ELV: EU Proposes Landmark Circularity Rules for the Automotive Sector

On July 3, 2025, the European Parliament's committees for Environment and Internal Market introduced a comprehensive proposal for a new regulation to transform the automotive industry. The plan is that it will replace the existing End-of-Life Vehicles (ELV) Directives, establishing an ambitious framework for the entire lifecycle of a vehicle, from design to end-of-life management, with a core focus on circular economy principles. The proposal introduces several legally binding requirements for how vehicles are designed and manufactured, with a strong emphasis on the use of recycled materials.

• Mandatory Recycled Content: New vehicles shall contain at least 20% of plastic recycled by weight from postconsumer plastic waste. At least 15% of this target must come from plastic recycled from end-of-life vehicles, creating a "closed-loop" system.
• Metals and Critical Raw Materials: The European Commission will be empowered to set future mandatory recycled content targets for steel and aluminum. It will also assess setting targets for critical raw materials, such as the rare earth elements used in the permanent magnets of electric vehicle motors.
• Overall Recyclability: Each new vehicle type must be designed to be at least 85% reusable or recyclable and 95% reusable or recoverable by weight (excluding batteries)
• Expert Comment on Substances of Concern: Further, a list of "substances of concern" will be developed. This is in line with the requirements under the Ecodesign for Sustainable Products Regulation (ESPR) and fits into a wider landscape requiring such lists for a number of products, including packaging and batteries1..
• Extended Producer Responsibility (EPR): Manufacturers will be held financially responsible for the vehicles they place on the market throughout their entire lifecycle. This includes covering the net costs of collecting and treating the vehicles after they are discarded. The fees paid by producers will be modulated based on the vehicle's environmental performance, such as its recyclability and the amount of recycled content it contains. 
• Digital Circularity Vehicle Passport: Within 72 months of the regulation entering into force, every new vehicle will require a Digital Circularity Vehicle Passport. The manufacturer shall, at the time of placing the vehicle on the market, ensure that the information in the passport is accurate, complete, and up to date. This passport will provide access to crucial information, including material composition, recycled content data, and instructions for the removal and replacement of key parts, facilitating better repair and recycling.
• Circularity Strategy: Manufacturers will be required to develop and submit a "Circularity Strategy" that outlines their actions to comply with the new circularity requirements. 

From a strategic perspective, this is a major turning point. It removes the traditional separation between manufacturing, repair, and recycling. The companies that will succeed are not those who see this as a simple compliance task, but those who use it as an opportunity for innovation. They will integrate circular principles into their core strategy to build more resilient supply chains, reduce their dependency on virgin materials, and create a sustainable competitive advantage in the European market