Why Europe should work with the auto industry, not against it

During my over 30-year long career, I have had the opportunity to work in executive positions in over 5 countries around the globe and live through several market crises, the arrival of new and fiercer competitors and the transition to new technology and regulations. For me, one thing is clear: today, Europe’s automotive sector is at a turning point, and the stakes are very high.

As I officially start my mandate as President of the European Automobile Manufacturers'​ Association (ACEA), I would like to share with all of you the mindset driving me, as well as Sigrid de Vries and all our colleagues, the CEOs of the European auto industry. We have a clear view, a road map and vision, made of 5 key pillars.

1. An ambitious and structured industrial policy

Over the last 20 years, the European automotive industry has been gradually losing ground to its main global competitors.

While the internal combustion engine (ICE) technology has been historically led by European players, the switch to electric vehicles risks to further jeopardise our position on the global stage, given the market scale and support that China has in this domain.

The march towards all-electric also places Europe at a disadvantage in terms of control of the value chain. This is true in both upstream, when it comes to sourcing, and downstream, when it comes to infrastructure, green energy availability and economic support to customers. By 2030, no more than 5% of the raw materials needed for battery production will be sourced in Europe.

In this context, the recent European political approach based on regulating rather than supporting risks putting Europe’s automotive industry in an even more unfavourable situation when compared to its Asian and American competitors.

According to us, it’s thus time for decisive action to avoid the growing risk of de-industrialisation of our continent. The automotive sector continues being a key driver of Europe’s prosperity, competitiveness, and innovation, and it is in all our interests that it remains so. Just to give you a few numbers, we are talking about almost 13 million jobs in Europe, accounting for 7% of the total, and about 30% of the total R&D expenses per year, making automotive the largest private contributor to innovation. We are talking about the vehicles, cars, LCV and trucks that ensure the 80% of mobility of people and goods in km every day. We are therefore calling on Europe to put in place an ambitious and structured automotive and industrial policy, able to rival those of other world regions, while safeguarding and promoting free trade across the globe.  

2. Respect technological neutrality

The automotive industry is asked to reduce passenger car emissions by 100% by 2035: a far greater effort than any other sector. The power generation industry is asked for a 70% reduction and the overall transport sector are asked for 50%.

Make no mistake. The auto industry is unequivocally and fully committed to decarbonise road transport as fast as possible. 60% of the activity in the road vehicles sector is carried out by companies having committed to net-zero emissions by 2050. This puts our industry at the forefront, compared to the 40% of the airline industry, and the less than 10% in the construction sector. 

But we see that Europe is now the only geographical area which does not set technological neutrality at the core of its regulatory framework, forcing us to choose a technology over another. It remains to be seen if this choice is the best one, if you really consider it under the light of the decarbonization objective. If we are looking for THE truth, not just our truth, then we all face the same evidence: today, from a scientific point of view, high-tech, hybrid technology can compete in terms of CO2 footprint. 

3. Adopt a consistent and holistic regulatory approach

Despite the challenging environment, all our efforts and investments are geared towards decarbonization. The best argument to prove that we “are all in” is the fact that, as I am speaking, European car makers are investing more than €250bn in electrification. Policies and regulations should align with and support this goal. We need the regulator to speak with one coordinate voice, considering the specific rhythms of industry, research and investments. 

This was not the case, for instance, with the recent Euro 7 proposal. In its current form, Euro 7 will have a strong impact on our business and our people. Deadlines are too short, and the boundaries conditions are too broad. According to our engineers, Euro 7 could increase the cost of the cars by €1,000 in average. It means rising the final pricing by twice as much, with a consecutive potential reduction of the new car market.

We should instead reorient the huge investments that would be required by Euro 7 and allocate them to accelerate electrification, making EVs more affordable, or reducing the current fleet’s emissions. 

4. Need for a horizontal approach

This transformation is not only about the automotive industry. It cuts across many industries, horizontally. It is a team sport that we must play together, orchestrated by the public authorities.

The charging infrastructure topic is a perfect example. As of today, the lack of charging infrastructure, both private and public, is a major concern. We need more commitment and coordination among states and sectors to ramp up a dense EU-wide network of charging stations.

Despite many announcements and recent progress, infrastructure development is lagging behind the industry efforts. The auto industry is moving fast. In 2012, 10 automotive brands offered around one electric model each. Today 25 brands propose a total of 40 electric models.

Yet only 2,000 charging stations are set up every week in Europe, while 14,000 would be required to ensure our continent’s transition to electric mobility, or just service the vehicles that are increasingly on our roads every day. Without considering the massive gaps between European countries in terms of average rollout speed: some countries are currently reaching 30% of their target, when others are at a 5% rate. As of today, some 50% of the charging points in the European Union are concentrated in just 2 countries: Netherlands and Germany. 

5. Ensure affordable mobility for all

We should also not forget the critical issue of access to mobility for our citizens.

One the one hand, as car markets we are forced to make increasingly expensive cars. Safety and emissions regulations are increasing EV and ICE costs and forcing us to exit small car segments. Moreover, EV prices are structurally higher than ICE and they are bound the remain high, as I am afraid that speculation on raw materials prices will not allow this to change soon.

On the other hand, we must defend European customers purchasing power. Electricity consumption will probably have to be heavily taxed to compensate for the shortfall in tax revenues, and we already see EV purchase incentives being cut everywhere in Europe for obvious budgetary reasons.

ICE vehicles will be the majority of the car park even beyond 2050, if we want to go to 0 by then, we should handle also this challenge. If we really want to have an impact on climate change, there is no doubt that we will also have to find solutions for the existing vehicle fleet, without limiting anyone’s mobility. 

In conclusion 

Today we must make the right choices to shape the mobility of Europeans in decades to come, as well as the industrial future of our continent. The collective choices before us must be made in the full light of technological, industrial, economic, and societal truths. If not, this would be harmful not only for the players of the industry, but for our continent and its citizens.

Our objective is to adopt a strategic approach, an open vision and bring the voice of the auto industry into the debate. We are determined to achieve the objectives we are given with transparency and facts-based approach, in addition to the daily work of millions of people.