Future of the European Automobile Industry

The train has left the station, and the journey is speeding up. The industry is undergoing a paradigm shift; some refer to it as a revolution. It is not a stretch to predict that every position in the mobility industry will see some sort of disruption.

FREMONT, CA: Electric vehicle adoption in Europe appears to be inevitable as the core targets of Europe in climate, air quality, energy security, and industrial competitiveness perfectly align with the thought. Other suggested alternatives, like hydrogen, biofuels, or e-fuels, are unlikely to play much more than a specialised role in future automobiles.

This transition was first fueled by environmental and climate legislation, which dates to the early 1990s. In the past 30 years, EU auto emissions regulation has been a contentious process with zigzags and sometimes conflicting goals. The sector's self-regulation failed to achieve the objectives set for 2008, and harsher criteria were subsequently implemented as the EU had prioritised CO₂ emissions though ignoring environmental rules (such as NO_x).

Nonetheless, the disparity between climate and environmental norms persisted, opening the path for the up-marketization and dieselisation of the industry. This resulted in a diesel crisis, made worse by shoddy testing processes and execution, along with illegal business tactics by automakers. As automobiles got heavier, more powerful, and more costly, a large portion of the obtained emission reductions got compromised and weight-based CO₂ requirements also contributed to this unfavourable development. Fast-track electrification was the only way to meet the Fit for 55 package's 100 per cent emissions reduction objective by 2035 when the European Green Deal was ultimately established as a result of this legislative framework's breakdown. At the same time, market pressures and technological advancements are progressively driving this quick switch to electromobility. The new European requirement to cut expenditure on Russian oil sped up the whole process.

One important lesson this project's country reports and transversal studies provide is that even though electrification of individual road transportation or the switch from fossil fuels to clean electricity is considered the project's main focus, the transformation is more extensive. Though the production of battery electric automobiles requires fewer workers, digitalisation of both the product and the process, automation of production and a complete reorganisation of automotive value chains are also under progress. There will be an implication of significant jobs due to the substantial structural change but the whole new job descriptions and skill requirements will lead to a lot of unemployment.

Due to this paradigm shift, long-held positions of power that have been developed over the years are also under threat. Market entry for newcomers is now possible in ways that were unthinkable before. No model for the future could be drawn from past achievements. All of this is taking place within a new age of de-globalisation, following the pandemic's impact on supply chains and the collapse of the post-World War II rule-based international order. The increase in terms of geopolitics stakes paved the way.

It might be challenging to gauge how a certain plan would affect employment. The scope of the study (narrow, wide automotive sector, or entire economy), assumptions made about future changes in sales volume, productivity, value composition, and other factors, all affecting the forecast outcomes. The sectoral component might be narrowly focused on employment in the production of powertrains or broadened to include related businesses like charging infrastructure.

The issue is that automation and electrification lead to employment losses in the automobile manufacturing industry, which includes the battery industry. One mitigating element is the growing value added by electronics and autonomous drive systems as well as the labour needed for installing and maintaining the infrastructure for charging. A lot of jobs in the industry will undergo substantial transformations in terms of skills, location, contract type, and working conditions, which is another characteristic of employment projections. The worst of all employment situations may arise if European businesses and authorities were to hold down the mobility transformation.

If Europe's auto sector failed to keep up with rapidly developing zero-emissions technology, China, South Korea, and other American businesses undoubtedly want to acquire a competitive edge. Hence, right now, concentrating on overall employment gains or losses is less crucial than coming up with strategies to assist European businesses, regions, and employees with the change. There will be significant effects at the plant and regional levels, even if the transition is handled in a way that keeps total employment relatively steady.

Germany, despite its late start, appears to be well prepared for the shift owing to their significant investments in electrification, quick development of battery manufacture, and the culture of cooperative labour relations. There won't be any job losses, but job profiles will change drastically. France, which has seen a significant decline in its market share over the past ten years, expects stability on account of technological advancement and electrification. Both core nations want to sustain as much technical expertise domestically as they can. The automobile sector in Central and Eastern Europe, which had benefited most from the post-enlargement development, now faces an uncertain future. The area is fragile and reliant on choices made at corporate headquarters. Although some see possibilities in extending the life of combustion engines and hybrid technologies, compromising long-term competitiveness in exchange for short-term stability, others are embracing the shift to e-mobility by establishing strong supplier positions, such as in battery manufacture.

Throughout the first ten years of vehicle electrification, battery cell production has developed and expanded mostly outside of Europe. To create its local battery cell manufacturing sector, Europe is already on the right track as they enter the second decade of automobile electrification. Europe has been successful in building a robust innovation network across the whole battery production process, and it is now catching up to the top Asian producers.

The EU is moving in a positive direction towards increasing its capacity and competence, but there are still hazards. The choice of battery chemistries to pursue requires critical consideration. According to current trends, European manufacturers are concentrating on higher-end markets while ignoring the lower price range. This might result in a problem with future equity, market vulnerability, and a delayed transition in low-income nations.

While initiatives to develop native natural resources in Europe frequently encounter local opposition, crucial raw materials are primarily imported, posing supply chain concerns.

Before this transformation may be deemed successful, a determination will be needed to provide enough charging infrastructure across Europe. Affordability in particular must be carefully considered for low-income households.