Facing the impact of China’s cheap electric vehicles, the industrial strategy of the European Union is accelerating its shift. Stephan Sejourne, the EU Commissioner for Industrial Affairs, stated on Friday that the EU must defend its automotive industry from Chinese competition. This includes reassessing the zero-emission car target for 2035 and implementing new rules to protect domestic production within Europe.
The Vice-President of the European Commission and Commissioner for Prosperity and Industrial Strategy, Sejourne, warned that without intervention, the number of cars produced and sold in Europe could drop from 13 million to 9 million in the next decade.
“We need to be less naive and align ourselves with the standards of all major economies in the world,” admitted the Vice-President to the Italian newspaper La Stampa.
In the face of significant changes in the automotive industry, the EU must show flexibility and review the target of completely ceasing the sale of internal combustion engine cars by 2035. This is in response to car manufacturers’ unrealistic calls for a complete shift to electric vehicles. The EU plans to review this target by the end of this year.
Adjusting the 2035 zero-emission goal is seen as a crucial step for the EU to buy time. This move aims to allow European carmakers to continue selling more profitable fuel cars during the transitional period, accumulating enough funds to effectively compete with the price wars brought by China’s cheap electric cars in the European market.
Sejourne disclosed that the EU is preparing a multi-layered defense strategy to address the challenges posed by Chinese companies:
Earlier this week, Sejourne announced that the EU Commission plans to establish a new category of affordable small electric vehicles to directly counter Chinese cheap electric cars and boost the EU’s internal market. This broader strategy is expected to be formally outlined on December 10.
The Commissioner hinted at taking actions against Chinese production activities within Europe. He cautioned, “Today, there are manufacturers assembling Chinese cars in Europe using Chinese parts and Chinese employees – this is happening in Spain and Hungary. This is unacceptable.”
Regarding whether to implement full protectionism, Sejourne remains cautious. He stated, “It is necessary to introduce conditions for foreign investments in Europe.” However, he also pointed out that imposing tariffs across the board could lead to trade tensions and harm domestic production.
In October of this year, the EU imposed temporary tariffs of up to 35% on electric cars imported from China (an additional percentage based on the original 10%) to counter the massive subsidies by the Chinese government to the electric car industry. However, some former senior US trade officials and analysts believe that the EU’s tariff measures are still “too low” to effectively prevent Chinese cars from seizing market share in Europe.
Sejourne stressed in conclusion that to reduce dependence on rare earth minerals from China, Europe must adopt a diversified strategy, including seeking new suppliers from countries like Brazil, Canada, and African nations.
Furthermore, restrictions on the use of rare earths, increased recycling efforts, and investment in potential local mining sites should be implemented to reduce the dependency on Chinese rare earth minerals.