In a letter addressed to the President of the European Commission, Ursula von der Leyen, European automotive manufacturers (ACEA) and suppliers (CLEPA) outlined their expectations for the upcoming Strategic Dialogue on the future of the European automotive industry, scheduled for 12 September.
The associations ask for a new ‘transformation plan’ to save the European automotive industry. “Europe’s transformation plan for the auto industry must move beyond idealism to acknowledge current industrial and geopolitical realities. Meeting the rigid car and van CO2 targets for 2030 and 2035 is, in today’s world, simply no longer feasible.”
However, the European automotive industry is also deliberately focusing on only one side of the coin, the side where they can’t be blamed for their policies over the last few decades. And there is a lot to blame them for.
ACEA and CLEPA claim, “Since the adoption of the current CO2 reduction framework for road transport, the industrial, economic, and geopolitical realities have changed drastically,” “To achieve the EU’s climate ambitions, while also safeguarding Europe’s competitiveness, social cohesion and supply chain resilience, the strategy for the automotive sector must evolve accordingly.”
“The Dialogue on 12 September is a timely chance to recalibrate EU policy for the automotive value chain in line with today’s shifting market, geopolitical, and economic realities,” the associations add.
‘Holistic and pragmatic’
“As automotive manufacturers and suppliers, we are committed to helping the EU achieve the net-zero goal in 2050. Together, we have launched hundreds of new electric vehicle models and committed to invest more than €250 billion towards the green transition by 2030,” says the letter’s introduction.
“We want to make this transition work, but we’re frustrated by the lack of a holistic and pragmatic policy plan for the automotive industry’s transformation. The EU currently regulates manufacturers on the supply of new vehicles, yet fails to provide the conditions to enable the transition,” ACEA and Clepa complain.
“Europe faces near-total dependency on Asia for the battery value chain, an uneven distribution of charging infrastructure, higher manufacturing costs, including electricity prices, and burdening tariffs from key trade partners, such as the 15% duty on EU vehicle exports to the U.S. We are being asked to transform with our hands tied behind our backs,” they add.
“As a result, the battery-electric vehicle market share is still far from where it needs to be: around 15% for cars, roughly 9% for vans, and 3.5% for trucks. Some EU markets are showing signs of progress, but a significant portion of customers remains wary of switching to alternative powertrains,” is the conclusion.
Transformation plan
The associations ask for a new ‘transformation plan’ to save the European automotive industry. “Europe’s transformation plan for the auto industry must move beyond idealism to acknowledge current industrial and geopolitical realities. Meeting the rigid car and van CO2 targets for 2030 and 2035 is, in today’s world, simply no longer feasible.”
“Instead, the current CO2 reduction path in road transport must be recalibrated to ensure it delivers on EU climate goals whilst also safeguarding Europe’s industrial competitiveness, social cohesion, and the strategic resilience of its supply chains,” the letter adds.
To make switching an obvious choice for a critical mass of European consumers and businesses, much more ambitious, long-term, and consistent demand-side incentives are needed, including lower energy costs for charging, purchase subsidies, tax reductions, and favourable access to urban space, both associations stress.
“Multiple drivetrain technologies, too, accelerate market acceptance and achieve decarbonisation targets in real-world conditions. Other markets are successfully using this approach already,” they point out.
Technologically neutral
“The upcoming revision of the CO2 standards for cars and vans is an opportunity to correct the course and anchor in law much-needed flexibility, industrial perspective, and a market-driven approach. It is clear by now that penalties and legal mandates alone will not drive the transition,” ACEA and CLEPA insist.
“Technology neutrality should be the core regulatory principle, which safeguards that all technologies can contribute to decarbonisation. EVs will lead the charge, but there must also be space for (plug-in) hybrids, range extenders, highly efficient internal-combustion-engine (ICE) vehicles, hydrogen, and decarbonised fuels.”
What both associations ask and expect is clear: “The Commission must ensure that Europe retains its vital production capacity and technological know-how. Without policies that enhance European competitiveness to maintain manufacturing, the transition risks hollowing out our industrial base, putting innovation, quality employment, and supply chain resilience at risk.”
“That’s why the upcoming Strategic Dialogue on the future of the automotive industry on 12 September is the moment for a change of tack. This is the EU’s last chance to adjust its policies to today’s market, geopolitical, and economic realities, or risk jeopardizing one of its most successful and globally competitive industries. We share a common destination, yet the journey requires more pragmatism and
flexibility to keep the motor of Europe’s automotive sector running,” they conclude.
One side of the coin
It is undoubtedly true that the EU has set clear goals to achieve carbon neutrality by 2050 and has established challenging targets accordingly. It is also clear that the authorities haven’t done enough to promote and realize these ambitious targets, be it with supporting (clear) legislation or with a well-thought-out array of financial measures and incentives.
That’s one side of the coin, but there is a lot to blame the European automotive industry for that has occurred over the past few decades. First of all, they lost the confidence of policymakers by cheating on their obligations, culminating in ‘Dieselgate’ and its consequences.
Secondly, in their arrogance of ‘being the best’, they lost sight of what was really happening in the automotive world, making a mockery of dystopian newcomers like Tesla, and profoundly underestimating where the Chinese were aiming to go.
Thirdly, and most importantly, they prioritized the interests of their shareholders over those of their customers. They stopped producing small and affordable cars, instead aiming to maximize profits from fewer cars by substantially increasing the profit margin per vehicle.
Fourthly, they underestimted the importance and the cost of electrification, omitting for an extended period to launch attractive, smaller EVs and instead focusing on large EV SUVs with astronomical price tags.
Last but not least, they failed to prepare their customers and internal networks for the energy transition. Initiatives to inform people about what EVs were all about were scarce, the internal distribution channels remained highly skeptical about electric driving, and weren’t corrected by higher management.
We all hope that they’ve learned their lesson, but the signs aren’t all positive. Instead of retaking the lead in innovation and creation, they step on the brakes and urge authorities to slow down. Pointing the finger at those who lead and accusing them of falsifying the play has never been the right way to progress or achieve a Renaissance.
