The European automobile industry is at a critical turning point. It faces rapid technological changes and increasing competition. I might also add that the Green Deal could potentially dismantle not just the auto industry but even more than that.
European Auto Industry Undergoing Major Changes.
When we think of car manufacturing, the first countries that come to mind are Germany, the United States, and China. Over the past fifty years, the automotive industry has undergone significant changes.
Countries with large steel reserves and high population density produce cars not only for their domestic markets but also for export. Although cars are manufactured worldwide, there are clear industry leaders as well as unexpected surprises.
European Auto Industry- Stagnation.
Millions of workers are directly and indirectly tied to the European automotive sector. It is estimated that the industry contributes one trillion euros annually to the European Union’s (EU) economy.
However, the sector is currently facing significant challenges—primarily due to technological transitions (the Green Deal) and increasing global competition. Additionally, the tariffs promised by former U.S. President Donald Trump in April on European cars present yet another blow to the industry.
The Struggles of the European Auto Industry.
The ongoing global tariff war is expected to hit Europe’s already stagnating car industry particularly hard. BMW has warned that tariffs imposed by the EU, the U.S., and China could cost the company one billion euros.
This issue extends beyond Trump’s proposed tariffs. For instance, the electric Mini Cooper is manufactured in China, and when imported to Europe, it faces a 20.7% import duty.
European car manufacturers’ attempts to cut costs domestically to maintain competitiveness face strong resistance from labor unions and politicians.
For example, Volkswagen was forced—under union pressure—to abandon plans to close three factories in Germany at the last minute. However, over the next five years, it still plans to reduce its workforce by 35,000 employees.
There is no country in the world where the automotive industry plays a more crucial role in the economy than Germany. If the German auto sector suffers, the entire country suffers. This is a fact that every German understands.
More Industry Setbacks.
Among the unfortunate cases is Audi, which closed a plant in Belgium, laying off 3,000 workers. Additionally, the once-promising Swedish battery startup Northvolt, in which Volkswagen and BMW had invested, has gone bankrupt.
The green transition will continue—that much I am certain. Of course, it would be ideal if Europe had its own battery production capacity. This is a significant issue, as relying entirely on Chinese manufacturing is not a viable long-term solution.
However, such projects must also be sustainable and profitable. In early March, the European Commission introduced a plan to rescue the European automotive industry.
This included investments in better battery development and EV charging infrastructure, along with a slight relaxation of CO₂ emission regulations.
Given the slower-than-expected adoption of electric vehicles and pressure from industry representatives, the Commission has announced targeted legislative adjustments to provide automakers with greater flexibility.
Critics have already labeled this move as an attack.
Yes, on electric vehicles, claiming it benefits only lazy automakers and China. With Europe’s delay in transitioning to zero-emission vehicles, I see only two winners.
Companies that lag behind and focus solely on short-term gains, and China, which already dominates the IT market and watches as the competition self-sabotages.
That is the current state of the European auto industry. Do you think Europe can climb out of this pit of failures?
I would like to add.
From 2035, the European Union is planning to stop selling new petrol and diesel cars. However, people will be able to continue driving their existing internal combustion engine vehicles, as well as buy and sell used cars of this type.
This is explained, for example, on the European Parliament website. “The new rules do not mean that by 2035 all cars on the road will have to be zero-emission vehicles.
These rules do not affect cars already in production,” the European Parliament’s explanation states.
Have a great day!
