Europe may lag behind China and the United States in the electric vehicle industry without a strong industrial strategy, the European Automobile Manufacturers’ Association (ACEA) warned on Thursday.
ACEA cited new report findings from France’s Ecole Polytechnique University, which outlines China’s established electric vehicle supply chain and the US’ effective incentives for electric automakers.
Call for the EU to develop strong industrial strategy
École Polytechnique’s “Comparison of the Chinese, European and American regulatory frameworks for the transition to a decarbonized road mobility” report calls for the European Union to develop its own “robust” industrial strategy to compete with industry leaders China and the US.
As per the report, the EU faces tremendous challenges in establishing a reliable EV supply chain. It warned that the EU may lose ground in EV production while other countries continue to advance due to their ambitious industrial strategies that stimulate local industries.
“Unlike China and the US, the EU lacks a robust industrial strategy to shore up electric vehicle manufacturing.”
Sigrid De Vries, ACEA Director General
China and US dominance
The report noted that China imposed a smart and holistic industrial strategy that expands to a wide range of industries in the electric vehicle space, including the following:
- mining
- refining
- manufacturing
- charging network
- cheap energy
- purchase incentives
- recycling
On the other hand, the European Union introduced a “piecemeal regulatory approach” that regulates certain steps in the electric vehicle value chain.
It also emphasized the effectiveness of the US Inflation Reduction Act’s federal tax credits of up to $7,500 for electric vehicles. In addition, individual states’ ambitious EV targets also aid in bolstering the country’s auto industry.
All that said, the EU must follow China’s and the US’ footsteps in launching such initiatives to avoid falling behind in the global EV race.
“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.”
Sigrid De Vries, ACEA Director General
EU’s heavy reliance on China
The report acknowledged the EU’s advancement in battery cell manufacturing. However, the region still fails to keep up with the demand. In effect, it continues to rely on China’s battery value chain.
“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.”
Sigrid De Vries, ACEA Director General
The EU must come up with a strategic regulatory and financial policy to establish a supportive business environment and bolster the growth of its electric vehicle industry. Such an initiative will aid the region in catching up with China and the US, enabling it to stay competitive amid the rapid transition to electric mobility.
