At a critical juncture, the European automotive industry is under increasing pressure to expedite its shift towards sustainability, driven by climate imperatives, resource constraints, and changing consumer expectations. This thesis investigates the dynamic interplay between EU policy regulations and market forces in shaping the sector’s green transformation. By conducting a comparative analysis of Germany, Slovakia, and Sweden, and focusing on the strategic responses of Volkswagen and Volvo.

The findings reveal that neither regulation nor market forces alone are sufficient to drive rapid and resilient sustainability transitions. Instead, the most successful outcomes arise where robust institutional frameworks, stable policy environments, and proactive corporate strategies are closely aligned with cultural values and market readiness, as exemplified by Sweden’s leadership in regulatory compliance, innovation, and circularity. In contrast, Germany’s experience highlights the risks of policy volatility, while Slovakia’s emerging progress underscores the transformative potential of foreign investment and knowledge transfer in less mature markets.

This thesis contributes to the field by offering a nuanced understanding of how policy and market drivers interact to shape sustainability trajectories in the automotive sector. It emphasizes the need for integrated, context-sensitive strategies that harmonize regulatory ambition with adaptive market practices. Ultimately, the study demonstrates that Europe’s path to sustainable mobility will depend on leveraging the synergy between institutional rigor and market dynamism while navigating the complex journey toward a greener, more resilient automotive future.