Concerns Over Worsening Situation if Internal Combustion Engine Vehicle Sales Ban Is Enforced
The European Union (EU) is taking measures to overcome the crisis in the automotive industry.
The European Commission, the EU's executive body, announced on the 19th (local time) that it will officially launch the "Strategic Dialogue on the Future of the European Automotive Industry" next month. The Commission explained that the strategic dialogue aims to provide solutions related to strengthening automotive supply chains, innovation based on artificial intelligence (AI) and autonomous driving, support for decarbonization, and simplification of regulatory frameworks.
The strategic dialogue will bring together key stakeholders from the industry, including European automotive companies, related infrastructure providers, and labor unions. Ursula von der Leyen, President of the European Commission, said, "The automotive industry is a source of pride for Europe and essential for its prosperity," adding, "We must ensure that the future of the automotive industry takes firm root in Europe."
The launch of the strategic dialogue is driven by the crisis facing the European automotive sector. The European automotive industry is responsible for about 13 million jobs. However, it is falling behind in competition with China during the transition to electric vehicles, and exports to China are also declining. The market share of European automotive brands sold in China decreased from 29% in 2019 to 24% in 2022.
Demand within the region is also sluggish. According to EU Observer, the market share of foreign cars sold in the EU has increased approximately 2.25 times since 2010.
In response to this crisis, Volkswagen, Europe's largest automotive company, announced in October that it would close factories in Germany. This is the first time in Volkswagen's 87-year history that it has closed a factory in Germany.
Major companies such as Audi, Volvo, BMW, and Fiat are also considering factory closures or production cuts in Europe.
The industry fears that the situation could worsen once the EU regulation banning the sale of internal combustion engine vehicles from 2035 is fully implemented. The pace of electric vehicle adoption across Europe is falling short of expectations. According to Eurostat, the EU's statistical office, battery electric vehicles (BEVs) accounted for only 14.6% of newly registered vehicles last year.
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