European Commission chief Ursula von der Leyen hosts auto sector executives, unions and others on Thursday to debate how to ensure EU car producers can electrify their fleets and compete with more advanced Chinese and U.S. rivals at the same time.
The sector, hit by factory closures and job cuts, including 54,000 job losses among auto suppliers last year, also needs to confront economic threats such as U.S. trade tariffs and a reliance on China for critical minerals and batteries.
The EU executive's "strategic dialogue" will feed into an auto industry plan later this year. It has already proposed discussions on key technologies, energy and input costs, trade, demand stimulation and regulation.
The European Automobile Manufacturers' Association (ACEA), representing 16 car and truck makers, said this week that its immediate priority was for the EU to axe potential fines for any auto producers that do not meet fleet CO2 emissions targets this year.
Renault boss Luca de Meo said these could reach 15 billion euros for European producers, with electric vehicles (EVs) needing to push beyond a 20% market share to avoid them. The market share of EVs in Europe dropped to 13.6% last year as sales fell sharply in France and Germany.
European automakers could choose to meet the electric targets by reducing petrol or diesel car production or by buying credits from Tesla or Chinese competitors.
"Basically automakers would buy green credits from the country which is polluting the most in the world, and fund those Chinese EV makers on which EU has just imposed tariffs," said Gianluca Di Loreto, partner at consultancy firm Bain & Company.
Leaders of auto manufacturing hubs Germany, Italy and the Czech Republic have also urged Brussels to waive penalties or have them calculated over a longer period. The Commission has hinted at some flexibility, but so far stood fast.
Pro-environment think tank T&E says this is with good reason. It says the industry has had since 2017 to prepare with many new cheaper models now hitting the market, that the 2025 targets are achievable and that carmakers are unlikely to face penalties, with some credit buying, but also increased EV and hybrid sales. In the worst case, it says, fines would be below 1 billion euros for the sector.
"If you postpone this by a year or by two years, you're not going to be in a better position. You're postponing something that is essential to your future success," said T&E executive director William Todts, who will also attend the dialogue.
MOVING ON FROM FINES DEBATE
Todts argues that instead of debating fines for months on end, the dialogue should focus on longer-term policies to help the European car industry succeed.
These could include improving charging infrastructure and incentives for consumers to buy domestically produced EVs, in line with the tax credits the United States Inflation Reduction Act brought in. This could particularly apply to corporate fleets, which make up 50-60% of purchases of new vehicles.
Auto suppliers said in a call before the EU dialogue that the bloc should set clear targets for regional content, following the North American model, to protect the 13 million people the sector employs.
Then there is the issue of how to deal with potential U.S. tariffs, as threatened by President Donald Trump.
BMW CEO Oliver Zipse said he would propose the EU lower its standard car import duty for U.S. vehicles from 10% to 2.5%, matching the U.S. rate currently applied to EU car imports.
