Circular Economy, End-of-Life Vehicles and Labour in Portugal: Regulatory Pressures, Employment Transformations and the Future of Downstream Automotive Work

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Abstract:

1. Context and Motivation
The return of protectionism and the acceleration of sustainability imperatives are reshaping the global automotive industry in profound ways. Among the most significant — yet least studied — dimensions of this transformation are its impact on downstream automotive work: the repair shops, authorised treatment facilities (ATFs), dismantlers, and recyclers that constitute the final stages of the vehicle lifecycle. The Circular Economy (CE) is increasingly positioned, both in EU regulatory discourse and in industrial policy debates, not only as an environmental instrument but also as a tool of strategic autonomy — a means to reduce dependencies on imported critical materials, particularly for battery production.
Portugal offers a particularly instructive national case for interrogating the labour dimensions of this CE turn in the automotive sector. As a mid-sized semi-peripheral EU economy with a mature but fragmented downstream automotive sector, and one of Europe's most significant lithium endowments, Portugal sits at the intersection of several of the structural tensions that animate the current CE debate: between regulatory compliance and genuine industrial transformation. It has an active OEM presence through AutoEuropa (Volkswagen, Palmela), Fuso Daimler (Tramagal), Stellantis (Mangualde), and Caetano (Ovar), but with smaller recycling companies there is still informal labour, and the survival of small operators is a challenge. The promises of green job creation and the risk of precarious employment in new CE-oriented activities are important recent pressures in the whole automotive sector.
2. The Portuguese ELV System and Its Labour Implications
Portugal's end-of-life vehicle (ELV) management system is organised around Valorcar, the Extended Producer Responsibility (EPR) body established in 2004 under the EU ELV Directive (2000/53/EC). Valorcar coordinates a national network of ATFs responsible for the depollution, dismantling, and recycling of end-of-life vehicles. While Portugal has broadly met EU reuse and recovery targets, the sector employs a relatively small and precarious workforce, with limited formal qualifications and constrained career progression pathways. The ATF network is composed predominantly of small and micro-enterprises, many of which have operated at the margins of formalisation.
The forthcoming reform of the EU ELV framework — replacing the 2000/53/EC Directive with a more stringent Regulation introducing mandatory recycled content requirements for new vehicles — will impose significant new technical demands on ATFs, including more sophisticated dismantling techniques, traceability systems, and data management capabilities. This paper argues that these regulatory changes will have a decisive impact on the structure of employment in the Portuguese downstream sector: increasing skill requirements, potentially accelerating market consolidation, and raising fundamental questions about the capacity of small operators and their workers to adapt.
3. The Informal Repair Sector and the Right-to-Repair
Beyond the ATF network, Portugal's downstream automotive sector is characterised by a dense and socially embedded network of independent repair shops — the oficinas — many of which operate in a grey zone between formal and informal economic activity. These establishments employ a significant share of Portugal's automotive workforce, often under atypical contracts and with limited access to training and social protection. The CE regulatory wave — encompassing the Right-to-Repair Directive, ecodesign requirements, and the new ELV Regulation — creates a paradoxical dynamic for this segment: on one hand, extending vehicle life and promoting repairability could, in principle, sustain or expand demand for repair work; on the other, the increasing technical complexity of electric and connected vehicles, combined with growing OEM and authorised dealer restrictions on access to repair data and spare parts, risks further marginalising independent repairers.
Sector associations such as ANECRA (National Association of Car Repairers) have raised concerns about these dynamics, highlighting the mismatch between the regulatory ambition of the CE and the structural conditions of Portugal's repair labour market. This paper will examine how Portuguese independent repair workers and their representative bodies perceive and respond to these regulatory changes, drawing on documentary analysis and, where possible, interviews with key stakeholders.
4. OEMs, Battery Repurposing and Emerging CE Labour Demands
The electrification transition adds a further dimension to CE labour dynamics in Portugal. At AutoEuropa, the integration of CE principles into production — including design for disassembly and the management of battery second-life applications — raises questions about whether CE commitments formulated at the group level in Wolfsburg are meaningfully cascaded to the Portuguese plant, and with what implications for work organisation, qualification profiles, and collective bargaining. Similarly, at Stellantis-Mangualde, the transition to electric light commercial vehicles creates new challenges around battery end-of-life logistics and the reskilling of production workers.
More broadly, the potential development of a battery CE loop in Portugal — linking the country's significant lithium reserves (notably the Barroso project) with domestic battery cell manufacturing, second-life repurposing, and recycling activities — could create new categories of skilled employment in CE-related activities. However, realising this potential requires deliberate industrial policy and targeted investment in training and reskilling that goes beyond what current market dynamics alone are likely to deliver. This paper will assess the extent to which public policies and social partner initiatives in Portugal are beginning to address these challenges.
5. Research Questions and Methodology
This paper is organised around four interconnected research questions:
(1) How are the tightening EU CE and ELV regulatory framework reshaping employment conditions, skill demands, and market structures in Portugal's downstream automotive sector?
(2) Are the CE's promises of green job creation being realised in the Portuguese automotive context, or are they generating new forms of labour precarity and market exclusion?
(3) How do Portuguese OEMs integrate CE commitments into their production strategies, and what are the implications for workers and trade unions?
(4) Can Portugal's strategic position at the intersection of lithium extraction, battery manufacturing, and CE regulation be leveraged to build a genuinely sustainable and decent-work automotive ecosystem?
Methodologically, the paper combines regulatory and policy document analysis with sectoral statistical data, secondary literature, and targeted stakeholder interviews with repair shop associations, ATF operators, trade union representatives, and OEM management at AutoEuropa, Caetano, Fuso Daimler and Stellantis. In keeping with the CFP's invitation to engage with multiple stakeholder perspectives, the paper will give particular attention to the voices of workers and their organisations.
6. Contribution to the Colloquium
By centring labour as the primary analytical lens for examining the CE turn in the Portuguese automotive sector, this paper makes a contribution to a field that has been dominated by engineering, environmental, and business model perspectives. It responds directly to the CFP's concern with whether the CE genuinely transforms the sustainability of the automotive industry's linear economy or merely superimposes new markets upon it — examining this question from the vantage point of those who work in the sector's downstream activities. In doing so, it also contributes to the broader colloquium debate about how protectionism, sovereignty ambitions, and sustainability imperatives interact to reshape the geography and social organisation of automotive value chains in the Global North.