Report: Europe Must Act to Avoid Falling Behind Further in EVs

by | 14. Dec 2023 - 14:25 | Politics

China dominates the market because of its holistic approach to the whole value chain, from mining to selling the final car, authors claim.

China dominates the field of electromobility, forcing competitors to react. In the U.S., government policies like the Inflation Reduction Act and the Infrastructure Investment and Jobs Act have introduced widespread incentives for the entire value chain of electric vehicles, from mining the critical minerals to the final purchase. Across the pond, the European electric vehicle market faces multiple challenges, which a new report by French university École Polytechnique highlights (PDF). The report warns that Europe could fall further behind and urges policymakers to act accordingly. The authors explain China’s dominance through its holistic approach to the whole electric vehicle value chain. Since the 20th century, the People’s Republic has intensified efforts to build a rare earth industry, for example. And since at least 2012, China has shifted its focus to EVs in favor of combustion engines.

EU Policymakers and Member States Could Help Carmakers

The report argues that the European Commission’s proposed emission targets and imposed rules, such as the combustion engine ban from 2035, without providing measures to achieve them, have created uncertainty for European carmakers. In addition, the proposed efforts to localize battery value chains are insufficient. The report gives the example of 40 percent of raw material processing is set to happen in the EU by 2030 under the proposed Critical Raw Materials Act, compared to 50 percent under the IRA in the U.S. to qualify for tax credits for the purchase of electric vehicles.

To address these risks, policymakers must create a framework to support European carmakers. The report urges the European Commission to develop appropriate regulatory and financial frameworks to level the playing field between competing regions. In addition, EU member states are advised to consider economic and non-economic incentives for carmakers, while carmakers must adapt their value chains.

Photo: iStock/nrgemi

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