We are following with high attention and with concern the recent developments in the automotive industry in the EU. Over the last months, I have met with automotive associations and CEOs of the EU car manufacturers to get a better understanding of the situation.
The European automotive industry is a cornerstone of growth and prosperity for Europe. The EU is the second largest producer of motor vehicles in the world, behind China but substantially ahead of the US.
The automotive industry accounts for more than 10% of manufacturing employment in the EU, and in some Member States the share is much higher.
With investments of €73 billion in research and development, it accounts for a third of the EU's private R&D investments. We have a positive trade balance in motor vehicles that has recently risen to almost €100 billion.
But the automotive industry is undergoing a profound transformation at the very same time that the global competition is changing.
On the one hand, the automotive value chain is transforming from the traditional internal combustion engine value chain towards zero-emission and digitalisation, with profound impact for car manufacturers and automotive suppliers.
On the other hand, demand is shifting towards third markets. Car sales in the EU are below the pre-COVID level, while China has become the largest market. Also, in third markets, the demand has shifted towards zero-emission vehicles.
We have set a clear framework for the transition to zero-emission vehicles with the 100% zero-emission cars target by 2035. The target has created certainty for manufacturers and investors. It has also provided enough time to plan for a fair transition.
We have also set binding targets for Member States to ensure a minimum of sufficient infrastructure. While there has been significant progress, we know that the distribution of charging points across the EU is uneven, so there is an urgency to expand and evenly distribute charging infrastructure to support the anticipated surge in electric vehicle adoption across all EU Member States.
The climate crisis is accelerating at pace. This means an equally urgent need to decarbonise and industrialise our economy. And there is a security need to cut dependency on imported fossil fuels.
There is a global race to net-zero technology. Global players are speeding up investments. According to the International Energy Agency, one out of five cars sold in 2024 is set to be electric. Europe cannot afford to fall behind and lose its competitive edge in this race, nor can we leave any strategic vulnerabilities exposed.
This means a huge market opportunity for the European automotive industry, bringing along new job opportunities. But it also brings challenges.
It is here and now that this structural shift is causing hardship for automotive workers and producers.
We know that several factors are affecting the competitiveness of European automotive manufacturers:
- Costs are approximately 30% higher compared to China because of higher costs of energy, labour and raw materials.
- While European industry has technological excellence in many aspects, Chinese car manufacturers enjoy technological advantages on batteries, software, infotainment systems and development time.
- And then there are the effects of subsidies in third countries.
This is why our full focus will be on supporting and creating the right conditions for automotive companies to reach our common goals.
We have put in place measures to support the development of the electric vehicle market, from building up electric vehicle supply chains, including a sustainable supply of batteries, critical raw materials and semiconductors, to the roll-out of recharging infrastructure and accelerating the deployment of an electricity grid fit for the transition to zero-emission vehicles.
There has also been substantial EU funding available for the transformation towards electromobility, notably from the Recovery and Resilience Facility, for the conversion of automotive plants, for charging infrastructure and for schemes to incentivise fleet renewal.
Under the Net-Zero Industry Act, we will create skills academies to support key green technological sectors in the EU, such as batteries, by training 100,000 workers per year. We have established the Automotive Skills Alliance to enable the massive upskilling and reskilling of the automotive workforce.
And in order to ensure a level playing field, we have started the in-depth anti-subsidy investigation on electric vehicles imported from China and have imposed provisional duties. The investigation has been conducted in full compliance with the WTO rules and EU law and is grounded on solid facts and evidence. It will conclude by the end of the month following necessary support that was received from the Member States last week. In parallel, we have engaged in intense negotiations to explore a possibility of a negotiated solution. Any such solution, like price undertakings, would have to ensure the same effect as the measures like tariffs. It will have to be adequate to eliminate the injurious effect of subsidies established; effective, monitorable and enforceable. And such a solution should be fully WTO compliant.
I would like to stress that the aim of trade defence measures is not to close markets but to restore fair competition.
All these measures will support our automotive industry's transition, but we know that there are still many challenges ahead. We need to redouble our efforts so that the electrification pathway remains viable and broadly accepted.
The Commission wants to ensure that Europe remains a global leader in the automotive industry. We want to maintain a strong automotive EU manufacturing base as well as technological sovereignty when it comes to new automotive technologies. For this, we need to be holistic and strategic, and have a discussion which involves all the actors of the automotive industry and its value chain.
