According to a new study by the clean transport and energy lobbying group Transport & Environment (T&E), the European car industry, which is responsible for €330 billion of the EU’s GDP and employs three million people directly or indirectly, faces an agonizing choice. It can boost and ramp up EV production with proper EU support, reaching a new peak, or succumb to the tendency to abandon the 2035 zero-emission goal and lose over a million jobs.
On the other hand, there is a clear climate goal. “Nonetheless, their internal combustion engines (ICE) continue to be a significant source of pollution, emitting 452 Mt CO₂ in the EU in 2023 alone, which is approximately 10% of total emissions. This underscores the urgent need to transition to electric vehicles.”
Reevaluation of the EU’s 2035 ICE ban
While the European automotive industry primarily supports the transition to climate-neutral mobility, voices are being heard for a reevaluation or modification of the EU’s 2035 ban on the sale of new internal combustion engine (ICE) cars.
These come from political groups, such as the European People’s Party (EPP), the largest faction in the European Parliament, as well as countries including Germany, Italy, Austria, Bulgaria, the Czech Republic, Poland, Romania, and Slovakia.
Among those within the industry itself pushing to slacken the reins, the German Association of the Automotive Industry (VDA) advocates a 90 percent CO2 reduction target and allowing a limited number of ICE cars after that date. German carmakers often propose a ‘technological open-mindedness,’ including the consideration of e-fuels and plug-in hybrids beyond 2035, as ways to achieve climate goals without a complete ban on ICEs.
A rapid, absolute ban could jeopardize the European automotive industry’s competitiveness, especially in light of events like the US’s U-turn in policies under Trump and China’s growing lead. This would likely mean significant job losses in the traditional ICE supply chain, they argue. However, a study now suggests that T&E proves the opposite: abandoning EV efforts is self-defeating and would likely result in over a million job losses.
Julia Poliscanova, Senior Director at T&E, says: “It’s a make-or-break moment for Europe’s automotive industry as the global competition to lead the production of electric cars, batteries, and chargers is immense. Europe’s success hinges on the road that EU politicians take today. Keeping the 2035 zero-emissions goal alongside adopting strong industrial and demand policies is the EU’s best chance to return to greater car production, maintain job levels, and increase the economic value of its auto industry.”
To base its arguments on solid grounds, T&E says its report provides a comprehensive overview of Europe’s electric vehicle (EV) transition and its associated value chain, drawing together current projects in car manufacturing, battery gigafactories, critical minerals refining, and recycling across the continent.
“We examine how varying rates of production growth and levels of electrification will influence GDP and employment under three distinct scenarios. One chapter is dedicated to the growing charging infrastructure sector, its economic value, and employment potential across equipment manufacturing, electricity sales, software, and support services. Finally, we propose a suite of targeted industrial policies that would enable Europe to achieve its most ambitious pathway.”
Four stringent recommendations
The latter boils down to four recommendations to beef up electric car industrial leadership:
- Maintaining the 2030-2035 car CO2 targets in the upcoming regulatory review, flanked by EU-wide measures to support demand.
- Introducing production aid for EV batteries in both EU and national funding streams, alongside incentives to source EU-made components and materials.
- Implementing the EU Alternative Fuels Infrastructure Regulation, electricity market reforms, and grid action plans to speed up charger roll-out, grid connections, and permitting.
- Mainstreaming social conditionality for quality jobs and strengthening technology and skills transfer provisions in foreign direct investment.
T&E backs up its claims by the endorsement of three industry associations, which reviewed the report and support its high-level message on the economic and employment potential of Europe’s electric vehicle transition. However, they don’t endorse all aspects of the report.
These are all deeply involved in the transition: E-Mobility Europe (former Avere), grouping national EV associations, EV manufacturers, fleet owners, and others, RECHARGE, the European industry association for advanced rechargeable and lithium batteries, and ChargeUp Europe, the industry association for the electric vehicle (EV) charging infrastructure sector.
63 organizations in 23 countries
T&E itself was established in 1990 by a small group of environmentalists, researchers, and green motorists. It operates (with headquarters in Brussels) as a federation with a network of 63 member organizations from 26 countries across Europe. These members are typically non-profit national organizations focused on the environmental and health impacts of transport at national, regional, and local levels.
Its funding – apart from membership fees – comes from a diverse range of sources, including various philanthropic foundations, such as the European Climate Foundation, ClimateWorks Foundation, and Oak Foundation, among others. Governmental bodies also contribute, including the European Commission, the Norwegian Agency for Development Cooperation (NORAD), the German Ministry for Environment, and the Belgian Ministry of Energy.
The primary mission is to promote sustainable transportation in Europe, with a vision for a zero-emission mobility system that is affordable and has minimal impact on health, climate, and the environment.
