While Chinese car manufacturers are trying to conquer the European market and threaten the domestic industry, which is currently in crisis, the EU is trying to find a solution to stop them. The proposal was made by Luca de Meo, CEO of Renault and President of the European Automobile Manufacturers’ Association (ACEA), who called for a new industrial policy in Europe.

In September 2023, European Commission President Ursula von der Leyen announced that the EU will launch an investigation into the privileged position of electric vehicles produced in China due to subsidies. Some member states of the European Union are trying to independently protect domestic manufacturers, such as France, which announced that it was canceling subsidies on new electric cars produced in China. The biggest threat to French and other European manufacturers is not only Chinese companies like BYD, but also the world’s largest electric car manufacturer, Tesla.

Luca de Meo stated that Europe is facing major challenges and that the alienation and disorientation of the European automotive industry will lead to a structural trade deficit for Europe. He also warns that the phase-out of internal combustion engines, which is planned for 2035, could mean a decrease in the competitiveness of the European car industry. According to him, ICEs have been a protective barrier for Europeans for years, and now with the development of electric cars and the increased need for batteries, that protection is disappearing because the Chinese control 75 percent of global battery production.

Also, he expressed concern about the increase in car prices in the last two decades (+50%), as well as the average age of cars, which has increased from seven to 12 years. These and other reasons could be fatal for the automotive industry in Europe, if an appropriate decision is not made in time to protect domestic manufacturers and the domestic market.

Source: Reuters