ACEA — 2023-04-28
News from Brussels
Message from ACEA’s Director General – 2023 April
In this increasingly competitive global context, ACEA recently gathered over 250 movers and shakers, including auto industry CEOs and EU policymakers, at our annual reception in Brussels. The message from our sector was clear: coherent policies and practical incentives that boost industrial competitiveness are at the top of our list – and these must help exceed the ambitions of our US and Chinese counterparts.
With almost a third of all R&D investment in the EU spent by the auto sector and a massive €250bn pumped into electrification, we are clearly committed to achieving net-zero emissions in the transport sector. Nevertheless, the EU is at risk of falling behind in the global race.
With almost a third of all R&D investment in the EU spent by the auto sector and a massive €250bn pumped into electrification, we are clearly committed to achieving net-zero emissions in the transport sector. Nevertheless, the EU is at risk of falling behind in the global race.
Good news for electrification. Charging infrastructure still the main stumbling block
Back in Europe, there is yet again good news for the EV market. Recent ACEA data confirmed that market share rose to 13.9% for battery electric cars and 24.3% for hybrid models. While China is currently ahead of Europe and the US in the electrification of the car market, the European market will rebound in 2025 and take the lead again on the other world regions by 2030.
This is why it is even more troubling that the recent agreement on the EU Alternative Fuels Regulation (AFIR) falls flat in terms of matching the ambitious CO2 targets set for vehicle manufacturers. In particular, AFIR fails to sufficiently address the widening gap between EV ownership and infrastructure access.
With more than three in five vehicles in the EU expected to have a plug by 2030, compared to just one in five today, what practical measures can be taken? In practice, member states must rapidly scale up infrastructure deployment by fast-tracking permitting and upgrading power grids.
Also, as recent ACEA data demonstrates, governments should expand EV purchase incentives to alleviate affordability concerns for European consumers – especially as economic differences are exacerbating EV market disparities across European regions and member states.
EU governments should expand EV purchase incentives to alleviate affordability concerns for European consumers – especially as economic differences are exacerbating EV market disparities across European regions and member states.
Access to raw materials risks stalling the EV revolution
Access to critical raw materials (CRMs) is also an essential piece of the puzzle in Europe’s electrification revolution. How can net-zero emissions realistically be achieved if the EU does not have secure and reliable access to the raw materials that will power the electric and fuel cell revolutions? Today, a meagre 1% of the critical raw materials needed for batteries are produced in the EU.
In many ways, Europe’s reliance on CRM imports from third countries, especially China, overshadowed European Commission President Ursula von der Leyen’s recent visit to China. It also remains to be seen what the EU’s new talk on ‘derisking’, rather than ‘decoupling’ (the US’s approach), its relations with China will mean in practice.
The release of the long-awaited Critical Raw Materials Act (CRMA) last month gave us just a glimpse of what this may look like. The CRMA pledges to source only 65% of the EU’s annual consumption of strategic raw materials from third countries. While this ambitious objective should be applauded, its feasibility is very much on the cards. That’s why it is of utmost importance that all critical raw materials essential for the electric and fuel cell revolutions are designated in the EU’s list of strategic raw materials.
It is of utmost importance that all critical raw materials essential for the electric and fuel cell revolutions are designated in the EU’s list of strategic raw materials.
Let’s not reinvent the wheel – Euro 6/VI and electrification can deliver more for Europe’s net-zero transition
As the G7 recently reaffirmed its commitment to net-zero emissions in the road sector by 2050, EU policy makers are debating to add yet another burdensome regulation on the auto industry – Euro 7 – at a time when our global competitors are racing ahead with incentives for attracting green investment.
Recent ACEA figures demonstrate the proposal’s shortcomings, with only a mere 10% of combustion engine cars on EU roads set to fall under Euro 7 rules in 2035. As the proposal currently stands, road transport NOx emissions would be reduced by a tiny 2 to 4%, while consumers would be faced with an average €2,000 increase in the purchase price of a new car.
This comes at a time when European middle-classes are already struggling with mounting inflation and higher energy bills. This is even before they can consider purchasing more sustainable – but currently less affordable – electric vehicles. Current Euro 6/VI rules – together with electrification – can already reduce NOx emissions by a massive 80% by 2035 compared to 2020, raising further doubts on the legitimacy of the Euro 7 proposal.
Current Euro 6/VI rules – together with electrification – can already reduce NOx emissions by a massive 80% by 2035 compared to 2020, raising further doubts on the legitimacy of the Euro 7 proposal.
Smarter regulation and incentives for a globally competitive European auto industry
Our message to policy makers is clear: realising net-zero emissions in the transport sector cannot be achieved simply by piling on regulations. Instead, we urgently need an ambitious and coherent policy framework for investment. To enable the European auto sector to flourish, this must be complemented by purchase incentives that accelerate the net-zero emissions transition.
We simply cannot stand by as the industrial competitiveness of one of Europe’s most successful and innovative industries – that touches the lives of almost all Europeans – is increasingly threatened by growing competition abroad and mounting regulation at home. In one sentence, smarter regulation, robust enabling conditions, and incentives will be key for a globally competitive European auto industry.