Europe’s carmakers face a dire future as Chinese rivals dominate the electric vehicle market. Experts call for urgent innovation to save the sector.
The European Union’s automotive industry, once a global leader, is teetering on the edge of irrelevance as it struggles to compete with China’s rapid advancements in electric vehicle (EV) technology. Industry insiders and policymakers warn that without immediate action, Europe risks losing its foothold in the global market, jeopardizing the livelihoods of nearly 14 million workers across the continent.
“We need to shift from a defensive mindset to one that embraces innovation,” said Frank Niederländer, BMW’s vice president of government affairs Europe, at a recent POLITICO working group. “If we don’t, the European car industry will face an irreversible decline.”
A Growing Crisis
China’s dominance in EV technology and batteries has left European automakers scrambling. Swedish battery company Northvolt, once a beacon of hope for European innovation, recently filed for Chapter 11 bankruptcy in the U.S. after automakers like BMW pulled out of contracts due to slowing EV sales.
“This is akin to watching the Titanic sink while doing nothing,” said Julia Poliscanova, vehicle director at Transport & Environment. She criticized the EU and national governments for failing to support startups like Northvolt, which were supposed to provide alternatives to Asian battery suppliers.
Lessons from China
In a bid to catch up, Europe is considering adopting China’s joint venture model, where foreign companies share technology in exchange for market access. However, geopolitical tensions, such as the U.S. ban on Chinese software in vehicles and the EU’s potential data safeguards, complicate such partnerships.
“What partners will be accepted in the market?” Niederländer asked, emphasizing the risks of aligning with Chinese firms while maintaining security and sovereignty.
The Path Forward
Policymakers are urging the EU to take bold steps, such as using its €1.2 trillion seven-year budget to invest in critical supply chains and green technologies. French MEP Thomas Pellerin-Carlin stressed the need for Europe to prepare for global political volatility, particularly in light of Donald Trump’s “America First” policies and China’s ambitions in Taiwan.
The EU could also draw inspiration from the U.S. Inflation Reduction Act, which has sparked a wave of EV and battery investments stateside. “Europe needs to create a similar dynamic to avoid falling further behind,” Niederländer said.
To revive its automotive sector, Europe must shift its focus from overregulation to implementing existing climate targets while fostering innovation. Experts agree that the bloc’s economic future depends on whether it can rise to meet these challenges and reassert itself as a leader in the global auto industry.