The European automotive industry is “in deadly danger,” EU industry chief Stephen Sehone said he hadn’t written his words months ago.
The utter sound, high energy prices, widening global competition, uncertain regulations and the trade environment have put the sector in a spiral crisis.
“There is a risk that a map of the future of the global automotive industry will be drawn without Europe,” Sejorne said in April.
To tackle the sector’s most pressing challenges, the EU Commission’s Ursula von der Reyen Commission will host top-car executives in Brussels on Friday.
It was the third and final crisis meeting of its kind of this year, part of what the committee requested for a “strategic dialogue on the future of the automotive industry.”
The meeting is scheduled for three hours, but will it create new momentum for the industry?
Last spring, EU Release The Industrial Action Plan, which includes funds for battery producers, is, in particular, a battery booster of 1.8 billion euros and an additional 1 billion euros allocated for battery research and development under the Horizon Europe programme.
However, such an initiative failed to change the overall dark outlook.
“The sense of urgency hasn’t faded,” Sigrid de Vries, director of the European Association of Automobile Manufacturers (ACEA). “The sense of urgency hasn’t faded,” told Euronows. “We need to take more action.”
Automakers are particularly frustrated by the lack of practical policy plans for industry change, as expressed in a recent open letter by ACEA President and the European Association of Automobile Suppliers (CLEPA), Ola Kellenius and Matthias Zink to Ursula von der Reyen.
Europe’s plan of change “must move beyond idealism to acknowledge the current industrial and geopolitical realities,” they wrote.
Industry representatives say a more even distribution of charging infrastructure is needed to reduce billing energy costs, more purchasing subsidies and tax cuts, and in particular, to make the switch to electric vehicles an obvious option for the key mass of European consumers and businesses.
The European EV market is stagnant
Currently, the market share of battery-electric vehicles in Europe is stagnating at around 15%.
There are still not enough charging stations in Europe, so many European consumers are hesitant to buy electric cars. 75% of these are found in only three countries: the Netherlands, France and Germany.
Crossing the EU, there are only about 880,000 Public charging points are currently available.
However, ACEA estimates that 8.8 million charging points will be required by 2030. This is only five years from now.
To achieve this, 1.5 million chargers need to be installed each year. This is almost ten times the current growth rate.
Looking at more economic and legal troubles on the horizon, the automotive industry is hoping to review current CO2 regulations.
“Meeting the strict car and van CO2 targets for 2030 and 2035 is no longer possible in today’s world,” as the presidents of ACEA and Clepa wrote in Ursula von Der Leyen.
Instead, they are calling for flexibility and pragmatism regarding drivetrain technology (aka the ban on combustion engines) as key rescue ropes for struggling industries.
After all, “You can’t push people into a certain type of car,” Sigrid de Vries said.
For years, electrification has been a major strategy deployed globally by the industry to produce zero-emission vehicles, in response to the critical quests of policymakers.
Additionally, these vehicles are increasingly connected, capable of exchanging information with other vehicles and roadside infrastructure, increasingly relying on chips and software to become high-performance “computers on the wheels.”
As a result, new companies in the battery and high-tech sector entered the automotive market and jumped over traditional automakers.
And here, most European companies are still lagging behind their Asian rivals in electric vehicle innovation. 2024, Only one electric vehicle was built in the EU.Volkswagen ID.3.
In this context, China is on the rise as global battery production and quasi-controlled labor costs leads to an increasing number of electric vehicle manufacturing hubs, where Chinese cars are becoming increasingly competitive.
And the People’s Republic remains the much larger global market.
Last year, Germany’s Trade & Investment found that over 32 million vehicles were sold in China, half of which were sold (11 million in the European Union and 15 million in the US).
This week, the number of participating Chinese companies rose to the highest level, up 40% at the IAA Mobility Industry Show in Munich, the world’s largest.
China’s rule and US tariffs
With China’s increasing control along with Donald Trump’s tariffs on European cars, as a report by former Italian PM and the ECB on the competitiveness of the EU, the European auto industry has put great pressure on developing the industry’s resilience to quickly adapt to the new environment and counter China. President Draghi pointed out.
Other experts advocate for more cooperation with the Chinese.
“We need to have a close relationship with China, not distance ourselves. They hold all the cards, so it’s stupid not to work with China,” Ferdinand Dudenheffer, economist and director of German Centre Automotive Studies (CAR), told Euroneus.
“This requires political support. What we don’t need is China’s bashing.”
What is at stake is the survival of the European automotive industry, and is widely regarded as the industrial backbone of the European economy, supporting more than 13 million direct and indirect employment (over 6% of the total EU employment) and contributes about 1 trillion euros to the EU’s gross domestic product.
In Germany, Sweden, and several Eastern European countries, the automotive industry accounts for more than 10% of the manufacturing workforce.
So, when Germany, Europe’s largest economy, lost 50,000 jobs in the automotive sector last year alone, the shockwave was felt everywhere.
The country is some of the most famous car manufacturers in history, but their survival is not guaranteed forever.
Look at the UK, where the automotive industry once dominated. But today, 100% of the UK brand remains. This is a family-owned Morgan, who manufactures handmade sports cars.
“We won’t be able to come back if all our jobs are lost and all our factories are closed,” Dudenhoffer said.
“So, if the automotive industry struggles and declines, the general economic perspective in Europe could be devastating for years to come.”