Calls to weaken the European Union's targets for automobile carbon dioxide emissions have grown louder recently. If you believe the argument, they hurt European competitiveness by making cars unaffordable and destabilising the market.
The opposite is true: Scaling back now would be a costly mistake.
The EU must stay on course, ensuring that our industries lead in cleaner technologies, so that electric vehicles become more affordable, and we provide the right incentives to secure a stable energy and transportation transition.
Keeping pace in the global EV race
Our automotive industry is struggling to adapt its business models to cope with rising global competition. The clearest challenges come from China’s state-supported industry and the Inflation Reduction Act, which came into force in the United States under President Joe Biden. These industrial policies aim to make their respective countries global EV leaders.
The EU cannot shrink from this moment. If we hesitate, we will hand the future of mobility to our competitors.
Ambitious targets help, not hurt, our efforts. Phasing out the combustion engine by 2035, for example, provides manufacturers with the certainty they need to innovate and establish new supply chains — especially when it comes to crucial battery storage. The EU’s Green Deal and Fit for 55 package have already led to massive investments in battery production and charging infrastructure. Turning back now would reduce investor confidence and slow progress.
High targets, low costs
The key to making EVs more affordable is mass production. We’ve already seen this with solar panels and wind energy, which have come down in price thanks to the right incentives.
We are starting to see similar effects in the EV sector. Affordable EVs, made in the EU, are on their way. Several manufacturers are churning out smaller and cheaper models following proof-of-concept with more expensive ones.
There is no doubt that EVs need to come down in price. The European Commission has made a good start on this with its emphasis on making corporate car fleets green — perhaps as early as 2026. Corporate cars account for over half of all new car sales in the EU annually. They are often resold at competitive prices after a short period of company use. An electrification mandate would therefore go a long way towards scaling up the second-hand market.
Helping our companies compete
The upcoming EU Automotive Plan is an opportunity to revive our struggling car sector by investing in skills, infrastructure and affordability measures. This means supporting local manufacturing, including through joint venture and technology transfer requirements for foreign companies. Local content requirements can also go a long way to shielding our automotive sector from unfair global competition, and countervailing duties should be employed if necessary. The revenue from these could be used, for example, to invest in charging infrastructure.
Nor should we rule out subsidies, which could be sourced from the reallocation of unspent pandemic-related funds or the EU's tariffs on Chinese-made EVs. Any subsidy policy, however, must be harmonised at the EU level. The patchwork of national measures that exists today is ineffective.
We know that the future of mobility is electric — and it is increasingly our present reality. The only question is who is going to lead that transition. It can be the EU, but only if we do not shrink from our ambitions.
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