European car manufacturers ask for ambitious automotive policy

Ahead of the unveiling of the Green Deal Industry Plan, Luca de Meo, the new President of the European Automobile Manufacturers’ Association (ACEA) and Renault Group CEO, is urging EU leaders to put in place an ambitious and structured automotive, and industrial policy, to rival those of other world regions.

Concerned about the EU industry’s eroding competitiveness on the global stage, de Meo made this call in an open letter to policymakers. “Our industry has long had a competitive advantage across the value chain of internal combustion engine vehicles,” stated de Meo, speaking to journalists at a press conference in Brussels.

“This will no longer be the case with electric vehicles, at least in the short term. Our competitors have many cards in their hands that we don’t yet have, namely upstream in the supply chain of battery electric vehicles. On top of that, their support from national and local authorities has been massive and is still increasing in China and the US.”

An example of this support is the Inflation Reduction Act (IRA) installed by the Biden administration last year. “Indeed, through the IRA, we see the United States stimulating their industry in the green transition, while Europe’s approach is to regulate the industry, often in an unsynchronized way.”

Euro 7

Of course, the European manufacturers again emit their concern about Euro 7. “The Euro 7 proposal on pollutant emissions, for instance, imposes unrealistic constraints on the industry and would even slow down the drive to decarbonization,” says the ACEA press release.

“Complying with Euro 7 would bring cost increases that could deter customers from buying these new cars,” cautioned de Meo. “This could extend the life span of the fleet: meaning older cars, with higher emissions, staying longer on the roads.”

According to ACEA, the current Euro 7 proposal would render new cars about €2 000 more expensive on average and have a huge impact on sales (another -10% on the already record low sales of 2022). However, the European Commissioner for the Internal Market, Thierry Breton, states that this additional cost of Euro 7 would not exceed €150 on average, which is quite a big difference.

Environmental NGOs, on the contrary, have already complained several times about the fact that the new Euro 7 standards are not stringent enough and won’t make a big difference in battling pollution. According to the Commission, the Euro 7 standards would diminish NOx emissions of cars and light commercial vehicles by 35% compared to Euro 6.

“We argue that we could achieve a far better cost-benefit ratio if we reorient the huge investments that Euro 7 would require toward electrification, making electric vehicles more affordable, and developing zero-emission technologies to improve the fleet,” argued de Meo. As an example, the Renault Group CEO warns that the implementation of these new standards could cause the closing of four Renault factories in the short term.

Green Deal Industry Plan

On the other hand, the European car manufacturers see many good things in the coming EU Green deal for the industry. Seen as the EU’s response to the IRA, ACEA believes that the Green Deal Industry Plan, if successfully deployed, could be a first step to help keep investment in the EU while safeguarding free trade across the globe.

The sector is also hopeful that the Critical Raw Materials Act will enhance domestic capacity to extract, refine, and process raw materials, as well as improve their security of supply. Otherwise, EU vehicle manufacturers will continue to be at a significant disadvantage compared to their counterparts from other regions, ACEA warns. Before 2030, only 5% of the raw materials needed to produce batteries will come from inside Europe.

5% increase in production

ACEA also announced its forecast for new car sales this year. “Despite the many uncertainties ahead, the market should start embarking on a recovery process in 2023,” explained ACEA Director General Sigrid de Vries.

“We expect around 9,8 million new cars to be sold across the region this year, up 5% from 2022. However, this remains 25% below the 2019 pre-crisis levels, showing that we are still in a fragile situation. In this context, it is all the more important that our industry strengthens its position on the global stage.”

ACEA also points out that the number of electric models to choose from has increased dramatically over the last years, but that the problem of the accompanying infrastructure remains. “Currently, some 2 000 public charging points are installed on the European continent every week, while the weekly installing rate should turn around 14 000 charging points to ensure a smooth energy transition.”