On March 5, the European Commission is set to unveil the findings of its strategic dialogue on the future of the European automotive industry, a sector under immense pressure. Launched at the end of January, this initiative aims to shape an action plan supporting an industry that directly and indirectly employs 13 million people and generates over €1 trillion annually—equivalent to 7% of the EU’s GDP.
As the EU pushes towards its 2050 net-zero climate goal, the automotive sector is at the heart of this transformation. Reducing emissions from passenger cars is a critical element, requiring a shift away from combustion engines, a push for alternative fuels, and widespread adoption of battery-electric vehicles. However, audits from the European Court of Auditors (ECA) paint a concerning picture: efforts to cut emissions have largely failed, alternative fuels remain unviable at scale, and the transition to electric vehicles could prove costly for both the industry and consumers.
A report published in January 2023 revealed that, before 2020, CO2 emissions from passenger cars decreased only in laboratory conditions. More rigorous testing methods have since narrowed the gap between lab results and real-world performance, yet actual on-road emissions have barely improved. Gains from more efficient engines have been countered by heavier vehicles—on average 10% heavier than before—leading to an increased need for engine power, up by approximately 25%.
Alternative fuels like hydrogen and e-fuels are often cited as potential replacements for petrol and diesel. However, a December 2023 ECA audit on biofuels found them neither credible nor reliable for large-scale adoption, due to limited availability, high production costs, and environmental concerns.
The EU’s push towards electric vehicles is encountering significant roadblocks. A June 2023 audit highlighted that Europe’s battery industry lags behind global competitors, leaving the region heavily dependent on non-EU battery and vehicle manufacturers. If this trend continues, the EU’s goal of a fully zero-emission fleet by 2035 may come at the cost of its own automotive industry and workforce.
