10.10.2024

Debate in the EP: The automotive industry is in a huge crisis

The European Commission is defending a de facto ban on sales of new petrol and diesel cars from 2035 - and highlighting the left-right divide among MEPs over the key climate policy target. This became clear after a debate in the European Parliament on the crisis facing the European automotive industry, reports Euronews.

"The target created certainty for producers and investors, and also provided sufficient time to plan for a just transition." Sufficient time has been given to plan a just transition," Economy Commissioner Valdis Dombrovskis stressed to MEPs in Strasbourg.

He also highlighted the existence of binding targets for the deployment of infrastructure such as charging points, while acknowledging that roll-out across Europe has so far been uneven.

"There is an urgent need to expand and evenly distribute charging infrastructure to support the expected surge in the adoption of electric vehicles in all EU member states," said the European Commissioner.

Jens Gieseke, head of transport policy for the centre-right European People's Party (EPP), spoke on the same issue as evidence that the transformation is not working.

"Europe was not prepared for the transition and lacked the necessary infrastructure for electric vehicles," the German lawmaker said.

Giesecke - followed by other MEPs from the EPP and parties further to the right - also pointed to the looming deadline for an interim target to reduce average CO2 emissions from cars as a problem. Carmakers are way off target and face billions of euros in fines if they don't radically change their sales portfolio by the end of 2025.

"For 2025, we see a risk of excessive sanctions. The car industry is in a huge crisis. The legislative framework is too narrow and inflexible. The consequences will be dramatic", Gieseke warned.

Focusing on electric vehicles is a dead end

In 2023, 10,7 million passenger cars were sold in the EU, Norway and Iceland, with an average of 106,6 g of CO2 emissions per kilometer under test conditions, according to preliminary data published in June by the European Environment Agency.

The difference is comfortable over the current limit of 115,1g. However, the limit will be reduced to 93,6g next year under legislation effective from 2019.

With carmakers facing a penalty of €95 per vehicle sold for every gram by which their fleet average exceeds the limit, last year's sales and emissions figures would translate into a fine of more than €13 billion across the industry. if repeated in 2025. Missing the van target would likely add another few billion to the total.

For Giesecke, the solution lies in lifting the ban on internal combustion engines, which he noted is an old demand of German conservatives in the EPP. He also called for a broader approach to decarbonisation.

"Focusing on electric vehicles is a dead end, we need a broad mix of technologies, we also need to recognize climate-neutral fuels," says the MEP.

Mohamed Chahim of the centre-left Socialists and Democrats group warned that China was ahead of the EU in developing its electric vehicle industry, echoing Dombrovskis's remark that European manufacturers face energy and raw material costs around 30% higher than theirs main competitor.

"Chinese electric cars are significantly cheaper - they have taken the lead in this technology. "Companies and colleagues lobbying to delay and repeal the legislation are only thinking of short-term profit, not the future of workers - and more importantly, European consumers," warned the Dutch MP. But he argues that the solution is not to abandon climate policy goals.

Despite his words, the debate between lawmakers appeared to miss the issue of addressing China's electric vehicle technology gap and EU factory closures. The EU has sparked a trade war with Beijing by imposing tariffs on imports of Chinese electric vehicles. The reason for the decision was unfairly awarded subsidies, something that Beijing stubbornly denies.

“Chinese industries are enjoying advances in batteries, software, infotainment. There is a global race for green technology. Europe cannot afford to fall behind and lose its competitive edge in this race," warned Dombrovskis, noting that the International Energy Agency predicts that one in five cars sold this year will be electric.