finally pushes member states to roll out smart meters. All EU countries must reach 50% smart electricity meter coverage before 2031, and 65% before 2034. Currently, member states can avoid rolling out smart meters, if a cost-benefit analysis process proves that the costs of smart meters outweigh the benefits. This loophole is removed and only applies to the coverage beyond 65%.

Last but not least, member states will need to fiscally promote the uptake of electricity as an energy source, by ensuring that the tax differential between electricity and gas is set in such a way that electricity is taxed at a lower rate than gas. This is less relevant for transport, except possibly for Italy, where there are 1 million CNG-fueled vehicles. But this is especially important for the electrification of buildings and the promotion of efficient electric heating with heat pumps.

This is likely to be a controversial proposal, as the Commission tries to get around the unanimity requirement for fiscal harmonisation (article 113 TFEU). Instead, the legal basis for revising the Electricity Market Regulation is Article 194(2) TFEU, which can be approved with qualified majority voting.

Cars

T&E welcomes the Action Plan’s strong recognition of passenger battery electric vehicles (BEVs) as critical tools for energy sovereignty. In 2025 alone, BEVs saved Europe €4.1 billion in avoided oil imports.

The Commission’s focus on demand-side incentives is positive, particularly the guidance on Social Leasing (Annex II). Directing Social Climate Fund and ETS2 revenues toward affordable, EU-made small BEVs for low-income and rural households will ensure a socially fair transition.

We also support the review of the Clean Vehicles Directive to ensure that public authorities lead the way in terms of procurement of zero emission vehicles..

The plan rightly highlights corporate fleets (which account for 60% of new car sales) as the primary engine for establishing an affordable second-hand BEV market.

The plan announces several fiscal measures such as i) a proposal measures on progressively phasing out fossil fuel subsidies (Q4 2026) and ii) a recommendation on Fiscal and Non-fiscal demand-side incentives for zero emission vehicles (Q4 2026). It is unclear yet to what extent this will cover cars (private and corporate) and will be additional to the currently discussed Clean Corporate Vehicles Regulation.

T&E welcomes the Commission’s commitment to review the Alternative Fuels Infrastructure Regulation (AFIR) in 2026.

What is missing

While the Action Plan puts electrification front and center, it relies heavily on voluntary national demand-side tweaks (fiscal and non-fiscal) and turns a blind eye to the severe political risk currently facing the sector.

The plan fails to account for how ongoing discussions around the Automotive Package threaten to further weaken vehicle decarbonisation targets despite the urgent need to rapidly scale up EVs. Pushing for electrification in an action plan while simultaneously allowing supply-side ambition to be watered down in legislative negotiations sends a dangerous and contradictory signal to investors, automakers, and consumers alike.

Also, while the plan addresses fossil fuel subsidy phase-outs, it lacks a firm deadline to end tax write-offs for fossil-fuel company cars.

To turn this plan into reality, the EU must:

Set binding electrification targets for large corporate fleets under the upcoming Clean Corporate Vehicles Regulation.
Protect the 2035 100% ZEV target under the car CO₂ standards as the bedrock of investment certainty.
European social leasing mechanism: the Commission should introduce a European Social Leasing scheme to scale leasing of compact, affordable, made-in-Europe electric vehicles via public de-risking.

Trucks

An EU-wide electrification target will also boost the uptake of battery-electric trucks (BETs). The EAP’s focus on BETs reflects their strategic importance for strengthening the EU's energy security and reducing dependence on fossil fuels. The electrification target should now serve as a compass for future truck-related policies, including the 2027 revision of the CO₂ standards and public & private procurement zero-emission targets. Regarding the latter, the EAP confirmed a revision of the Clean Vehicles Directive (CVD) by end 2027.

On charging infrastructure, the electrification plan foresees a dedicated de-risking mechanism for publicly accessible heavy-duty vehicles (HDV) charging. This is welcome news. Facilitating access to private financing can unlock additional clean investment, accelerate the rollout of charging infrastructure and therefore help EU transport companies adopt BETs at a faster pace.

Finally, the plan acknowledges the need, by 2040, to deploy sufficient grid connections for both publicly accessible and depot charging to enable 40% of the EU truck fleet to be electrified.

What is missing

While the Plan mentions that the upcoming AFIR review will address data collection on depot charging needs, it falls short of ambition. Semi-public depot charging deserves much greater attention in the AFIR framework.

The Commission also commits to proposing a recommendation on fiscal and non-fiscal demand-side incentives for ZEVs by Q4 2026. While this is welcome, it is unclear whether these measures will apply to cars, vans, trucks, or all vehicle segments. It fails to address a key barrier: the role of large shippers (cargo owners). Their procurement decisions have a major influence on the investment choices of European transport companies. Therefore, they should take greater responsibility for decarbonising the freight they commission. Unfortunately, the EAP overlooks this issue.

To accelerate electrification of the EU trucking sector, we call on the EU to:

Use the AFIR review to set common, minimum EU requirements to legally qualify semi-public depot charging;
Consider making semi-public depot charging eligible for funding under the Alternative Fuel Infrastructure Facility and including them in the AFIR targets;
Uphold the ambition level of the CO₂ targets for HDVs, and avoid further weakening;
Put forward a legislative demand-side proposal that includes binding zero-emission procurement targets for large shippers, helping create predictable market demand and supporting transport operators' investments in BETs.

Shipping

The Action Plan sends a strong signal that shipping electrification is now a priority on the EU agenda. Specifically, it places a welcome emphasis on the deployment of charging infrastructure (OPS) in ports and rightly identifies the upcoming review of the Alternative Fuels Infrastructure Regulation (AFIR) as a key milestone to accelerate its roll-out.

The EAP also includes a KPI on battery-electric ferries specifying that "sufficient infrastructure should be deployed to enable one-third of European ferries to operate as battery-electric vessels" by 2040. While the share of battery-electric ferries could already be set to rise (our report on ferry electrification shows that 52% of EU ferries could be electric by 2035 if the right conditions are put in place), this is nevertheless an encouraging signal.

What is missing

Although the Action Plan acknowledges the importance of electrifying shipping, it does not introduce any concrete measures to accelerate the transition.

On price transparency, the EAP invites stakeholders to enhance price transparency and comparability of shore side electricity prices but does not outline specific actions.

Similarly, the Commission indicates that it will work on removing barriers to the electrification of ferries and inland waterway transport but fails to provide concrete measures to achieve these objectives. This is especially pressing given the potential omission of small ferries from the planned expansion of the EU ETS.

To accelerate shipping electrification, the Commission should:

Expand AFIR shore power mandates to gradually include all ships, regardless of their size and type, and introduce requirements for vessels charging infrastructure.
Set minimum standards for price transparency for the provision of shoreside electricity.
Mandate Member States to include comprehensive forecasts of ports' future electricity demand in their National Policy Frameworks.
Include zero-emission requirements in the review of public procurement rules to ensure stronger support for battery-electric ferries.

Aviation

The European Commission recognises electrification's role in aviation decarbonisation alongside Sustainable Aviation Fuels (SAF), which is essential to set the conditions for a stronger industrial base. The plan offers two positive steps.

Firstly, launching a pilot program for real-world testing is an initial step towards bringing together industry, regions, and Member States. The Norwegian Test Arena is a blueprint for a real life pilot, with policymakers, safety authorities, airports, manufacturers and energy suppliers working together to create an early ecosystem for electric aircraft.

Secondly, encouraging electricity system operators to include airports in network planning is crucial in providing the local power upgrades necessary for charging aircraft.

What is missing

Electric aviation severely lacks concrete commitments. Binding targets for a technology which is not yet certified, and not commercially available, may be premature. However, the complete absence of even aspirational goals signals a low level of ambition.

Furthermore, a number of measures for other sectors - e.g. adjusted depreciation times for BEVs, or bridging the tax gap between fossil gas and electricity - could be easily extended to electric aviation.

Finally, the EAP overlooks the role that electric aviation would play in maintaining the European leadership in aircraft manufacturing in the future - a role that should not be taken for granted given the quick developments in electric aviation in China and the US.

To turn electric aviation into a reality, the EU must:

Include relevant measures for aviation in the EAP. Those measures include adjusted depreciation periods, or closing the tax gap between kerosene and electricity. The introduction of those measures should be commensurate with the commercial deployment of electric aircraft.
Introduce high level aspirational goals for the uptake of electric aircraft, especially on short routes - e.g between 50% and 80% of all flights below 1,000 km, and 90% of PSO flights, electrified by 2050.
Create an EU industrial alliance: a formal alliance is essential to foster coordination across the supply chain, building a robust "Made in EU" electric aviation ecosystem, including aviation-grade batteries.
Implement financial derisking: Dedicated tools are crucial to provide aircraft OEMs with the support needed to offset massive upfront capital costs for aircraft certification programmes.