European Commission President Ursula von der Leyen will convene auto industry leaders, labor unions, and other stakeholders on Thursday to discuss strategies for electrifying EU car fleets while remaining competitive against more advanced Chinese and U.S. manufacturers. The industry, already grappling with factory shutdowns and job losses—including 54,000 layoffs among auto suppliers last year—also faces economic challenges such as U.S. trade tariffs and heavy dependence on China for essential minerals and batteries.
As the sector navigates these hurdles, automakers are urging Brussels for greater flexibility to avoid steep fines for exceeding carbon dioxide emission limits in 2025. They are also pushing for agreements that would allow them to purchase green credits from foreign competitors to meet targets. Additionally, they remain concerned about the possibility of increased tariffs on imported vehicles under former U.S. President Donald Trump.
A new Commission plan due later this year says the 27-nation bloc can help by helping the industry catch up in key technologies such as batteries and software, streamline regulation, cut input costs, and guarantee a level playing field globally. It can also encourage demand by improving a patchy charging network, modernizing grids for faster charging, and lowering energy costs.
However, carmakers argue that the EU executive needs to do much more to prevent a collapse in a sector that employs 13 million people and contributes about 7% of the economy. They point to rising manufacturing costs, a stuttering switch to electric vehicles, and what they describe as unfair competition from subsidized Chinese carmakers.
They are also grappling with falling demand amid a global economic slowdown, likely pushing car sales lower this year.
While Europe’s leaders have vowed to support the industry, some manufacturers are bracing for the impact of a Trump trade war, which, according to Economic Institute estimates, could slash German exports by 1% and wipe out 300,000 jobs.
Von der Leyen, the European Parliament’s top advocate for the industry, has urged Brussels to rethink its penalties. She wants the bloc to adopt a “flexible approach” that takes account of economic conditions and factors such as a country’s level of environmental protection. She wants to see a system that weighs penalties against the cost of the required changes and considers the need to protect workers. She will present her plan to lawmakers in February. Transport Commissioner Apostolos Tzitzikostas will develop an action plan based on the discussions.
He will set the agenda for a series of meetings with automakers, suppliers, and trade unions. The first dialogue will focus on key challenges, and the second will tackle possible solutions. It will be followed by a third meeting to address how the industry can achieve a sustainable future within the EU. The plan will then be forwarded to the European Council, which has its final say. It is expected to be adopted by June 2023. Reuters’ Kari Ervi and Martine Geller contributed to this report.