CBAM in Automotive: When the Cost of Imports Is Felt in Every Bolt

The European automotive industry is one of the pillars of the continental economy. It directly employs over 13 million people, generates roughly 7% of European Union GDP, and accounts for one-third of global R&D expenditure in the sector. In the Central and Eastern European (CEE) region, its role is even more pronounced — in Czechia, Slovakia, Hungary, and Poland, automotive forms the backbone of industrial production and exports. Densely interconnected supply chains have grown around major assembly plants, with thousands of companies operating within them — from Tier 1 suppliers to specialised engineering firms.

A new variable is now entering these supply chains.

A car is not a CBAM good. But the bolts, frames, wheels, and radiators inside it — those are.

On 1 January 2026, the Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase. What had been two years of reporting only is now turning into a payment obligation. Importers of steel, aluminium, and other materials into the EU must now purchase CBAM certificates — and their price for the first quarter of 2026 was set by the European Commission at EUR 75.36 per tonne of CO₂e.

CBAM does not apply to finished vehicles. It applies to the materials and components from which vehicles are assembled. Steel for chassis. Aluminium for frames and EV battery casings. Bolts, nuts, tubes, sheets. And it is precisely these materials that companies in the CEE region import in large volumes — from India, China, Turkey, and Southeast Asia.

This is not just about large OEMs. A mid-sized company importing steel rods from Asia to manufacture components for automakers is affected just as much as a corporation with a billion-euro turnover. There is an exemption: if the total annual import of CBAM goods does not exceed 50 tonnes, the company does not need to be a registered CBAM declarant.

CBAM in 30 Seconds

The principle of CBAM is straightforward: if a European producer pays for its emissions under the EU Emissions Trading System (EU ETS), an importer from a third country should pay the equivalent. Otherwise, the foreign producer has an unfair price advantage — and emissions simply shift beyond EU borders instead of declining.

CBAM currently covers six sectors: iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity. The importer must purchase a CBAM certificate for every tonne of CO₂e embedded in the imported goods, with the certificate price derived from the current EU ETS allowance price.

Crucially, the payment for CBAM certificates is not introduced abruptly but phased in gradually. The resulting payment is calculated from three components: the embedded emissions of the imported goods, minus the free allocation adjustment (CBAM factor × benchmark for the given product), minus any carbon price effectively paid in a third country. The calculation incorporates the so-called CBAM factor, which determines what share of the free allocation of emission allowances (from the EU ETS) is deducted from the embedded emissions of the import. In 2026, this deduction is still very high (97.5%), so the resulting payment is relatively low. But it decreases year on year — until in 2034 it disappears entirely and the importer pays for the full volume of embedded emissions.

The CBAM factor is applied to the benchmark value for a given product and production route. The resulting deduction is subtracted from the embedded emissions — and the importer pays for the remainder. The lower the CBAM factor, the higher the payment.

The adjustment and the benchmark are set by legislation. But the embedded emissions (the first and most important component of the calculation) depend on what data the importer uses. And this is where the critical decision arises.

Default Values vs. Actual Emissions — The Key Difference That Determines How Much You Pay

CBAM distinguishes two ways to determine the embedded emissions in imported goods:

Default values are emission factors established by the EU for each combination of country of origin, product, and production route. They are deliberately conservative — corresponding to the average of the countries with the highest emission intensity. Moreover, they increase annually by a mark-up: +10% in 2026, +20% in 2027, +30% from 2028 onwards. They are defined in Commission Implementing Regulation (EU) 2025/2621.

Actual emissions are specific emission data from the producer, verified by an independent EU-accredited verifier. The methodology for their calculation is laid down in Commission Implementing Regulation (EU) 2025/2547. If the producer manufactures with lower carbon intensity than the default values assume, actual emissions result in a lower certificate payment.

Why this matters: The difference between the two approaches can be substantial. Default values are effectively a "penalty for ignorance" — if the importer does not know its supplier's emissions, the EU assigns the highest values. Investing in obtaining actual data thus directly translates into lower costs.

Downstream Expansion: Why Automotive Cannot Hide Behind "Finished Parts"

The original circumvention logic was simple: why import raw steel when you can import a finished part that falls outside CBAM? The European Commission anticipated this scenario.

New legislative proposals extend the scope of CBAM by approximately 180 additional products under the so-called Annex II. Among them are items the automotive sector knows intimately: chassis, gearboxes, suspension systems, radiators, and road wheels.

CN Codes Examination

The following Combined Nomenclature (CN) codes are particularly relevant for the automotive sector:

• 7318  Screws, bolts, nuts, rivets, and similar articles of iron or steel
• 7606  Aluminium plates, sheets, and strips of a thickness exceeding 0.2 mm
• 7608  Aluminium tubes and pipes
• 7326  Other articles of iron or steel (chains, springs, anchors…)
• Newly proposed: chassis (8706), radiators (8708 91), wheels (8708 70), gearboxes (8708 40)

Quick check: Review the customs declarations for your imports over the past 12 months. If you find these codes and the annual volume exceeds 50 tonnes — CBAM applies to you.

Why the EU Is Expanding the Scope - The Logic of Annex II

The basic CBAM Regulation (EU) 2023/956 covers raw materials in Annex I — steel, aluminium, cement, fertilisers, hydrogen, and electricity. However, if the scope remains limited to raw materials, a straightforward path to circumvent the regulation emerges: import a finished steel part instead of raw steel.

This phenomenon is known as carbon leakage through circumvention. The EU is responding by extending Annex II to include processed goods made from CBAM materials. The objective is to cover the entire chain from raw material to component, so that the CBAM price signal is not undermined.

For automotive, this is critical: the majority of imports are not raw ingots but processed parts and those are precisely what Annex II progressively captures.

For companies in the supply chain, this means one thing: the strategy of "importing a finished component instead of raw material" is ceasing to work as a way to avoid CBAM.

Three Logical Impacts of CBAM on Automotive

At its core, CBAM does one thing: it makes importing materials with high carbon intensity more expensive. Once this price lever is in place (and it progressively strengthens as the free allocation deduction declines to zero in 2034) it triggers three foreseeable reactions in the automotive sector.

What to Do Now: A Checklist for Automotive Companies

Regardless of company size — if you import materials or components from countries outside the EU, this is the minimum you should have completed or under way.

For the analytical assessment of CBAM exposure across your supplier portfolio, we use our internal CBAM calculator, which allows different scenarios to be modelled efficiently. It quantifies and compares expected CBAM costs based on emission information as well as country of origin and specific suppliers, identifies the most material items and suppliers in the portfolio, and provides an analytical basis for optimisation decisions in procurement and supply chain setup.

Map Your Imports

Review your customs declarations for the past 12 months. Identify all items falling under CBAM CN codes (iron, steel, aluminium, and their products). Calculate the annual tonnage in each category.

Assess the 50-Tonne Threshold

If annual imports in any CBAM category exceed 50 tonnes, you must be a registered CBAM declarant. The deadline for applying for "Authorised CBAM Declarant" status was 31 March 2026 — if you missed it, address this immediately.

Decide Which Emission Values You Will Use

Every importer faces a fundamental choice: calculate the CBAM obligation based on EU default values, or invest in obtaining actual emission data from suppliers. Default values require no cooperation from the supplier but are deliberately high and increase annually. Actual emissions require active cooperation and independent verification — but if the supplier produces more cleanly than the default values assume, the result is a lower payment. For most importers, a hybrid approach will make sense: invest in actual data for key suppliers; accept default values for smaller consignments.

Assess Suppliers by CBAM Exposure

Not all suppliers are equally significant from a CBAM perspective. Map your portfolio against four variables:

• Import volume (tonnes per year) — the higher the volume, the greater the absolute impact on certificate costs.
• Emission intensity of the country of origin — default values vary by country. Imports from India or China will carry higher default values than imports from Turkey or South Korea.
• Material type and production route — steel from a blast furnace (BF/BOF) has a fundamentally different emission profile than steel from an electric arc furnace (EAF), just as primary aluminium differs from secondary aluminium.
• Existence of a carbon price in the country of origin — if the supplier pays a carbon tax or participates in an emissions trading system in their country, this payment is deducted from the CBAM obligation.

Ensure Independent Verification

Emission data from non-EU installations must be verified by an independent verifier accredited in the EU. Agree with your suppliers on who will arrange and pay for the verification — and start with those of the highest priority.

Conclusion

CBAM is a price signal that is progressively rewriting the logic of procurement, design, and financial planning across the automotive sector.

For automotive companies in CEE, this means the need to comprehensively assess their approach to CBAM impacts: to map and validate supply chains, to decide where to invest in actual emission data and where to accept default values, and to put in place processes that ensure the company has the right data at the right time. This is not a one-off compliance exercise — it is systematic work with the supplier portfolio that will need to be refined and deepened every year.

The carbon price at the EU border is here to stay. Companies that set this process in motion now will be in a fundamentally different position in three years than those that wait.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For a specific assessment of CBAM impacts on your company, we recommend consulting a specialist in EU customs and environmental regulation.