A direct warning from the Mersu director: This is a real threat to the European automotive industry

The European automotive industry is in a situation where it has to balance between China, global competitiveness challenges and European political guidance.

The EU strives for an ambitious climate policy that drives the European automotive industry to renew itself. The concern, however, is that the policy measures could raise costs and increase uncertainty in a market where Chinese competitors in particular are advancing rapidly.

The automotive sector directly or indirectly employs approximately 30.8 million people in the EU, but jobs are decreasing rapidly. For example, according to the European Association of Automotive Subcontractors (CLEPA), more than 100,000 job cuts have already been announced in Europe due to bankruptcies and restructuring, and competition, especially with Chinese players, has intensified to the extreme.

Within the EU, the automotive industry’s worst worries should have been alleviated when the Commission came against the automotive industry at the end of last year and relaxed the 2035 combustion engine ban. According to the original proposal, only fully electric cars would be allowed after 2035, but in the commission’s new proposal, a 90 percent emission reduction is sufficient, and the rest can be compensated with, among other things, synthetic fuels and biofuels.

In practice, the Commission’s proposal means that internal combustion engines will not disappear completely after 2035 if they operate on low-emission fuels.

In order for the Commission’s proposal to enter into force, it also needs the approval of the member states and the European Parliament. The parliament is currently looking for compromises for the proposal among the political groups.

Political battlefield

Chairman of the European People’s Party (EPP), the largest group in the Parliament Manfred Weber said on Wednesday that the EPP is committed to lifting the 2035 internal combustion engine ban.

“Our goal is a competitive, innovative and future-proof automotive industry for the European Union.”

According to Weber, the new 90 percent emission reduction goal is ambitious, so the industry needs flexibility.

The EPP promised two years ago in its election campaign to remove the combustion engine ban and is now fulfilling its promise, which may not please many other parties.

The debate about internal combustion engines has been one of the biggest political controversies in recent years.

On Wednesday, Weber wished the parliament “legislative peace”. He invited socialists and liberals to build a common line so that technology does not become a constant political dispute.

A warning from the Mercedes boss

CEO of Mercedes-Benz and President of the European Automobile Manufacturers Association (ACEA). Ola Källenius warned on Wednesday that European regulation of the automotive industry is drifting too far from market realities.

According to Källenius, the automotive industry is committed to a green transition and significant investments, but needs a more functional political framework to support it.

“The automotive industry is Europe’s largest industry. In addition to millions of jobs, it is also the industry that uses a third of all private R&D spending,” he reminds.

According to Källenius, the current regulation does not correspond to the changed operating environment. In addition, a successful change requires consumer acceptance and practical conditions, such as a functioning charging infrastructure.

“I ask the decision-makers to be open-minded and pragmatic, and not to get stuck in ideological positions that are outside the reality of the market,” says Källenius.

The competition is getting tougher

Kauppalehti asked Källeniuk which is the bigger threat to the car industry, EU regulation or China?

The Mersu director did not agree to pit the topics directly against each other, but emphasized the importance of Europe’s competitiveness.

“The automotive industry is one of the most competitive industries in the world, and of course, with the growing and strong Chinese automotive industry being a part of it in recent years, it increases the intensity of the competition even more.”

According to Källenius, the solution is to take care of Europe’s own competitiveness.

“So in a situation like this, what should be the strategy? Look at your own competitiveness. What can you do at the policy level to strengthen entrepreneurship and competitiveness here in Europe?”

Källenius hopes that the operating environment of companies will not be tightened too much and, if necessary, they will dare to correct previously made decisions.

“So we need a smarter approach to regulation, and in some cases we’re rolling back some of the regulation to take a leap forward.”

The direction is clear, the means open

According to Källenius, the strategic direction of the automotive industry is not unclear: the transition towards zero emissions has been decided.

“It is absolutely clear that the European automotive industry has chosen a path towards zero emissions. So it is not a topic of discussion. It is about the method, how to get there?”

According to him, the current regulatory framework has not produced the desired results and therefore the direction must be changed.

“That’s when you have to sit down and say, ‘Okay, I’m going to change my game plan here.’ Any company would do that. Any sports team would do that, and Europe must do the same,” says Källenius.