Time is running out for Europe’s automobile manufacturers. You need to prepare for the new EU regulation on CO₂ emissions. The Automotive industry in the EUwhich is responsible for six percent of total employment in the EU and seven percent of the EU’s gross domestic product (GDP), is by the CO₂ border adjustment system (Carbon Border Adjustment Mechanism, CBAM) of the EU will be greatly affected.
The new regulation requires companies to account for the CO₂ emissions of selected imported products. The steel and aluminum categories are particularly important for the automotive industry.
Although complete vehicles are not currently covered by the CBAM, the automotive sector is one of the hardest hit industries due to its reliance on emissions-intensive materials. There is a high dependency on imported steel and aluminum for components such as body panels, chassis, frames and battery trays.
The CBAM is currently still in the transition phase and will enter the final phase on January 1, 2026. This means that companies will have to record the emissions caused by the products they import over the course of 2026. From February 2027, they will have to purchase certificates for the emissions recorded; the first report on this will be due in August 2027.
CBAM costs will add up quickly
A modern passenger car consists of around a ton of steel and 200 kilograms of aluminum. The global average is about 1.9 tons of CO2-emissions per ton of steel produced, and with every ton of primary aluminum, around 15 tons of CO2-emissions.
According to forecasts by analysts, the… Prices for greenhouse gas emission certificates will amount to 150 euros per tonne of CO₂ by 2030. This means that a newly manufactured vehicle could soon incur 300 euros in CBAM certificate costs, assuming that manufacturers import 20 percent of the required steel and 54 percent of the required aluminum according to the EU import data. Given the fact that Germany 2024 four million cars has produced, German automobile manufacturers and suppliers could be obliged to purchase around 1.2 billion euros in CBAM certificates in 2027.*
For the period after 2027, the European Commission plans to include categories such as chemicals and plastics in the regulation, which would mean even more car parts would fall under the CBAM regulation. In view of this, it is even more important for European car manufacturers and suppliers to develop solid CBAM strategies today.
Preparations for CBAM for automobile manufacturers and suppliers
Across the EU automotive industry, companies appear to be inadequately prepared for the new CBAM phase.
However, this is not only due to companies’ inaction, but also because EU regulators have not yet finalized the details of how emissions values are calculated and how data is verified. However, the scope of companies required to report and the deadlines for purchasing certificates have already been determined.
Given this, now is the time for European car manufacturers and suppliers to prepare for the regulations that come into force in January 2026. You should consider the following priorities.
1. Familiarization with CBAM and evaluation of your own processes
The most important elements of the CBAM have been defined, now companies must act. If you haven’t already, you should first familiarize yourself with the overall process and requirements.
If you are in-scope, i.e. if you exceed the de minimis threshold for importing more than 50 tonnes of CBAM-related goods per year or 100 tonnes of associated CO₂ emissions per year, you should identify which areas of your supply chain are most affected. Identify your key suppliers and imported goods, develop a targeted approach to obtain actual emissions data from these suppliers, and assess the potential financial impact. As more materials fall within the scope of CBAM and greenhouse gas emission allowance prices rise, the financial impact will increase in the coming years. Companies must prepare to meet these new obligations and bear the financial impact.
2. Collaboration with suppliers
Identify your most important suppliers – typically the 50 to 100 largest – and focus on them. Then create a targeted collaboration plan while defining an informed approach to the broader supplier base. Consider revising your procurement terms to require data sharing in the future. If necessary, you can also support your suppliers in familiarizing themselves with the topic of emissions and their calculation. Close collaboration is essential to obtain real emissions data, avoid the more expensive default values and identify further potential for decarbonization.
Access to trusted supplier data is one of the biggest challenges companies face today.
While the EU provides mechanisms for data exchange between suppliers and importers Catena-Xan industry network for the European automotive industry, in combination with third-party data exchange software, an alternative to collecting trustworthy, standardized emissions data. Catena-X enables companies to collaborate and share data in a trusted environment. It brings together manufacturers, technology providers and suppliers to standardize data exchange processes along the entire value chain. Beyond data sharing, these networks promote knowledge sharing so members can get to know each other, align standards, and work together to accelerate compliance readiness.
To become part of this network, companies usually have to register and introduce certified software that supports standardized data exchange. Then they can start collaborating with other members. This approach ensures interoperability and automates the collection of trustworthy emissions data. Catena-X is actively working to refine its capabilities and standards to support the CBAM.
The most important thing is to find the right technology partner to optimize CBAM reporting and support the integration of greenhouse gas emissions data into core financial accounting processes.
The EU CBAM report requires a lot of data, all of which can be automatically requested, populated and reported using customized ERP-based systems. The actual emission values are used for this. The SAP Green Token solution supports reporting for CBAM filers by enabling standardized, auditable reporting workflows. The SAP Green Ledger solution manages the certificate registry and helps ensure the financial and carbon accounting of CBAM emissions and certificates in accordance with accounting standards such as US GAAP and IFRS (planned for the first half of 2026).
Manual processes such as emails and Excel files are error-prone, not scalable, and make compliance with CBAM requirements time and resource intensive.
Preparation of all systems for CBAM compliance
The CBAM will reshape material sourcing in the automotive industry by introducing CO₂ emissions as a cost factor and promoting transparency in global supply chains.
The ideal scenario for automakers and suppliers is to take decisive actions to decarbonize – such as sourcing low-emission steel and aluminum products, increasing circular economy efforts and optimizing product designs to use fewer CBAM materials – while fully automating CBAM compliance activities.
Access to accurate data on supply chain emissions and their financial impact provides the insights business leaders need to advance decarbonization and reduce risk in the years ahead.
The right combination of software tools and collaboration within the industry-specific network enables cost-optimized and automated compliance with CBAM requirements and provides valuable information about the supply chain. The SAP solutions for sustainable business management can achieve measurable ROI by automating data collection and workflows. They also enable finance teams to eliminate manual processes so they can focus more on strategic analysis and action. This helps create a scalable foundation for ongoing carbon cost management while supporting standardized data exchange and collaboration across the entire value chain.
Start preparing now to ensure your business continues to grow as the final phase of CBAM 2026 approaches.
Read the CBAMPlaybook and look at this CBAM webinar to find out more.
Thomas Janzen is an industry expert at SAP SE.
*This is a rough calculation to illustrate the possible impact. It is based on data showing that the EU imported 27.4 million tonnes of finished steel products in 2024. EU consumption was around 129 million tonnes. We therefore assume that imports account for around 20 percent of EU steel consumption. 2023 54 percent of the aluminum used in the EU came from imports. Based on these average values, this results in around two tonnes of imported greenhouse gas emissions per vehicle or 300 euros, with 20 percent of the emissions attributed to a ton of steel and 53 percent of the emissions attributed to 200 kilograms of aluminum.
