ACEA calls for EU strategy to compete with 'dragons’

Brussels – The European Automobile Manufacturers’ Association (ACEA) has called for a joined-up strategy to enable EU industries compete with fast-growing counterparts in China and other global regions.

“Europe lacks a robust and coherent approach to the increasingly tough competition from abroad,” said ACEA director general Sigrid de Vries in an 31 August message.

In particular, De Vries said, “China has its gaze set on the European market, with the potential to fundamentally change the face of Europe’s industries as we know it.”

This June, ACEA data revealed that EU sales of battery-electric cars outpaced diesel for the first time.

Another key trend was also noted: Chinese brands and Chinese-made vehicles are making rapid inroads into the European electric vehicle (EV) market.

"Propped up by public money and government intent, it is no secret that China’s auto industry now mounts a challenge to the auto industry in Europe and beyond," said the ACEA leader.

De Vries went on to explain that, unlike in Europe, China has adopted a “holistic approach” to industrial policy, looking at entire value-chains for strategic industries.

Applied to the automotive industry, Chinese strategy covers a broad range of subjects, including mining, refining, and manufacturing as well as charging networks, cheap energy, purchase incentives, and recycling.

According to De Vries, China currently accounts for 75% of global battery production capacity and has “a near monopoly” on critical raw material supplies.

In 2022, the country installed 800,000 EV charging points – almost as much as the total installed elsewhere, globally, since investments in charging infrastructure started.

The ACEA official also noted the “game-changing” decision by the US to launch the Inflation Reduction Act (IRA) to support the digital transition in the country.

“Contrary to their counterparts in China and the US… EU legislators have opted for a more piecemeal approach,” said De Vries.

This often translates to setting targets first and dealing with essential framework conditions for implementation “later or insufficiently”.

For instance, she said, this is the case with the Alternative Fuels Infrastructure Regulation (AFIR), which “came late and fell short of minimum needs”.

“The recently adopted EU Batteries Regulation also still leaves details unclear, adding cost and complexity to the battery supply chain in Europe,” she added.

The ACEA boss recommended that Europe must accelerate the build-up of local capacity and secure existing ties and new partnerships with third countries.

“The recent Chinese export restrictions on germanium and gallium, two materials vital for microchips, provide a flavour of what could come if the EU does not find a way to become less reliant on others,” she warned.

Furthermore, De Vries emphasised the importance of keeping trade relations “as open, fair, and supportive as possible – including those with China.”

According to the director general, China is the biggest vehicle market in the world and “a serious production and innovation hub” for components and vehicles.

While European brands have “long-held” relationship with customers and “solid legacy” as innovators, Europe’s competitiveness as a home for manufacturing industries is at stake, De Vries warned.

EU vehicle makers are now absorbing costs around combustion-engine phaseout and investing heavily to build up EV and hydrogen solutions: all while "operating within a framework of stringent boundary conditions, high inflation, and a saturated market.” 

De Vries concluded by calling for an EU industrial strategy that "steers clear of protectionism and naivety, broadening perspective beyond its internal gaze and creating conditions for sustainable economic activity.

"One that makes Europe a match for Chinese and other dragons.”