EU car manufacturing could potentially increase to 16 million vehicles per year, sustained by continued electric vehicle incentives
The European auto industry is at a critical juncture, according to Transport and Environment (T&E), a Brussels-based advocacy group. A new study by T&E predicts that vehicle production in the EU could reach 16.8 million vehicles per year by 2035 if electric vehicle (EV) and clean energy targets are maintained. This production level would match the region's post-financial crisis peak in 2009.
The study highlights the importance of effective industrial policies to ensure the success of the European automotive value chain. Failure to implement such policies could result in a significant economic loss, with the sector's contribution to the economy falling by up to €90bn ($105bn) by 2035.
European automakers such as Volkswagen Group and Mercedes-Benz have already begun localising production through partnerships. The continued growth of the EV market could lead to the creation of new roles, with the T&E model predicting 120,000 new jobs in EV production by 2035. However, one million jobs in the field could be lost if the transition is not managed effectively.
Battery production is set to play a crucial role in this transition. The study predicts that battery production could rise from its current 187GWh to 900GWh by 2035. Chinese company CATL has already announced plans to invest $4bn in a new battery plant in Hungary.
The economic output of the charging sector could also increase significantly, reaching €79 billion ($92.3bn) by 2035, according to the report. The study found additional benefits, including an offset of any workforce reduction caused by the move away from internal combustion engine (ICE) vehicles, through opportunities in the battery and charging industries.
The EU's best chance to return to greater car production, maintain job levels, and increase the economic value of its auto industry is to keep the 2035 zero-emissions goal and adopt strong industrial and demand policies, according to T&E. The study identifies Germany, France, Sweden, Poland, Italy, Spain, and Slovakia as the European countries that should be supported with effective industrial policies to promote EV production, electrification of commercial fleets, and battery manufacturing.
The study does not provide a direct link for further reading about the European EV landscape. However, it is clear that the future of Europe's auto industry hinges on the road that EU politicians take today. Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E, described the situation as a "make-or-break moment" for the auto industry in the EU.
Recently, the UK government revised its zero-emissions vehicle (ZEV) mandate, extending the timeline for ICE vehicles to be phased out following industry requests. The European Commission has also proposed an amendment to its CO Standards Regulation that would see emission targets averaged over a three-year period.
In conclusion, the future of Europe's auto industry is closely tied to the success of its EV and clean energy initiatives. With the right policies in place, the EU has the potential to not only maintain its position as a global leader in car production but also create new opportunities and jobs in the battery and charging sectors. The next few years will be critical in shaping the future of Europe's auto industry.
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