Summary of "POLITICO Live's event "Race for traction: the automotive industry at a crossroad""
Summary of Business-Specific Content from POLITICO Live Event:
“Race for traction: the automotive industry at a crossroad”
Key Themes & Challenges
The European automotive sector is at a critical crossroads due to several factors:
- Intensifying global competition, notably US-China trade tensions.
- Regulatory complexity and fragmentation across EU member states.
- Rising energy costs, fragile supply chains, and uneven enabling conditions.
- The challenge of reconciling ambitious climate goals with industrial competitiveness and economic realism.
Company Strategy & Industry Outlook
Frank Nidolanda, BMW VP Government Affairs Europe
- Europe has strong climate ambitions but struggles with execution at scale and speed.
- Fragmented incentives and infrastructure across the EU slow down electric vehicle (EV) adoption and production.
- Targets:
- ~45% of car sales to be EVs by 2030.
- 100% zero-emission vehicle sales by 2035.
- Current EV adoption growth (~3 percentage points per year) risks falling short of the ~50% target by 2035.
- Without a coherent industrial policy, Europe risks importing EVs rather than producing them domestically.
Three strategic recommendations:
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Smarter CO2 counting Shift focus from tailpipe emissions to full life cycle emissions, including materials, production, and recycling.
- Example: BMW i3 lifecycle CO2 emissions reduced by 35% compared to the previous model through use of CO2-reduced steels and secondary aluminum.
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Technology openness Support electrification alongside hybrids, hydrogen, and renewable fuels to ensure a scalable, affordable, and resilient transition.
- BMW plans to launch its first series hydrogen vehicle in 2028.
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Link green and digital transformation Leverage AI, digital twins, and automation to improve manufacturing efficiency and innovation.
- BMW’s new plant in Derishan operates fully virtually with AI-supported planning.
- Emphasizes open trade and partnerships over protectionism to maintain competitiveness and supply chain resilience.
- Calls for alignment of tools and timelines to ensure a socially sustainable transition.
Research & Data Insights
Amanda Kley & Crystal Papy, Politico Research & Data Analysts
- Europe leads in regulatory ambition but lags behind China and the US in industrial execution and scale.
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Key metrics:
- China has tripled auto R&D spending since 2015 and now holds over 50% of global transport patents.
- China’s EV market share rose from under 10% in 2021 to over 50% in 2024; Europe and the US remain net importers.
- Eastern Europe produces about one-third of EU passenger cars but mainly as assembly hubs, lacking R&D and intellectual property.
- EU EV market share is around 17%, with a target of over 50% by 2030.
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Challenges:
- Fragmented EU infrastructure and permitting processes slow EV adoption.
- High energy costs in Europe squeeze already slim automotive margins.
- Europe’s digitalization lags behind, with lower industrial robot density and AI adoption compared to the US.
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Supply chain risks:
- Heavy reliance on China for critical raw materials (lithium, magnesium, rare earths).
- The EU’s Critical Raw Materials Act (2024) caps reliance on any one country at 65%.
- Initiatives include 47 CRM projects across 13 member states, a circular economy act, and an EU resource plan for supply diversification.
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Digital adoption remains low: only 11% of EU enterprises use AI; the EU’s 2030 digital targets are far from achieved.
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Life Cycle Assessment (LCA) is emphasized for policy-making:
- Battery electric vehicles (BEVs) have lower lifecycle emissions than hybrids or petrol cars under ideal conditions.
- The EU plans to develop a common methodology for full vehicle lifecycle CO2 reporting by 2025.
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Conclusion: Europe’s regulatory depth is a strategic asset but must translate into industrial leadership by scaling capacity, investing strategically, and aligning climate and industrial policies.
Panel Discussion Highlights
December 10th EU Package Expectations
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Expected elements include:
- Reform of 2035 zero emission legislation.
- Battery booster package.
- Greening corporate fleets mandate.
- Industrial accelerator act with possible local content requirements.
- Regulatory streamlining omnibus proposal.
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Industry calls for a bold, courageous package that fixes the framework without U-turns.
- Emphasis on market orientation, flexibility, and demand-side measures such as infrastructure and incentives.
- Corporate fleets are electrifying slower than private cars, suggesting potential policy focus.
- Avoid reopening CO2 target debates; current targets are effective with improving battery costs and EV adoption.
Charging Infrastructure & Demand
- The sector is investing heavily in EV charging but is not yet profitable.
- Policy predictability and investor confidence are crucial.
- Infrastructure gaps remain, especially for corporate fleets and heavy vehicles.
Trade & Local Content Requirements
- Local content requirements are seen as WTO-incompatible and risky.
- Preference for coordinated EU-wide incentives based on carbon footprint rather than protectionist mandates.
- Free trade agreements are important for export opportunities (e.g., Mercosur, India, Indonesia).
Battery Sector Development
- Europe lacks significant battery production capacity and requires:
- Massive investment.
- Technology transfer and joint ventures with Chinese firms under secure conditions.
- EU-level coordinated planning beyond member state initiatives.
Plug-in Hybrid Emissions (Utility Factor Debate)
- The EU Commission wants to revise emissions calculations to reflect real-world higher combustion engine use.
- Industry resists, arguing for the need for transitional technologies and consumer acceptance.
- Data shows hybrids emit approximately 3.5 times more than official figures.
- Panelists emphasize infrastructure and behavioral incentives over regulatory tweaks.
- Consensus that the transition requires multiple technologies, not just pure EVs.
China & Global Competition
- China leads in EV production, patents, and infrastructure.
- The EU needs a unified position on trade, investment, and supply chain resilience.
- Tools to counter unfair competition and export restrictions should be WTO-compliant.
- Diversification of supply chains is critical but a long-term effort.
- Strategic partnerships and leverage with China are necessary.
Chip Shortages & Semiconductor Strategy
- Semiconductor shortages persist; automotive demand accounts for about 30-40% of EU chip use.
- The EU Chips Act 2.0 is expected to focus on resilience and diversification.
- Industry urges a pragmatic approach balancing cost, capacity, and global interdependencies.
Tech Sovereignty & Cybersecurity
- Growing concerns over reliance on foreign (especially Chinese) technology in connected vehicles and infrastructure.
- Cybersecurity and hybrid warfare risks require proportionate market access restrictions.
- Maintaining a European manufacturing base is vital for sovereignty.
Frameworks, Processes, & Playbooks Mentioned
- Life Cycle Assessment (LCA) for CO2 emissions measurement (cradle-to-grave).
- EU Critical Raw Materials Act and Circular Economy Act for supply chain resilience.
- Digital Decade 2030 targets for AI and digital adoption.
- Carbon footprint-based incentives as an alternative to local content requirements.
- Three-lane policy approach for passenger cars, light commercial vehicles, and heavy-duty vehicles.
- Joint ventures and technology transfer frameworks as strategic tools for battery and technology development.
- WTO compliance as a guiding principle for trade and industrial policy.
Key Metrics & Targets
- EV sales targets: 45% by 2030, 100% zero emission by 2035.
- Current EV market share in Europe: ~17%; target >50% by 2030.
- China’s EV sales exceed 50% by 2024.
- Battery costs expected to drop 28% by 2027.
- EU to develop lifecycle emissions reporting methodology by 2025.
- EU Critical Raw Materials reliance capped at 65% per country from 2024.
- AI adoption in EU enterprises at 11% (2024).
- Eastern Europe produces nearly one-third of EU passenger cars.
Actionable Recommendations
- Align EU industrial policy and climate goals with flexible, market-oriented regulations.
- Accelerate digital transformation and AI adoption in manufacturing.
- Scale up EV production and infrastructure with coherent EU-wide incentives.
- Develop battery production capacity via investment, joint ventures, and technology transfer.
- Avoid local content mandates; use carbon footprint and resilience criteria instead.
- Enhance supply chain diversification and strategic partnerships, especially regarding China.
- Incorporate full life cycle emissions in regulatory frameworks.
- Support corporate fleet electrification as a demand lever.
- Maintain open trade policies while protecting against unfair competition.
Presenters & Sources
- Frank Nidolanda, Vice President of Government Affairs Europe, BMW
- Amanda Kley, Research and Data Analyst, Politico Research & Data Division
- Crystal Papy, Head of Policy and Intelligence, Politico Research & Data Division
- Panelists: Sig (automotive sector representative), Lucy (charging infrastructure expert), Sarah (policy expert), Ignasio (trade expert), and others from automotive industry and EU policy circles.
This summary distills the business strategy, operational challenges, policy frameworks, and competitive dynamics shaping Europe’s automotive industry as discussed in the POLITICO Live event.
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