Why are Europe’s EVs years behind China’s despite €250bn investment?

Advertisements

The ACEA President highlights that it may still take until the end of the decade for the European EV industry to reach the same level as global competitors.

Advertisement

The European Automobile Manufacturers Association (ACEA) has unveiled its manifesto and roadmap for the next five-year mandate of the European Union in Brussels on 29 November. The manifesto, described as “a competitive European auto industry driving the mobility revolution”, focuses on a future-ready mobility ecosystem.

Advertisements

Euronews Business takes a closer look at what was announced.

green transition commitment

By releasing it on the eve of the COP28 summit, ACEA emphasizes its commitment to the green transition as well as the association’s new vision unveiled in March. The purpose of the manifesto is to set out concrete actionable plans regarding demand, supply and production.

ACEA President, Luca de Meo, who is also CEO of Renault Group, further explained what needs to be done by the European automobile industry and regulators to bring this roadmap to life, as well as the challenges facing the sector .

He highlighted: “We think the automotive industry is part of the solution.”

Foremost among the challenges is the wave of new policies and regulations anticipated from the election of the new EU Parliament and EU Commission in 2024. Many regulations have deadlines coming up in 2030 or earlier.

These include the Net Zero Industries Act, the Critical Raw Materials Act, and CO2 reduction targets and standards for light vehicles. With these deadlines approaching, the Committee must now accelerate its action plan on how to achieve these goals.

New approach to regulations and tariffs

As part of its new manifesto, ACEA recommends that Europe needs to adopt a holistic approach rather than conflicting regulations to tackle automotive challenges. Thus, the EU needs to come up with a harmonized industry policy.

ALSO READ  Navigating Car Insurance for Enhanced Car Audio Systems

The European automotive industry also needs to be globally competitive, especially through affordable and green energy supply. Technological neutrality will also be important for the mobility revolution.

Despite the European automotive industry willing to spend approximately €250 billion on the green transition, a conflict of regulations so far appears to be one of the biggest challenges preventing the industry from being as competitive as its global peers.

As Di Meo says: “When we have an average of eight new regulations coming in every year by 2030, that will tell us that there is a bug somewhere in the system.”

The same is true when it comes to tariffs between the UK and EU after Brexit.

On Wednesday the European Commission proposed a one-time extension of existing rules on EU-UK trade tariffs. If accepted, the extension would delay tariffs between the EU and the UK until December 31, 2026.

“Today’s decision means that we skip the intermediate phase of some strict rules of origin that would have applied from 2024 to the end of 2026,” European Commission Executive Vice President Maros Sefcovic said.

“This removes the threat of tariffs on EU exports of electric vehicles to the UK and vice versa on 1 January 2024.”

Before its announcement, from 1 January 2024, any electric vehicle imported into or exported between the UK and the EU must prove that it is at least 45% made in the UK or EU. Failure to do so will result in a 10% tariff.

Luca De Meo and several other automakers were trying to postpone the tariffs for at least three years, De Meo was very vocal that failure to do so would potentially cost the industry around €4.3 billion in losses – so The new one will certainly be welcomed. Tariff delay.

This is because most EV manufacturers in the EU use batteries imported from China and have more time to rapidly scale up battery-making plants and capacities to reduce tariffs and dependence on the Chinese supply chain. Is required.

ALSO READ  Ocean mining pool refutes claims of censoring certain Bitcoin transactions

Advertisement

However, suspending the tariffs risks reopening the Brexit deal between the EU and the UK, and as such, could see a considerable backlash, creating further disruptions for the European automotive sector.

more affordable cars

Looking to see whether EV prices will continue to rise due to inflation, as it has over the past few years, Luca De Meo weighed in on the Renault CEO position. He highlighted that the company was planning to introduce a smaller, more urban-friendly car priced under €20,000 in 2026 and that Renault was exploring more potential similar designs. However, this will depend heavily on the strength of the European EV supply chain as a whole.

He stressed that the key to making the entire sector part of the solution is to introduce EVs with smaller batteries, which are more suitable for real urban consumption, rather than larger-sized batteries, which do not reflect the real needs of consumers. and “ecological disasters”. ,

“So far in Europe, regulations over the last twenty years have only increased the weight and dimensions of cars.” De Meo said.

EV competitors like the US and China already have a significant advantage over Europe. In the US, EV manufacturers receive significant tax relief for producing vehicles domestically. The Chinese electronic vehicle industry is also more than a decade ahead of Europe.

Advertisement

Improving charging infrastructure

According to De Meo, China has managed to become a source of inspiration for EV manufacturers around the world by being able to establish the entire EV value chain from mining to refining, rather than just some parts. This is something that will likely take Europe several more decades to achieve.

Not only that, but Chinese EVs have also developed their charging infrastructure strongly, and have strong standards that are optimizing all the time and outpacing the competition. There is greater coordination and teamwork between the public and private sectors as well as between industries.

ALSO READ  Why Does My Knitting Machine Drop Stitches?

Furthermore, Chinese EV manufacturers are taking a realistic approach to the green transition and realizing that this transformation needs to happen at every level of the value chain, not just at different stages.

Luca de Meo believes the EV industry in Europe could potentially catch up with its global peers by the end of the decade as it is not yet where it needs to be, especially when it comes to expanding European supply chains. This is especially true when it comes to charging infrastructure, which needs to grow about seven to ten times what it currently is to reach the 2030 emissions target.

He also highlighted that since Europe places great importance on competition and free markets, closing the European market would not be a viable solution in the long term, as it would create inefficiencies and lead to inflation.

Advertisement

ACEA is trying to re-establish itself by being more in touch not only with regulators but also with consumers. As part of the restructuring, the committee will strive to engage more with the automobile industry as well as across borders. It will also engage with think tanks, take into account public opinion and select only projects with clear and measurable interest returns.

It estimates that passenger car registrations in the EU for 2023 will increase by 12% to approximately 10.4 million units. However, this is still about 20% below levels seen before the pandemic in 2019.

Although 2024 is also expected to see some growth in EU car registrations, it will be much slower than this year, at around 2.5%, bringing the number of units to around 10.7 million units.

The market share of electronic vehicles (EVs) is expected to be around 14% to 14.5% this year, increasing to around 20% next year.

Source

Leave a Comment