Summary:
The article discusses the European Commission’s efforts to accelerate the electrification of the vehicle fleet in Europe, led by President Ursula von der Leyen. She aims to support the production of small, affordable electric cars by the European industry, with a target price of under €20,000. A strategic dialogue has been initiated between the Commission and the automotive industry, highlighting the gap between aspirations and reality, as European automakers face challenges in transitioning to electric vehicles (EVs) and are heavily reliant on China for their supply chains.
Von der Leyen has previously delayed stricter emissions regulations to appease automakers and announced a €1.8 billion project to boost battery production. However, concerns remain about Europe’s lag behind China in EV adoption. The article notes that the German automotive industry is pushing back against the EU’s 2035 deadline for banning new combustion engine vehicles, seeking extensions and more flexible regulations, particularly for hybrid vehicles.
The article concludes that reversing established legislation would be politically risky for the Commission, and ongoing discussions are expected to address the challenges faced by the commercial vehicle sector, which currently has a low market share of electric vans at 8.5%.
European car manufacturers have developed a situation of oligopoly through regulatory capture. This has led to a stagnation in innovation, with all 3 companies producing similar vehicles. They justify rising prices by highlighting unnecessary features like lane assist, phone connectivity, larger screens, SUV-style designs, and luxury amenities such as climate control.
In contrast, Asian manufacturers have continued to innovate, offering better vehicles at lower prices. As a result, almost everyone prefers those vehicles. Now European manufacturers have gone cry to mommy and seek assistance from the European Commission.
Apparently, free trade is only beneficial when it behests the established oligarchy. When it shows the EU’s industrial and political ineffectiveness, trade barriers are established and subsidies flow, not to those that need and deserve it, but to those that had and squandered.
Here’s an alternative: don’t reward these zombie companies and self-serving politicians for their mismanagement. Let them face the consequences of their actions and create space for new, innovative entrants.
Asian manufacturers have continued to innovate, offering better vehicles at lower prices
Some Asian manufacturers, particularly those in China, are able to offer lower car prices also due to state subsidies that are far higher than those in Europe, and not in the least to the exploitation of forced labor. There is ample evidence for this, and it is supposedly a major reason why China is opposing transparent supply chain laws.
Free trade is only beneficial when it behests the established oligarchy. When it shows the EU’s industrial and political ineffectiveness, trade barriers are established and subsidies flow
The EU has established some trade barriers against some imports from China only recently and to protect its industries from just the high Chinese subsidies mentioned above. However, even these new EU measures are literally nothing compared to the protectionist measures applied by China to shield its domestic markets from European and other foreign competition. If European companies want to run a subsidiary in China, for example, they need a Chinese partner company to form a joint venture, and the Chinese partner would then own the majority of the company; and this is just one example of Chinese protectionism. If it’s he case, it isn’t Europe but China - where wealth concentration and inequality is higher than in the EU - that considers “free trade only beneficial when it behests the established oligarchy”.
Here’s an alternative: don’t reward these zombie companies and self-serving politicians for their mismanagement. Let them face the consequences of their actions and create space for new, innovative entrants.
If BYD & Co wouldn’t benefit from Chinese subsidies and their government’s protection, the situation for Chinese carmakers would be more dire than it already is. We have seen many Chinese car manufacturers going bankrupt or halting production despite huge government support, and even China’s EV champion BYD openly said of late that the EV price war in China’s home market is ‘not sustainable’ (yet it still slashes prices),