The EU Commission has released a statement following its “Strategic Dialogue on the Future of the Automotive Industry”. In it, the Commission outlined three key priorities to ensure the longevity of the EU’s automotive industry. This included further development of the autonomous driving industry, a weakening of the 2025 CO2 vehicle targets and a bolstering of the EU’s EV supply chains.

Three key areas

1 – Innovation into software and hardware for autonomous driving

The Commission aims to set up and support an industry alliance to foster the development of software, chips and autonomous driving technology in Europe. As well as this it aims to refine testing deployment rules to get pilot schemes up and running faster.

Read: What market share do Chinese EVs have overseas?

“The development of autonomous technology over the past few years has gathered pace, however the industry remains heavily focused in the US and China,” said Didi Bostock Downstream and Financial Editor at Rho Motion. “While the region has strong domestic talent in the sector, Europe has not allowed the industry to flourish keeping it confined behind red tape in comparison to elsewhere.”

2 – The Commission will propose a “banking and borrowing” solution for the 2025 emission targets.

The 2025 emission target levels are set to stay the same however, rather than annual compliance, companies will get three years being able to borrow off future and past sales. As well as this, the commission will also prepare an accelerated review of the 2035 targets.

Based on Rho Motion’s 2025 EV sales forecast European automakers are facing fines of over EUR8 billion this year, with just a few OEM groups and pools expected to be hitting the required target. This change from the Commission comes after months of lobbying from automotive groups. Thoughts now move to whether this will be passed through the parliament and council and the potential changes to 2035 legislation.

3 – Improve competitiveness of European automotive supply chains, especially batteries

Europe, like most regions, faces the issue that imported batteries, primarily from China, are cheaper than domestically sourced ones, giving the risk of over-dependency. As a solution, the Commission will look at direct support to European battery producers and gradually introduce European content requirements for battery cells and components.

Read: The year of the terawatt hour, who deployed the most batteries in 2024?

While on paper this may seem a simple solution it is worth noting China’s dominance across the whole battery supply chain that makes it hard for European players to compete. Reliance on China is key to making low-cost batteries whether it is the sourcing of battery materials, the manufacturing machinery or the battery technology itself. This was most notably seen in Northvolt, it too relied upon Chinese technology. Substantial investment and support into European battery players is required to meet European need.

More Information

For more information about the EU’s EV and battery supply chain, see our research or get in touch.

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