The European Union pledged on Thursday to adopt an “action plan” to help the bloc’s struggling auto sector, the news came as Brussels held talks with industry leaders who have raised alarm bells over environmental tariffs and competition from China.
The European Union is under pressure to help the sector that employs over 13 million people and accounts for around seven percent of their Gross Domestic Product (GDP).
"The European automotive industry is at a crucial juncture and we recognise that it is facing challenges. That is why we are acting swiftly to address them," said EU chief Ursula von der Leyen, promising an "action plan" by early March.
The so-called "Strategic Dialogue", chaired by the president of the European Commission, brought together car manufacturers, suppliers, civil society organizations and unions.
Representatives of 22 manufacturers, including Volkswagen, BMW, Mercedes and Renault, were present, the commission said.
The meeting came as the commission pledged to make changes that help businesses, as firms complain that the bloc's focus on the environment and business ethics has created excessive regulations.
On Wednesday, Brussels unveiled a plan to revamp the bloc's economic model, amid concerns that low productivity, high energy prices, low investment and other shortcomings are leaving the EU behind the United States and China.
The auto industry has been plunged into crisis by high production costs, a troubled transition to electric vehicles (EVs) and increased competition from China.
Announcements of potential job cuts have increased. Volkswagen plans to cut 35,000 jobs across all its German plants by 2030.
Carmakers have called for "flexibility" on the high emissions tariffs they could face in 2025, tariffs that the bloc's new development plan says should be included.
"Immediately penalizing the industry, financially, is not a good idea, because the industry is in difficulty and... needs to be restructured, which will cost a lot of money," Patrick Koller, chief executive of French parts manufacturer 'Forvia', said before the meeting.
"When you look at the past, we have heavy industries that completely disappeared from Europe, due to a lack of competition."
To combat environmental changes, the EU introduced a series of targets for reducing pollutant gas emissions that should lead to the gradual removal of fuel-powered cars from the market by 2035.
Around 16 percent of the planet-warming carbon dioxide (CO2) gas released into the atmosphere in Europe comes from fuel-powered cars, the EU says.
Starting this year, carmakers must reduce the average CO2 emissions from all newly sold vehicles by 15 percent from 2021 levels, or pay a fee. Even tougher cuts are expected to be approved later, according to the Transport & Environment organization.
The idea is to encourage firms to increase production of electric, hybrid and small vehicles that sell compared to, for example, large cars (SUVs) that consume a lot of diesel.
However, some manufacturers complain that this is proving more difficult than expected, as consumers are not yet accustomed to electric vehicles, which have higher initial costs, and there is not yet a strong used vehicle market.
"We want to stick to the target... but first we can smooth the path to get there," Ms von der Leyen said on Wednesday.
Critics say that removing the tariffs would unfairly penalize manufacturers who have invested in complying with the new rules.
Electric vehicle sales fell 1.3 percent in Europe last year, accounting for 13.6 percent of all sales, according to the European Automobile Manufacturers Association (ACEA).
A senior EU official said offering subsidies to businesses to buy electric cars is one option.
The 27-nation bloc could also seek to improve its underdeveloped electric car charging network. The EU could also modernize networks to allow faster charging, lower energy costs, cut regulations and compete with China in battery production, analysts say.
Meanwhile, the number of Chinese electric cars has increased in the EU, reaching 14 percent of the market in the second quarter of 2024.
Brussels has imposed additional tariffs on imports of electric vehicles made in China of up to 35.3 percent after assessing that the state support that Beijing gives to Chinese manufacturers was unfairly weakening European manufacturers of these vehicles.
The move was opposed by Germany and other EU members and is the subject of a lawsuit by BMW, Tesla and several Chinese automakers. VOA (A2 Televizion)
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