The Brussels-led transformation of the European car industry is closing in on a decisive phase. The search for a compromise between the European Commission‘s climate resolve and the industry calls for less regulation has kicked off. The first round, with the gloves still on, produced few answers.
Europe’s climate chief, Commissioner Wopke Hoekstra hosted the working group on “clean transition and decarbonisation“ on 12 February as part of the strategic dialogue on the future of automotive industry launched by EC President von der Leyen two weeks prior. The talk with industry representatives and other stakeholders focused on the transition to clean mobility.
The working group is the first of four such groups designated by Ms von der Leyen to deal with the challenges the bloc’s carmakers are facing. Commissioner Stéphane Séjourné will address the industrial value chain; Commissioner Henna Virkkunen is to oversee technological and digital innovation; and Commissioner Roxana Mînzatu is charged with leading the debate on skills and social considerations within the sector.
The talks are to inform the follow-up action plan, or the EC official blueprint for the future of the industry. The plan is supposed to be unveiled by Commissioner Apostolos Tzitzikostas on 5 March, five weeks after Ms von der Leyen announced the strategic dialogue.
You might be interested
Self-inflicted challenges
The four groups and Mr Tzitzikostas have their work cut out generously. The EU automotive sector is facing a double challenge: a very costly transition to electric vehicles exacerbated by skyrocketing energy prices. Both are the direct results of the set of EU policies known as the Green Deal.
The European Commision’s idea is for electric vehicles to displace the production of internal combustion engine-powered cars by 2035. This presents the carmakers with a conundrum: how to adhere to the rules while remaining profitable businesses?
No obvious answers are available. As a direct result of the aforementioned policies, fierce competition from cheaper Asian manufacturers is already making European automotive companies bleed jobs. The transition is bound to do nothing to stanch the wounds. (Watch a debate on the industry challenges in a podcast by the news portal EU Perspectives.)
The sector’s woes are further compounded by the threats by the U.S. Trump administration to impose steep import tariffs. At the same time, the tariffs mooted by the European Union on imported Asian EVs are a double-edged sword: the imported cars would become more expensive, but so would several key ingredients of the European production.
Little time left
This is a bunch of nuts that may prove beyond the action plan’s powers to crack. But the car companies feel they have little time left for deliberation. „We will have an action plan in a couple of weeks, but that’s still just a plan. We need real action,“ Sigrid de Vries, Director General of the European Automobile Manufacturers’ Association (ACEA) quipped to the press after the first strategic dialogue meeting on 30 January.
The Commission appears to be caught between a rock and a hard place. It does not wish to backtrack on its climate resolve while acknowledging the need to “unleash the innovative power of European companies,“ as Ms von der Leyen put it when announcing the dialogue.
The industry representatives are adamant that this amount to more than a lip service. “We need to ensure that Europe as a whole becomes more competitive globally so it can compete with China and the US,” Ms de Vries stressed in a press release. “This means unleashing the industry’s innovative capacity while making manufacturing in Europe more affordable and profitable. Reducing energy costs and regulatory burdens is crucial. We need to streamline permits and remove barriers that hinder progress, focusing less on dictating rules and more on incentivising growth.”
Count us in, but…
While this appears to go against the grain of the Green Deal policies, as of the time of writing, the gloves have not come off. The manufacturers‘ representatives appear keen not to oppose the European Commission green zeal directly – but their guarded press quotes highlight the sense of urgency among them. “The EU auto industry remains fully committed and economically invested in the transition towards zero-emission mobility,“ Ola Källenius, CEO of Mercedes-Benz and ACEA President was quoted as saying. „But the only way for this transition to succeed is to make it a market- and demand-driven transformation. The upcoming Action Plan must be built on this premise.“
Christian Levin, CEO of Traton, Scania and Chair of the Commercial Vehicle Board, sounded a similar note. “Commercial vehicle manufacturers have expressed their support for ambitious climate targets but underlined that targets alone are not enough. Rapid infrastructure deployment and other enabling conditions, such as total cost of ownership parity and demand-side measures, are essential,” Mr Levin warned in an ACEA press statement.
