Europe Divided Over the Automotive Crisis, Commissioner Dombrovskis “Silent”
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The European automotive industry is facing a severe crisis, with car sales falling sharply and electric vehicles (EVs) remaining prohibitively expensive for many consumers. The European Parliament is divided on how to address these challenges. The center-right argues for delaying environmental goals and providing regulatory relief to an industry struggling with high production costs and international competition, particularly from China. The Left and Green parties defend the existing Green Deal framework, pushing for state subsidies and protectionist tariffs to protect European automakers from cheaper Chinese EV imports. The debate highlights broader concerns about balancing economic recovery, environmental commitments, and global competitiveness in the European car industry. “Laconic” and “evasive” comment from the Commissioner Dombrovskis, envisioning only two new future working documents.
By eEuropa
Strasbourg, 8 October 2024 – 2 MIN READING
Today, the European Parliament debated during three hours the deepening crisis in the European automotive industry, which is struggling with declining car sales, high electric vehicle (EV) costs, and strict EU regulations setting ambitious environmental targets. The debate highlighted sharp divisions in the Parliament, with Commissioner Valdis Dombrovskis participating.
On one side, the center-right bloc is critical of the Green Deal and calls for a review of the timeline for meeting environmental goals. They argue that the current regulations, which mandate a rapid shift towards electric vehicles and ban internal combustion engines by 2035, are exacerbating the industry’s crisis by imposing heavy financial burdens on manufacturers and consumers. This group advocates for postponing environmental targets to provide more certainty and stability for the automotive sector, which is already facing challenges from global competition, especially from China.
On the other hand, the left, including the Greens, defends the current environmental rules and timeline, viewing them as essential for reducing emissions and ensuring a sustainable future. They propose stronger state subsidies and trade protection measures, such as tariffs on Chinese-made EVs, to shield the European market from cheaper imports. This protectionist stance is driven by concerns that Chinese carmakers, backed by substantial state support, are outcompeting European manufacturers in terms of price, particularly in the electric vehicle segment.
The industry is also under pressure from the high costs of transitioning to electric vehicles. Despite a growing global push for EVs, European automakers are struggling with rising production costs and underutilized factories, leading to potential job cuts and factory closures across the continent. German car giant Volkswagen, for example, is facing historic challenges, with warnings of significant job cuts and declining sales in key markets like China.
The crisis has sparked calls for a revised industrial policy to support the sector through the transition, alongside investment in infrastructure such as charging stations and energy grids, which are essential to facilitate the adoption of electric vehicles. As the EU navigates this crisis, the automotive industry is becoming a central battleground for broader debates about Europe’s economic future, environmental sustainability, and global competitiveness.
Commissioner Dombrovskis, closing the debate with Members of the European Parliament in Strasbourg, stated that the EU must preserve both technological capacity and employment. He promised that the Commission will develop a roadmap in collaboration with social partners to ensure a smooth transition of the workforce to meet new challenges and will present an Industrial Action Plan for the automotive sector.
Great disappointment from all EP Members as they left the hemicycle, after these “poor” and “meager” words, following a 3-hour debate. The EP Members stated that the Commissioner had, in fact, taken no stance, neither in defending the Green Deal nor in reconsidering the decisions already made regarding the automotive industry, instead buying time by promising two “worthless” initiatives with “no concrete commitments.”
Many commented that the outgoing Commission could not bind the work of the future Commission, which will, however, take office almost two months later than initially planned, just before December.
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