Automotive News Europe — 2024-03-20
Automotive Industry
Luca de Meo urged a 10-year "Marshall Plan" to replace older polluting cars with newer ones, as part of a public letter ahead of EU elections in June 2024.
Renault Group CEO Luca de Meo called for EU nations to cooperate to address an “imbalance in competition” versus China and the US to ensure the future of the bloc’s automotive industry, much as they have on the aerospace giant Airbus.
“We are seeing growing signs of weakness that could be a cause for real concern if nothing is done,” de Meo wrote in a wide-ranging public letter ahead of European Parliament elections June 6-9 2024.
De Meo, who is also president of the automotive lobby ACEA, issued the letter in several languages as head of Renault Group.
Among his proposals, de Meo said Europe should speed up the pace of replacing older cars with newer, cleaner ones through a “Marshall Plan” fund over the next decade. The fund could redistribute resources across Europe based on the capacities of each country and through new EV incentives. It could save 1 m tons of CO2 by 2030, he said.
Europe’s automotive sector is under pressure from a number of sides, he said, including the move to software-defined vehicles, a growing number of regulations, the need to invest in new technologies, price volatility of raw materials such as lithium, and “reskilling” of the workforce to avoid mass unemployment.
“China rules, the US stimulates and Europe regulates,” he wrote.
Among de Meo’s proposals is Europe-wide support for the production of small, affordable cars, which he said could generate 10,000 jobs.
The chairman of Renault Group, Jean-Dominique Senard, echoed de Meo’s call for such cooperation on Wednesday 20 March 2024 in testimony before the economic affairs committee of the French Senate.
Renault is negotiating with Volkswagen Group to cooperate on a sub-€20,000-euro ($21,600) EV.
Renault is calling for a European policy on small cars, Senard said, as well as seeking partnerships to build them at an affordable price.
'Center of gravity' moves to Asia
De Meo in his letter said “the center of gravity” in the automotive industry had shifted to Asia, which about 52% of all cars sold in that region, compared to 20% for Europe and 24% for North and Latin America.
As a consequence of Beijing’s support for electric cars, as well as the size of China’s domestic market, exports to Europe have increased fivefold since 2017, with the overall trade deficit between Europe and China now at €400 bn.
Chinese automakers have a cost advantage on a typical compact car of €6,000 to €7,000, de Meo said, translating to about 25% of the selling price. Factors include much lower energy and labor costs.
Already, SAIC’s MG brand has boosted total sales to over 200,000 annually in Europe with a lineup of low-cost EVs, plug-in hybrids and internal-combustion models. BYD, which rivals Tesla in global EV sales, plans a factory in Hungary.
€250 bn invested in transition
The European Commission is investigating whether China’s EV incentives and support amount to unfair competition, with potential remedies including punitive tariffs. Already, France has excluded China-built cars from its EV incentives – including the Spring from Dacia, part of Renault Group.
The US has boosted its domestic EV value chain with €387 bn in incentives through Inflation Reduction Act, which de Meo said has put the US on par with China in the cost of a gigafactory -- $60 m per gigawatt hour, while Europe is at $80 m per gWh.
De Meo said that the European auto industry has already committed €250 bn to the energy transition to meet the EU’s Green Deal target of zero emissions by 2050. But he said it requires a “clear and stable framework.” De Meo offered a range of proposals and projects, including: