The European automotive industry stands at a critical juncture. The transition to electric vehicles (EVs) is crucial to the EU’s climate targets in the transport sector. This transition requires a significant transformation of existing supply and value chains, which will also impact the types of labour and skills needed in the industry. The 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.
This CEPS in-Depth Analysis takes stock of challenges the industry is facing, and explores potential avenues to support the EV transition, with a focus on passenger cars and vans – or light duty vehicles (LDVs). In particular, the report examines the revenue and cost dynamics of the shift to battery electric (BEVs) and its implication for the industry and policy. Further on, it highlights the risk of declining European value added unless critical value chains are scaled up while reflecting on persistent supply chain risks and potential cost implications for BEVs. The analysis then identifies financial tools to support and accelerate the transition, including targeted support for consumer uptake, innovation, infrastructure, and skills development.
