Why the EU Is Taking Action

The European Union’s Green Deal and Circular Economy Action Plan aim to make Europe more resource-efficient and reduce waste. The automotive sector plays a crucial role in achieving these objectives, as it consumes vast amounts of steel, aluminium, plastics and critical raw materials. At the same time, millions of vehicles reach the end of their life every year, and many valuable materials are still not fully recovered and returned to the economy.

With the new regulation, vehicles are expected to become not only cleaner and more energy-efficient, but also significantly more circular. To achieve this, the EU is replacing the existing End-of-Life Vehicles Directive and the vehicle recyclability directive with a directly applicable regulation across all Member States.

Key Changes at a Glance

1. Vehicles Must Be Designed for Reuse and Recycling

Manufacturers will be required to design vehicles so that components and materials can be more easily reused, remanufactured and recycled. The established targets remain in place:

• At least 85% reusability and recyclability
• At least 95% reusability and recoverability by vehicle mass

What is new is the EU’s intention to modernise the calculation methodologies and align them more closely with real-world recycling performance.

2. Mandatory Use of Recycled Plastics

One of the regulation’s most significant measures is the promotion of secondary raw materials. New vehicles will be required to contain a minimum share of plastics derived from post-consumer recycled waste. A dedicated proportion of this recycled content must come specifically from plastics recovered from end-of-life vehicles.

The objective is to stimulate a robust market for high-quality recycled plastics while reducing reliance on virgin materials.

3. Future Requirements for Steel and Aluminium

The regulation also lays the groundwork for future minimum recycled-content requirements for steel and aluminium used in vehicles. The European Commission will conduct further studies and develop specific targets in the coming years.

These materials have a substantial impact on the carbon footprint of vehicle manufacturing and offer considerable opportunities for circular resource management.

4. Stricter Rules for End-of-Life Vehicles

For the first time, the regulation introduces harmonised EU-wide criteria defining when a vehicle officially becomes an end-of-life vehicle. This is intended to reduce legal uncertainty and curb illegal exports of vehicles that should instead enter authorised treatment systems.

The regulation also strengthens requirements related to:

• Collection of end-of-life vehicles
• Treatment in authorised facilities
• Removal of specific components before shredding
• Documentation and traceability throughout the process

5. Expanded Producer Responsibility

Vehicle manufacturers will assume greater responsibility for the collection and treatment of vehicles at the end of their life cycle. The principle of Extended Producer Responsibility (EPR) is broadened and extended to additional vehicle categories.

This approach is designed to ensure that the costs of environmentally sound vehicle recovery and recycling are not borne solely by municipalities or waste-management operators.

Who Will Be Affected?

The new rules apply not only to passenger cars and light commercial vehicles but, in part, also to:

• Motorcycles and other L-category vehicles
• Trucks
• Buses
• Trailers

As a result, the EU is establishing the first truly comprehensive circular-economy framework covering a broad range of vehicle categories.

What Does This Mean for Businesses?

For vehicle manufacturers and suppliers, the regulation represents a major transformation. Material data management, supply-chain transparency, product design and recycling strategies will need to be integrated much more closely. Compliance with circularity requirements will also become part of the vehicle type-approval process.

For recycling companies, the regulation creates significant opportunities. Growing demand for high-quality secondary raw materials is likely to drive investment in advanced sorting, dismantling and recycling technologies.

Conclusion

Regulation (EU) 2026/1738 is a landmark step towards a circular automotive economy in Europe. Future vehicles will be expected not only to meet high standards of safety and environmental performance, but also to be designed from the outset for repair, reuse and recycling. At the same time, the regulation strengthens markets for recycled materials and raises standards for the management of end-of-life vehicles.

For the entire automotive value chain—from manufacturers and suppliers to dismantlers and recyclers—the regulation signals the beginning of a new era of sustainable vehicle production and resource management.

Source: Regulation (EU) 2026/1738 of the European Parliament and of the Council of 8 July 2026 on circularity requirements for vehicle design and the management of end-of-life vehicles, published in the Official Journal of the European Union on 24 July 2026.