Automotive: EU Fears Its Plans May Fail & Invests Another €4.6 Billion
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All EU governments risk falling like dominoes within 1 or 2 years. They endorsed Brussels’ plans but are now realizing that the accelerated transition to electric vehicles risks causing millions of job losses, as European car manufacturers face the threat of closure. Massive protests could overwhelm governments and European leadership. Some are already warning of an institutional crisis within the EU. To mitigate the blow, in the first week of its new mandate, the European Commission is intensifying its support for net-zero technologies and manufacturing capacity in Europe. With a total of €4.6 billion in fresh funding, the Commission aims to accelerate cutting-edge clean energy solutions, including electric vehicle battery cell production and renewable hydrogen. This major investment – delivered through the Innovation Fund and backed by EU Emissions Trading System revenues – could help bolster Europe’s industrial competitiveness, secure resilient supply chains, and meet the EU’s ambitious climate targets?
By Paolo Licandro
Brussels, 16 December 2024 – 2 MINUTES READ
Europe is currently suffering from a severe loss of competitiveness in its automotive sector. Analysts point to a dramatic collapse in profits for European car manufacturers throughout 2024: industry giants like Audi and Volkswagen report a staggering 70% decrease in net earnings compared to the previous year. In addition, at least a dozen major factories have shut down across Germany, France, and Italy, and several ambitious industrial plans have simply evaporated.
This economic downturn represents the other side of the coin in the EU’s quest to position itself as a world leader in the clean energy transition—an ambition pursued without adequate financial resources, concrete plans, or the right investment strategies.
Meanwhile, consumers—who seem to have been overlooked—are increasingly hesitant. Millions of Europeans have stopped purchasing cars altogether. The root causes are manifold: perpetually shifting EU regulations offer no certainty that a newly bought vehicle will remain road-legal long enough to amortize its cost, while electric vehicle prices and fluctuating charging fees remain well beyond the reach of many households. This volatility has spurred a growing number of EU Member States to threaten blocking the Commission’s green ambitions, hinting at the possibility of entirely overhauling plans drawn up in Brussels.
Although millions of laid-off automotive workers are not yet protesting in the streets, governments and policymakers know such unrest could erupt at any moment, jeopardizing political stability. Many national governments are already bracing themselves for the fallout, fully aware that mass layoffs could destabilize not only the automotive sector but also their own political futures.
Against this backdrop, European Commission President Ursula von der Leyen is pressuring Teresa Ribera, the newly appointed Executive Vice-President for a Clean, Just and Competitive Transition, to deliver a gesture that might quell the growing dissent among governments, political leaders, and the workforce. Von der Leyen, who once supported former Commissioner Frans Timmermans’ vigorous efforts to dismantle the carbon-based development model in favor of electrification, is now facing fierce resistance from multiple fronts.
Now, EU decides to invest on automotive and…. CONTINUE READING
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