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Brussels has promised to help the European car industry as much as possible by using pan-EU 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 are still “formulating” options for an incentive program.

“It is reasonable to see how we can find out in a pan-European perspective, how to facilitate measures instead of going through national subsidies,” said Ribera. He warned of a “race in which we could face one national model against another”.

German Chancellor Olaf Scholz on Tuesday revealed that the commission is considering an EU subsidy program he proposed. The German government abruptly scrapped its own plan in 2023, leading to a rupture EV sale.

Many EU member states offer incentives for EVs, but the terms vary and many member states offer no purchase subsidies, according to the European Automobile Manufacturers’ Association.

A challenge for Brussels is to design a scheme that complies with WTO rules while avoiding subsidies flowing to Chinese car makers, whose market share is growing rapidly.

Ribera admitted that there is a “complex balance” to be struck between rapid electrification and “a mismatch in the capacity of European brands to deliver in terms of quantity and quality what we want to see in action on our roads”.

The commissioner, who is responsible for the EU’s “green industry” strategy, said that a possible incentive scheme would be one of several measures to support a sector considered important for the European economy. The European car makers “need a comprehensive view on how to update their capacities and catch up with the demands of the whole world,” said Ribera. In contrast, US President Donald Trump pledged this week to end “unfair subsidies” for EVs.

Ribera, a socialist and former deputy prime minister of Spain, ordered the delay of the 2035 deadline for the end of new sales of internal combustion engines because the car industry wants “predictability and clarity”.

“It doesn’t make sense to reopen the discussion if that gives a certainty and punishes the first movers who take it seriously without the potential advantage of those who still need to move,” he said.

But he said he was open to flexibility in annual EV sales targets and the fines automakers face for missing them. Ribera said there is an “open conversation” with carmakers about alternative commitments they can make in terms of investment.

Carmakers complain that paying fines will only hinder their EV investment plans while buying credits from Chinese EV makers will help Chinese competitors.

Ribera said it is important to “make sure that this legislation is applied in a way that facilitates what is the main goal” of eliminating gasoline and diesel engines.

He also said he was open to expanding technology transfer requirements for foreign automakers that want to set up manufacturing facilities within the EU. Brussels said last year that it requires foreign companies that receive EU grants for battery development to share some technology with local partners.

There is a “good lesson to be learned” from China, which set strict joint venture and tech-sharing requirements when European carmakers set up factories there 30 years ago.

Apart from the auto sector, Ribera said he was ready to expand the available measures the commission could take to benefit European industry.

Ribera said he would look into local content requirements to protect European turbine manufacturers facing stiff competition from Chinese companies.

Shares of European wind turbine makers took a hit from Trump’s earlier policy announcements, including the suspension of new offshore project leases.

Ribera insisted that the EU would stay on course on decarbonization, despite Trump’s move to abandon the 2015 Paris agreement on emissions reductions, of which he was one of the architects.

The devastating fires in Los Angeles show that the US is already suffering the effects of climate change at a great cost, he said.

“The world is much bigger (than the US) and there are many other partners and players who understand why it is important to stay united,” he said.