Electrifying transportation's journey to competitiveness faces challenges, stresses a recent research study on the topic
The European automotive industry is on the cusp of a significant transformation as it transitions towards electric vehicles (EVs). However, several challenges must be addressed to ensure a smooth transition and secure long-term competitiveness.
According to a recent report by CEPS, shifting revenues and cost structures, as well as the competitiveness of the EU automotive industry, will determine whether EV sales can offset the anticipated decline in internal combustion engine vehicle (ICEV) revenues. The report highlights the need for funding to address these challenges.
One of the key challenges is the insufficient charging infrastructure, high total cost of ownership, and limited consumer confidence, which are restricting EV uptake in specific vehicle segments and markets in Europe. To overcome this, an estimated €172 billion of investment is needed by 2030 to meet demand for charging infrastructure, but administrative bottlenecks are hampering faster deployment.
Another challenge is the need for a self-sufficient EU battery industry. Up to 70% of battery cells used in the EU are currently produced in China. To address this, an estimated annual investment of around €42 billion is needed until 2030 to build a self-sufficient EU battery industry. Key European players in this transition include Volkswagen Group and its subsidiaries PowerCo and Elli, which are developing and producing a unified battery cell platform for up to 80% of their electric vehicles.
The transition also requires a significant transformation of existing supply and value chains. As a result, the types of labour and skills needed in the industry will change. Upskilling and retraining will be important due to the shift in labor and skills needed in EV production, as many skills are transferable. However, the expansion of EV production may not be sufficient to fully compensate for job losses in ICE supply chains and production lines.
The average age of vehicles on European roads is rising due to these restrictions on EV uptake. This is a concern as it could lead to increased emissions and decreased fuel efficiency. The need for a self-sufficient EU battery industry and the establishment of a sufficient charging infrastructure are key to securing long-term competitiveness in the EV transition.
Securing long-term competitiveness is a major goal in the transition of the European automotive industry towards EVs. Achieving manufacturing scale is crucial for the success of the EV transition. Burdensome permitting and grid connection processes are hampering faster deployment of charging infrastructure.
The CEPS report, titled "Navigating the EV Transition," provides a comprehensive analysis of the challenges and opportunities in the transition of the European automotive industry towards EVs. The report can be found on their website: https://www.ceps.eu/ceps-publications/navigating-the-ev-transition/
