ACEA — 2023-12-14
News from Brussels
A new École Polytechnique report has revealed the immense scale of challenges for the EU in developing an electric vehicle supply chain. The report warns that while other global regions march forward with ambitious industrial strategies that boost domestic industries, the competitiveness of European electric vehicle manufacturing is at risk of being eroded.
According to the report, China’s strategic and holistic policy encompassing mining, refining, manufacturing, charging networks, cheap energy, purchase incentives, and recycling across the whole electric vehicle lifecycle has significantly bolstered its competitive edge. In stark contrast, the EU has employed a piecemeal regulatory approach to industrial policy – regulating specific steps of the value chain.
The report also signals the growing momentum to establish a manufacturing hub for the EV value chain in the US. Ambitious sales targets in states like California and at the federal level, combined with unprecedented funding under the Inflation Reduction Act (IRA), are boosting the domestic auto industry, straining European auto makers’ competitiveness in one of its most valuable export markets for electric vehicles.
“Unlike China and the US, the EU lacks a robust industrial strategy to shore up electric vehicle manufacturing,” stated Sigrid de Vries, ACEA Director General. “A vibrant European electric vehicle industry is vital to achieving climate goals. Europe wants to set the global pace for decarbonising, but it must do more to bolster critical industries that are part of the solution in a synchronised and coherent manner.”
While the report highlights progress in battery cell production in Europe, the development of an upstream battery value chain is not keeping pace with demand, leading to continued dependence on China. “We are encouraged by recent signals from the EU that recognise the immense challenges and competitiveness threats our sector faces. The recent proposal to extend EU-UK rules of origin for electric vehicles is indicative of this, yet too often, the EU puts the regulatory cart before the horse – to the detriment of its critical industries,” de Vries added.
De Vries: “The EU’s regulatory framework lacks a holistic approach to vehicle electrification. A patchwork of regulations – at a pace of eight or nine per year on average – divert vital funds and undermine competitiveness. To tackle climate change and provide impetus to Europe’s burgeoning electric vehicle industry, the EU must develop a tailored regulatory and financial framework to create a supportive business environment.”