EU auto industry chief calls for ambitious automotive industrial policy

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

“Indeed, through the Inflation Reduction Act (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 unsynchronised way.”

The Euro 7 proposal on pollutant emissions, for instance, imposes unrealistic constraints on the industry, and would even slow down the drive to decarbonisation. “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.”

“We argue that we could achieve a far better cost-benefit ratio if we reorient the huge investments that Euro 7 would require towards electrification, making electric vehicles more affordable, and developing zero-emission technologies to improve the fleet.”

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.

ACEA also announced its forecast for new car sales this year. “Despite the many uncertainties ahead, the market should start embarking on 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 of all the more importance that our industry strengthens its position on the global stage.”

EU leaders must put in place an ambitious and structured automotive industrial policy, to rival those of other world regions.