CLEPA – Optimism and caution prevail, entering into 2021

The automotive and mobility technology suppliers have started the year 2021 with mixed feelings of optimism and caution. Optimism, because demand for vehicles and components is picking up more rapidly than expected and the appetite for new, innovative technologies is accelerating. Caution, because the scars from 2020 are deep and the level of uncertainty remains high.

in CLEPA, by Thorsten Muschal, 21-01-2021


What are the threats and opportunities for the automotive and mobility technology sector in 2021? We’ve listed five themes that will play a key role in shaping the recovery:

Click here for the full CLEPA outlook on the recovery in 2021

Thorsten Muschal, member of the management of Faurecia and CLEPA President comments on the supply industry’s outlook on the new year: “COVID-19 has hit the automotive supply industry particularly hard and the impact of the crisis will remain a major factor in the new year. Many in the supply industry, in the last months of 2020, have managed to recover a good portion of the earlier revenue losses, allowing for optimism as regards further recovery in 2021. However, uncertainty remains high given the volatility associated with the containment of the COVID-19 pandemic.

Until large parts of the population have been vaccinated, the threat keeps looming of supply chain disruptions, factory lockdowns and border closures which caused much damage during the first wave of the pandemic. As a consequence, the planning of production remains much more challenging than it usually already is in the just-in-time operations of the sector.

Planning of production remains much more challenging than usual, as illustrated by the semi-conductor shortage

An illustration of this is provided by the current shortage of semi-conductors in the automotive sector. A combination of different factors – the COVID pandemic, the trade war between China and the US, a spike in demand from the consumer electronics side and the acceleration of vehicle electrification – has added weeks of delay to already long supply chains.

This has fortified questions on the need for ‘strategic autonomy’ of the EU and localisation of supply which need to be carefully assessed in the context of global playing fields and competitiveness. The global trade environment will in any case continue being an important factor for stability.

In 2021, the risk of further employment loss remains high. Last year, over 50 thousand job cuts were announced by Tier1 suppliers alone, according to Eurofound data, matching a similar number with vehicle manufacturers. The situation among small and mid-sized enterprises is more difficult to account for but, as a rule of thumb, one job with Tier1 suppliers generally supports another two to three livelihoods down the supply chain. Smaller companies also tend to have more trouble keeping up liquidity to sustain their business.

Substantial R&I investments are crucial for the development of affordable mobility

A further major concern is presented by the cuts that many suppliers had to make in their R&D budgets in order to cope with the crisis. R&I is the main factor in ensuring that automotive products are continually improved in terms of environmental impact and social sustainability. European suppliers are at the forefront when it comes to making vehicles continuously more sustainable, smart and safe with the help of advanced powertrain solutions, connectivity and automation. Substantial R&I investments are crucial for the development of affordable mobility. Particularly in today’s time of rapid change, with the unfolding transition to a green and digital societal, the impact cannot be underestimated, and is essential for the competitiveness for our industry.

2021 will be an extremely dense year from an EU policy perspective. We expect regulatory proposals on crucial topics such as CO2 emissions, Euro 7, data use and access, artificial intelligence, and the organisation of the aftermarket. Sustainability criteria and circular economy requirements will continue to fuel policy debate as well.

For businesses and policy makers, a major challenge will be to manage the transition in an inclusive and competitive fashion. Our primary objective, as industry, is to transform the mobility of tomorrow, to up- and re-skill our workforce and to keep R&D highest on our priority lists. As part of the implementation of a renewed European industrial strategy, it will be crucial to analyse the specific needs of industrial ecosystems such as ours, to tailor political support and measure impact on competitiveness and employment—all of course within the broad policy agenda of the EU Green Deal and digital transition.

The year 2020 has been one like no other. Working together has been instrumental to cope with the many challenges and this will be no different in 2021. The COVID crisis has shown the value of standing strong, together. In this spirit, we look forward to working with our customers, stakeholders and policy makers again also in 2021, advancing sustainable mobility and a competitive industry in Europe.”

 

Thorsten Muschal is Executive Vice President of Sales and Program Management at Faurecia, and CLEPA President since 2020.

 

EU-China investment agreement is hopeful sign, but clarity on substance is critical

Europe’s automotive suppliers welcome the conclusion of negotiations between the EU and China on a Comprehensive Agreement on Investment

in CLEPA, 30-12-2020


Sigrid de Vries, CLEPA secretary general, comments: “China is our industry’s second most important investment destination and European automotive suppliers are the biggest foreign investors in the sector in China. There are growing concerns that investment and market access conditions in China are uncertain and do not reflect the openness of the European market. A deal that secures and improves reciprocity in market access and investment conditions is therefore crucial for our industry and the protection of hundred thousands of jobs across the EU and China.”

European suppliers would support a deal that eliminates hurdles for investment in so-called new energy vehicles, provides enhanced protection of intellectual property and introduces more transparency and disciplines on state aid to establish a level playing field and reduce market distortions. Lastly, the deal could provide a meaningful institutional underpinning for cooperation between the EU and China to achieve climate neutrality and address human rights concerns.

CLEPA wants to acknowledge the efforts on both sides over the past seven years to come to an agreement. De Vries: “With the political decision to conclude negotiations being taken, it is now critical that the European Commission engages with all stakeholders to provide more clarity on the substance of the agreement. European suppliers currently lack sufficient detail on the Comprehensive Agreement on Investment to assess whether the sector’s concerns are sufficiently addressed. CLEPA is ready to scrutinise the agreement in principle and contribute to the next steps.”

 

Automotive suppliers comment on the EU-UK trade deal

The European Association of Automotive Suppliers, CLEPA, welcomes the Christmas trade agreement between the EU and UK and thanks all parties involved for their commitment to getting a deal agreed. This deal represents the starting point to ensure the continuation of the cooperation for both sides.

in CLEPA, 24-12-2020


Sigrid de Vries, CLEPA Secretary General, commented: “This deal avoids what would have been a worst-case scenario for European suppliers and the many jobs depending on the EU-UK trade relationship. Businesses and customs authorities now need The European Association of Automotive Suppliers, CLEPA, welcomes the Christmas trade agreement between the EU to work around the clock to get ready for the new trading conditions only one week before its implementation. We ask policy makers to engage with us to ensure trade in components is not needlessly being hit by tariffs and to avoid disruption at the border.”

CLEPA will analyse the technical details of the deal as soon as all the material is published to assess the extent into which this deal will serve the interests of the highly integrated EU/UK automotive supply chain, and refrain from commenting on the substance of the deal before then. Already certain is though that the deal will not avoid the resurrection of many trade barriers. We will therefore continue to work constructively with our partners in the EU and the UK to ensure that this free trade agreement proves a first building block rather than an end point.

 


 

About CLEPA

CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3.000 companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative technology for safe, smart and sustainable mobility, investing over 30 billion euros yearly in research and development. Automotive suppliers in Europe employ about five million people across the continent.

 

Keeping mobility affordable will become a crucial question

People cherish the freedom, comfort, and safety of their cars, and more goods than ever are being delivered to our doorsteps each and every day. COVID-19 has, apart from the pressure it’s been showing on the planet’s ecosystem, also firmly underlined the role transport plays in keeping society running. Europe’s ‘sustainable and smart mobility strategy’, published yesterday, acknowledges this. But the jury remains out on whether the right balance has been struck between the economy and the environment.

in CLEPA, by Sigrid de Vries, 10-12-2020


The strategy lists over 80 actions in 10 categories, announcing a ‘new type of mobility’: affordable, accessible in both cities and rural areas, clean, climate proof, comfortable, and efficient. Cars will still have a role to play and trucks will still be needed, underlined both Climate Commissioner Timmermans and Transport Commissioner Valean. But logistics will become smarter, freight will find its way increasingly to rail, and cars will be less dominant on the roads. Of those driving around, 30 million – which is ten percent – will be electric by 2030, the strategy proclaims.

No doubt, the EU needs to have a strong vision on the future of transport. The strategy rightly promotes a holistic view on the sustainable transport and mobility needs of society and the impact of policy measures on people’s lives and livelihoods. Valean highlighted the magnitude of transport – Europeans travelled some 6,000 billion kilometres in 2019 – citing that mobility is often the second largest expenditure in a household.

No doubt, the EU needs to have a strong vision on the future of transport

But the mantra ‘no one should be left behind’ needs considerably more elaboration in all of the EU’s policy proposals. How to actually keep our mobility affordable is set to become a crucial question in the years to come. The ‘just transition’ needs some legs to stand on as well. Regarding the impact of the green transition on employment, it does not suffice to simply state that electrification creates new jobs. It does, but it also costs jobs. This is where the need for a well-managed transition comes in.

“The car industry will flourish in Europe”, said Timmermans, emphasising the word ‘will’. CLEPA stresses, in response, that this statement needs to be more than wishful thinking. The industry transformation is underway, heavy investments are made, the technology options are clear. But the policy measures announced so far do not take industrial considerations into account much.

Yesterday’s strategy used the opportunity to beat the by-now-familiar Green Deal drums: the technology solution favoured by policy makers is electric.

Yes, so the strategy upholds: maintaining technology-neutrality across all modes is key – to then state that this should not lead to inaction on eliminating fossil fuel-based solutions. With the need to respect the principle of technology-neutrality, electricity and hydrogen are seen as the most promising options, so the paper posits.

Hence, by June 2021, the Commission will be revising its CO2 standards for cars and vans in order to ensure a clear pathway from 2025 onwards towards ‘zero-emission mobility’. The Commission will do the same for heavy duty vehicles in 2022.

The term zero-emission mobility continues to be the preferred one, although it disregards the carbon emissions during energy generation, as well as vehicle and battery production. ‘Zero-emission’ is now also applied when discussing policy for pollutant emissions, or ‘euro 7’ in technical policy speak, mixing up distinct regulations with a single stroke of the pen.

The policy measures announced so far do not take industrial considerations into account much

This, in fact, is the kind of detail that matters a great deal and ultimately translates into engineering targets, product portfolios, and the extent to which jobs will be maintained, relocated, or transformed.

CLEPA responded to the publication yesterday with its own messages once more. A manageable transition, for the climate, industry, and employment rests on competitive technologies such as the internal combustion engine, plug-in hybrids, fuel cell, and battery electric vehicles. Climate-neutral internal combustion with fuels from sustainable renewable sources is a viable option as part of the overall mix of solutions.

Only a transformation that is industrially successful and socially accepted can be sustainable politically and achieve the climate neutrality objective. A strategy built exclusively on battery and fuel cell electric vehicles contradicts the principle of technology openness and will neither achieve carbon neutrality nor support European competitiveness.

Automotive suppliers fully support the Paris agreement and the objective of achieving climate neutrality by 2050. The industry is also the one providing the technology solutions that will ultimately allow these goals to be realised. We will now scrutinise the communication in all its detail, and contribute to the detailed design of the rules, regulations, and definitions shaping the path forward.

In the meantime, we wish you a safe and healthy turn of the year!

Sigrid de Vries

CLEPA Secretary General

 

A manageable transition to climate neutrality rests on competitive technologies

Sigrid de Vries, Secretary General of CLEPA comments on the Strategy for Sustainable and Smart Mobility, adopted today by the European Commission:

in CLEPA, 09-12-2020


“A manageable transition, for the climate, industry and employment, rests on competitive technologies such as the internal combustion engine, plug-in hybrids, fuel cell and battery electric vehicles. Only a transformation that is industrially successful and socially accepted can be sustainable politically and achieve the climate neutrality objective. A strategy that builds exclusively on battery and fuel cell electric vehicles contradicts the principle of technology openness and will neither achieve carbon neutrality nor support European competitiveness.”

The automotive suppliers in Europe, associated in CLEPA, support the Paris Agreement and the objective of climate neutrality for 2050. They are convinced that the way to climate neutrality is through a technology open environment that balances environmental, social as well as economic goals.

De Vries: “The question is not if, but how to best achieve climate neutrality. Climate policy must strive for effectiveness and efficiency in order to achieve the objective at a minimum cost to society. We underline, that an approach taking life-cycle or well-to-wheel emissions into account will create incentives for all technologies to reduce emissions and increase efficiency.”

CLEPA welcomes the Commission’s work on exploring an approach, including impact assessment, that takes into account the potential contribution of fuels from sustainable renewable sources including the option of a voluntary crediting mechanism. It is positive that the Commission considers increasing targets for renewable energy and sustainable renewable fuels in the Renewable Energy Directive (RED II) to ramp up their development and deployment.

De Vries: “Climate-neutral internal combustion with fuels from sustainable renewable sources is a viable option. Supplying renewable energy and fuels for mobility along with the necessary infrastructure must be a priority for policy makers, including for road transport and not limited to other sectors. It is positive that the Communication recognises this, and we are keen on working further on the rules and conditions to make deployment of renewable energy and sustainable fuels from renewable sources a success. The targets of 3 million public charging points by 2030 and 500 hydrogen stations by 2025 are welcome. But the need will by far exceed these numbers, specifically if the CO2 emission targets for vehicles for the year 2030 were to be made tougher.”

CLEPA stands ready to contribute to the detailed design of the rules, regulations and definitions shaping the path ahead. For one, it will be important to keep the clear distinction between pollutant emissions and carbon emissions and to maintain the focus of the respective regulations.

CLEPA welcomes the Commission’s objective of designing a clear framework for artificial intelligence (AI).  “Artificial intelligence is a key enabler for the automotive industry’s digital transformation. AI can also contribute to reducing the impact of transport on the environment, and significantly improve road safety”, says De Vries.

CLEPA supports a horizontal AI legislation addressing only high-risk AI applications and ensuring a level playing field for all actors. These principles can be complemented with technical requirements in sector-specific regulations (either new or by modifying existing legislation), if deemed necessary.

Availability and access to data from connected vehicles is still often hampered, as the strategy correctly points out. A European Common Mobility Data Space is welcome in principle but further details on the design and objectives are required to assess its added value.

CLEPA welcomes the objective of automated mobility being deployed on a large scale by 2030 and calls on the European Commission to speed up processes to create a harmonised EU legal approach for highly-automated applications as a precondition for reaching this goal.

 

 

Stakeholders’ joint letter: Sustainable renewable fuels should be included in the EU mobility legislation

ON 30 NOVEMBER 2020, CLEPA TOGETHER WITH 38 ASSOCIATIONS AND COMPANIES, COLLABORATIVELY SIGNED AND SENT A LETTER, CALLING ON THE EUROPEAN COMMISSION TO INCLUDE SUSTAINABLE RENEWABLE FUELS IN EU MOBILITY LEGISLATION.

The signatories of this joint letter represent a crucial part of the automotive, fuel, energy industry and civil society in Europe, i.e. a combined force behind the transformation of EU mobility towards climate neutrality in a smart and sustainable way.

The European Union has set itself the ambitious objective of becoming climate neutral by 2050 and consequently raised its 2030 climate target. Whether the objective will be achieved and what impact this will have on EU competitiveness and employment strongly depends on the design of a suite of climate policies for the coming years. Transport and future mobility will be a central element of these policies. The EU’s long-term climate strategy cannot rely solely on the development of new technologies and infrastructures; it must embrace a diverse portfolio of solutions in parallel, including existing sustainable renewable liquid and gaseous fuel solutions that can reduce greenhouse gases starting today.

Against this ambition, the EU Commission will outline the Sustainable and Smart Mobility Strategy and revise important mobility and energy legislations, such as CO2 emissions standard for cars, vans and also heavy-duty vehicles. These upcoming revisions are the timely opportunity to implement a truly technology neutral approach by including the contribution to emissions reduction achieved using sustainable renewable fuels.

This recommendation aligns with the following principles, crucial to achieve a carbon neutral road transport sector in Europe:

  • Technology and fuel diversity towards 2050 – With increased climate targets there is added urgency for transport to accelerate its path towards net-zero emissions. To facilitate this acceleration, a broad portfolio of solutions is necessary to support the full spectrum of geographic, economic and vocational market demands. Considering the lack of a “one-size-fits-all solution”, it is imperative that all low carbon options, including alternative and renewable fuels, play a role in the energy transition not only on the existing fleet but also for new vehicles to curb the GHG emissions from the road transport sector across all the EU countries.
  • Coupling the efforts for the expansion of the sustainable renewable fuels market with further improvement of vehicle efficiency – Despite gains in fuel efficiency, increased demand for personal mobility and freight transport have led to increased CO2 emissions from road transport. It is necessary to leverage all available solutions to reverse this trend and accelerate the decarbonisation of the sector. Accelerating the production of sustainable renewable fuels, accompanied by continued development of a range of new vehicles optimised for these fuels, can have a climate-positive impact today via the existing and future vehicle fleet for both passenger cars and heavy-duty vehicles.
  • Enabling a competitive, sustainable market till 2050 – Many publications have shown that relying on full electrification alone will not result in climate neutrality in 2050. Products and solutions need to be placed according to their mission profile, where they are more necessary and accommodating the market demand. Conventional fuels and engine technologies provide a stream of revenues for vehicle manufacturers that can continuously be invested into alternative powertrains and solutions, according to the mission segment. As global players, vehicle manufacturers will maintain a central role in delivering innovative products, also in other parts of the world.
  • Integrating a growing rate of renewables in the market to practice the circular economy while seizing industrial opportunities – Sustainable renewable fuels technologies offer sectorial integration with the waste management and the agricultural sectors. This enables a clever approach to treat waste materials, which would have otherwise been disposed with the consequent emissions, while producing sustainable energy and, at the same time, high quality by-products like bio-fertiliser. This is a landmark example of circular economy targeting emissions in agriculture and waste. At the same time, the production of sustainable renewable fuel technologies involves a long value-chain, from renewable energy systems to components, taking place mostly in Europe. Sustainable renewable fuels value chain can contribute to create many new jobs and to maintain industrial leadership, while strengthening the cooperation with third-countries on innovative energy projects to speed up the energy transition.
  • System affordability – It is key to avert mobility poverty and to avoid a two-speed Europe while heading towards a carbon neutral mobility system. Being based on proven engine technologies and an already structured distribution network, sustainable renewable fuels are the most cost-efficient way to contribute to the decarbonisation process at the lowest possible cost to society. Besides the cost in relation to emission reductions, it is important to consider the impact on industrial competitiveness, innovation, affordability, and employment to ensure a fair transition for all European citizens.

Our industries are ready to contribute to a technology-open, ambitious but pragmatic regulatory framework to drive the decarbonisation of EU road transport.

 

Read the full letter here

 

 

Record number of award entries confirms critical importance of technology leadership in challenging times

  • Aptiv, BorgWarner, Continental, and Valeo emerge as winners of the 2020 edition of the CLEPA Innovation Awards
  • The SME Special Prize recognises Automotus, Chargetrip, e-troFit, Robby Moto Engineering, and Vayyar as winners
  • European automotive suppliers invest more than €30 billion in R&D annually

in CLEPA, 25-11-2020


In a year of unprecedented circumstances, the CLEPA Innovation Awards was equally unprecedented, breaking records in terms of the number of applications, participation rate, and number of countries of origin. The takeaway is clear: Innovation is a top priority for the automotive industry, and suppliers are delivering the solutions for the mobility of the future.

Organised by CLEPA, the European association of automotive suppliers, the Innovation Awards has become a leading contest in the mobility ecosystem, showcasing solutions that are driving the digital, carbon-neutral transformation of the automotive sector. These projects come from teams with extensive backgrounds in research and innovation, and from a broad variety of companies, considering the breadth of the industry.

The innovation technologies are grouped by four distinct categories: Connectivity and Automation, Cooperation, Environment and Safety. For each of these categories, the jury assessed the innovations taking into account their level of market relevance, impact, quality, and ambition, in order to select the finalists and winners.

SMEs take central role in developing technologies for smart mobility  

The competition, in its fifth edition, attracted regional and multinational companies alike, as well as small and medium-sized companies and startups from all over the world. For the third time, a special prize was awarded in each category to SMEs, acknowledging the important contribution they bring to the industry’s resourcefulness, ingenuity, and competitiveness.

This year, the long list of innovations presented by SMEs have one point in common, namely the advancements they are making towards digitalisation. Almost all the SME’s applications, across all four categories, incorporated some form of smart mobility solution.

The nominees in the fields of Connectivity and Automation, Cooperation, Environment, and Safety were announced during the CLEPA Innovation Week, from 19 to 24 November. These dedicated days highlighted the relevance of mobility technology in all categories, culminating with the CLEPA Innovation Awards online ceremony on 25 November.

Supporting research & innovation is key to EU’s recovery

CLEPA President Thorsten Muschal and CLEPA Secretary General Sigrid de Vries led the conversation with mobility experts and representatives from the winning companies during the online gala.

“I am really proud to see the many examples of excellence shown today. The record number of award entries confirms the critical importance of technology leadership in these challenging times. To strengthen Europe’s competitiveness, the European Union should maximise the support for pre-competitive research, be it through the budget for ‘Horizon Europe’, the funds for public procurement, or the financing tools of the European Investment Bank”, said President Thorsten Muschal.

“COVID-19 is accelerating the change in the automotive industry towards green and digital, but companies need to be capable of investing: this is where the impact of the pandemic poses the biggest challenge. European policy makers can make a difference: the regulatory framework must be technology-open and reward innovation”, said Secretary General Sigrid de Vries during the closing of the virtual conference.

Harald Proff, Deloitte Global Automotive Sector Leader, added during his intervention: “With less growth, innovation becomes even more important. Due to the corona pandemic and the strong transformational changes, suppliers are facing great uncertainty. The CLEPA Innovation Awards play an important role in recognising outstanding achievements in the supplier industry and making those visible.” Deloitte has been supporting the CLEPA Innovation Awards from its inception five years ago.

Society reaps the benefits from innovation

Among the awarded innovations, clear examples of societal benefit can be found across the spectrum. For many technologies, the focus lies on making vehicles more connected and more automated. From an application that converts vehicles into digitals hubs to a system that allows 3D experiences to enrich its users’ driving experience with information, navigation support, and entertainment, paving the way to the autonomous vehicle.

Cooperation among different partners, bringing together different levels and areas of expertise, leads to clear benefits for both suppliers and OEMs as well as the end user. Many of the submitted innovation technologies are a direct result of cooperative partnerships, further illustrating the value of cooperation in the industry.

Much work is also being done within the sector to push forward with technologies that meet environmental demands. Technologies which improve vehicle´s efficiency, range, and consumption, leading to lower emissions are at the forefront of research developments.

Lastly, safety applications are using the technology excellence of suppliers to remove road hazards and prevent accidents. Developments in lighting, camera and sensor technology, are all contributing to the reaching the ultimate objective of having zero casualties in traffic.

  • Leading competition returns in 2021

The CLEPA Innovation Awards, which will take place once more in 2021, is open to any and all companies that are contributing to the advancement of mobility with their technology. Next year’s award ceremony will take place on 26 October 2021.

The results of the 2020 edition are:

Connectivity & Automation

  • WINNER: Aptiv, Infotainment Compute Platform
  • 2nd PRIZE: Lear Corporation, Xevo Market
  • 3rd PRIZE: Continental, Natural 3D Display
  • SME WINNER: Chargetrip, EV Routing API
  • SME 2nd PRIZE: Ekkono, Virtual Sensors
  • SMEs 3rd PRIZE: Blickfeld, 3D Light Detection & Ranging System

Cooperation

  • WINNER: Continental, Body High-Performance Computer
  • 2nd PRIZE: Plastic Omnium, SmartFACE
  • 3rd PRIZE: Adient, Floating Seat
  • SME WINNER: e-troFit, Electrification Kit
  • SME 2nd PRIZE (ex aequo): DeGould, Auto-scan
  • SME 2nd PRIZE (ex aequo): Deltaray, Accelerated 3D X Ray Inspection

Environment

  • WINNER: BorgWarner, Cooled SiC Inverter
  • 2nd PRIZE: Valeo, 48V eAccess
  • 3rd PRIZE: ZF, eTrailer
  • SME WINNER: (ex aequo): Automotus
  • SME WINNER (ex aequo): Robby Moto Engineering, Range Extender
  • SME 2nd PRIZE: AutoDAP, Precise Vehicle Identification System

Safety

  • WINNER: Valeo, PictureBeam Monolithic
  • 2nd PRIZE: Vision Systems, Smart-Vision
  • 3rd PRIZE: Xperi, In-cabin Sensing
  • SME WINNER: Vayyar, Imaging Radar for Automotive Safety Applications
  • SME 2nd PRIZE: TriEye, CMOS-Based SWIR Camera
  • SME 3rd PRIZE: EasyRain, Aquaplaning Intelligent Solution

Discover all the benefits of these applications and learn more about the underlying technologies in the explanatory videos and the Innovation Awards finalists’ catalogue.

 

Final stretch of 2021 to remain bumpy, industry sentiment slightly improved

2020 has been an incredibly challenging year for the world, and the remaining weeks will not change that picture. The fall-out from the US elections, the cliff-edge scenario posed by a no-deal Brexit, the second wave of COVID infections and the related restrictions to economic activity to help contain the spread, and renewed incidents of fundamentalist attacks on human and democratic values: all of these ask for leadership and clear directions to strengthen the resilience of our society.

in CLEPA, by Sigrid de Vries, 12-11-2020


Relations between Europe and the USA are expected to improve with President-elect Joe Biden taking office in 2021, but Donald Trump still has some 70 days to cause tension on the international scene, whether by his own actions or by others misusing the void in direction and diplomacy for their own interests. This may contribute to further uncertainty in the global economic outlook.

In the meantime, businesses will try to understand the future President’s intentions in the areas of global trade and climate policy. The return of the US to the Paris Agreement on climate would be welcome, but same as for the EU, the question for the US will be in how to achieve the ambitions: technology openness and coherent policies for energy efficiency and energy carriers across all sectors will be crucial.

Brexit exposes 90% of automotive suppliers to risks

The talks between the EU and the UK to secure an orderly exit by the end of the year are in their final stages, and time has already run out to secure the best-possible preparations. The heavily integrated automotive industry on both sides of the channel continues to advocate for transition arrangements to enable all stakeholders to implement a last minute deal, and realistic local content requirements to ensure that trade between EU and UK is not needlessly hit by tariffs.

The most recent CLEPA business barometer shows that 90% of automotive suppliers are exposed to risks from Brexit. Only 50% however, have a detailed risk mitigation plan in place – due to a lack of clarity on what exactly to prepare for. High costs stemming from customs processing are seen as the biggest headache.

COVID-19 is accelerating the fundamental transformation of our society to green and digital, as well as adding high economic stress.

It is promising to see that the second wave of COVID-containment measures seems to be having an effect. Like before, effective and coordinated policy response remains essential: a response that ensures public health and minimises the impact on the economy in the longer term. Nevertheless, the measures will again depress overall economic and consumer sentiment.

Borders, factories, and dealerships should remain open

How can public authorities help companies retain their employees and secure the economic contribution that the industry provides to society?

Over the past few months, many companies have been allocating resources to ensure the safety of their employees, in line with public health guidelines. That is why we ask public authorities to avoid the closure of factories as much as possible.

EU Member States should also maintain the central information exchange on border measures set up by the Commission, to enable the continued flow of goods, but also cross-border commuting and necessary travel. The automotive supply chain is highly integrated, and preventing one single piece from moving countries, can stop production for weeks.

To avoid another devastating drop in demand, all dealerships and motor vehicle workshops should remain open as much as possible as well. This will also ensure that public services and consumers can access repair and maintenance services as needed.

51% of suppliers expect their revenue to continue to fall over the next 12 months

The impact of the COVID crisis on the automotive industry has already been severe. Since March, a loss of over 100 thousand jobs has been announced, half of which of suppliers.

In this context, the Skills Pact launched by the European Commission this week is a timely action, with the potential to make a real difference for economic recovery as well as in managing the twin transition to digital and green mobility. The automotive sector is one of the three first sectors to engage in the Pact, and CLEPA has been actively contributing since its conception.

To gain a deeper understanding of the business sentiment in our industry, we regularly conduct the CLEPA Pulse Check with the support of McKinsey. The latest edition shows that 51% of suppliers expect their revenue to continue to fall over the next 12 months.

On the upside: 73% of suppliers anticipate being profitable again in 2021 due to market recovery and drastic cost-saving measures which will start to bear fruit. The pressure on jobs and investment capacity however remains considerable as industry restructuring continues to play a significant role. The slimming down of research & development and production facilities is expected to remain an important feature of crisis recovery.

A further important result of the survey: Over 60% of automotive suppliers are accelerating the change in their product portfolio to shape the automotive transformation, drive the move to green and digital mobility, and make the most of the many opportunities while managing the many challenges.

The EU should leverage all instruments at its disposal to support research and innovation

CLEPA underlines the need for an honest debate about the effects of policy decisions via an open dialogue. The key question remains not if, but how to achieve the many societal objectives, securing innovation, manufacturing and employment in Europe as well as reaching the climate and digital goals. International supply chains and cooperation remain essential as well.

Are we optimistic in this last stretch to 2021, in times of Brexit, heavy pressure on globalisation, a strong, assertive China, and a health crisis that will not recede for some time to come?

We have to be. Europe is home to advanced technology competence, a skilled workforce and a strategic, high value industrial base. The automotive industry is crucial for the economic fabric of Europe. The sector is vast, innovative, with long value chains and strong eco-systems.

To underpin Europe’s long-term competitiveness, the EU should leverage all instruments at its disposal to support research and innovation. This includes the EU budgets for Horizon Europe, public procurement and financing tools from the European Investment Bank. Rules-based trade, high-standards and a focus on innovation are no hollow phrases. They cannot be.

This is a crucial moment to discuss forward-looking strategies related to society, mobility and industry. And we invite everyone to take active part in this discussion.

Sigrid de Vries, CLEPA Secretary General

 

Accelerated sector transformation ups pressure on policy makers

An overview compiled by CLEPA of announced job cuts by automotive suppliers and vehicle manufacturers since March, when the COVID-19 crisis hit Europe, indicates that some 100,000 jobs in the automotive sector will be lost in the coming year, of which 49,500 to automotive suppliers. This illustrates how the COVID crisis has accelerated the change in the automotive sector, which ups the pressure on policy makers to find the right approach to managing the green and digital transformation.

in CLEPA, by Sigrid de Vries, 07-10-2020


In addition to cuts to its workforce, industry is also being required to reduce investment in R&D, further impairing the ability to shape the change and achieve the climate and digital goals. This is a real problem because the global leadership of the sector role depends on innovative technologies and manufacturing excellence.

 

100,000 automotive jobs to be lost within the coming year

The CLEPA overview is based on public announcements made by companies across Europe. The actual numbers are likely higher, especially given that in the supply sector, many smaller announcements do not make the national press coverage. In addition, many in the sector are still benefiting from the various government programmes for temporary or ‘technical’ unemployment, indicating levels of hidden unemployment that may well become visible in official figures sooner rather than later. As an illustration, in Germany, 24% of automotive industry employees are still relying on the state’s wage support scheme, with the automotive industry ranking second after the metal industry.

Market watchers are increasingly speaking of a double dip for the European economy, as recovery continues to lose steam. The first survey and mobility data for September shows that weakness in the service sector is leading to a stagnation of the economic recovery, led by a contraction of ‘business-to-consumer’ sectors post-summer holidays.? A double dip could hit suppliers hard. Recent publications by financial analyst and management consultancies suggest that some automotive suppliers may be better positioned than others, with liquidity issues highlighted as the main concern.

Automotive suppliers in Europe employ about 1.7 million people directly, in addition to the 1.2 million employed by vehicle manufacturers. Supplier jobs add up to about 5 million when taking the longer value chain into account. The steel industry, for example, delivers 18% of its output to the automotive industry.

A recent study from the Boston Consulting Group suggests that the long-term employment impact of electrification could be mitigated if Europe manages to safeguard European battery cell production, and suppliers succeed in reskilling their workforce. In the process, we may see a shift of part of the supply chain to Central and Eastern Europe. The share of component production expressed in total labour hours will fall from 54% ICE (internal combustion engine) to 47% BEV (battery electric vehicles). Suppliers may be able to capture ground from vehicle manufacturers in the field of integrated electric engine systems. A summary is available here.

 

High dependency on powertrain manufacturing for European automotive employment, revenues, and innovation capacity

It is worth noting however, that about 30% of the value of a car is in the powertrain, and that there is a clear dominance of suppliers in this part of the overall vehicle assembly. In other words, large shares of the employment, revenues and innovation capacity in Europe rely on powertrain manufacturing. This is why managing the transition responsibly is so crucial.

The market for electric and hybrid vehicles is growing fast, but is still low as a proportion of total manufacturing. The CLEPA overview shows that since March 2.500 jobs were created in this field, in line with the direction of travel but in stark contrast to the overall numbers that need to be managed.

The EU Green Deal strategy, designed to decarbonise the EU economy towards 2050, aims to make the EU’s economy sustainable, turn climate and environmental challenges into opportunities, and ensure a transition that is just and inclusive for all. To date, we’ve heard a lot of further talk about setting ambition levels: European Commission President Von der Leyen has proposed lifting the overall EU carbon-reduction target for 2030 to 55% instead of the current 40. The European Parliament, this week, voted for 60%. The Council of Member States is expected to make its decision later this month. The Commission´s impact assessment argues that the automotive industry would have to face a tougher vehicle target for 2030 of 50%, up from 37.5%, when compared to the 2021 targets, and that a ban on the combustion engine is to be considered.

In our view, it’s time to focus on the needed action. The key question remains not if, but how to achieve the climate objectives, as well as secure innovation, manufacturing, and employment in Europe. The challenge we face – as automotive industry and society – is to manage the transition to safe, smart and sustainable mobility in an ambitious, realistic, and inclusive way.

Automotive suppliers are providing the technology solutions that will help realise the ultimate goals. But the current legislative approach, setting tailpipe-only targets that drive all efforts towards just one type of solution, electrification, is not the fittest for purpose. Yes, the Commission is setting important directions with increased attention for a full battery supply chain in Europe, a hydrogen strategy and partnerships for R&D funding. CLEPA also welcomes the launch of a dedicated Pact for Skills for the automotive sector to support the massive re- and upskilling effort that industry is undertaking.

 

Scale of automotive sector transformation requires integrated and technology-open policy approach

But the scale of transformation in the automotive sector, affecting millions of livelihoods, needs a far more integrated and technology-open policy approach. The world will need the full spectrum of technologies and energy carriers to achieve this objective. This includes battery electric vehicles, various degrees of hybridisation – from mild to plug-in, and fuel cells – and correspondingly low and zero carbon fuel, hydrogen and renewable energy. Thus, not only new vehicles, but also carbon emissions from the existing fleet can be covered.

In this light, Executive Vice President Timmermans’ intervention in the Environment Committee the other week, where he said to be opposed to a ban on internal combustion engine vehicles, is positive. Let’s now work to change the regulatory approach, to make sure carbon-free combustion counts towards reaching the goals as well.

We are, to put it bluntly, worried that the transformation will turn into a disruption. That the sector’s capacity to innovate, invest, and maintain employment will be crippled. This is why we make the case for an ambitious, as well as reliable, and technology-neutral regulatory framework to achieve its objectives.

 

Sigrid de Vries

CLEPA Secretary General

Joint call for a new Pact for Skills for automotive sector

CLEPA, together with its partners in EU-projects DRIVES and ALBATTS, presents a joint strategy to roll out a dedicated Pact for the sector

in CLEPA, 15-10-2020


The EU automotive sector is calling for a strategy that supports the recovery prioritising the up/reskilling of the workforce to maximise the industry competitiveness, job retention, and creation of new employment opportunities. Bringing forward the need for a sectorial pact for skills, this proposal is the result of an exhaustive cooperation and examination effort through the DRIVES and ALBATTS projects, and of several representatives from the whole automotive value chain, presenting a solid roadmap towards the necessary skills-transformation for the sector.

The paper is conceived as a roadmap for the whole automotive ecosystem and is open to the contributions of other stakeholders. It includes a clear action plan for the automotive sector to support the ongoing transformation towards a carbon-neutral and digitalised society, while reinforcing a smart and effective recovery strategy coming out of the COVID-19 crisis. For this, the signatories call for an open public and private partnership to support the automotive ecosystem during its transformation, while moving forward thanks to the combination of public and private funding.

This proposal further broadens the outcomes of the DRIVES project, funded by Erasmus+, which provides key inputs to the future work of the partnership, such as initial ecosystem intelligence, skills mapping, basic principles of the EU skills Framework in the automotive sector or a dedicated database of industry players, education providers and other relevant stakeholders.

Furthermore, the initiative also builds upon the recent exchange during the High-Level Roundtable on skills for the Automotive Sector celebrated on 23 September, hosted by European Commissioners Nicolas Schmit, (Jobs and Social Rights) and Thierry Breton (Internal Market, Industry, Entrepreneurship and SMEs). The text contains input from the fruitful exchange of a wide representation of parties participating in this meeting, including industry, academia, trade unions and employers’ associations, participated by CLEPA Secretary General Sigrid de Vries. The discussion focused on the current challenges that the automotive industry is facing in terms of skills shortage and how to best support the shift towards low and zero-emission mobility and digitalisation/automation.

These issues, along with other topics relevant for the future of the automotive workforce, are described in this joint paper.

 

READ THE JOINT PAPER