Categoria: CLEPA

CLEPA – European Association of Automotive Suppliers

CO2 standards: CLEPA urges policymakers to embrace technology diversity for a successful mobility transition

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As the European Council prepares to finalise its position on CO2 standards for cars and vans, CLEPA, the European Association of Automotive Suppliers, reaffirms its commitment to a balanced and technology-open approach that promotes affordable and sustainable mobility solutions with a real-world impact while supporting the competitiveness of the automotive supply industry.

in CLEPA, 24-03-2023

CLEPA Secretary General, Benjamin Krieger, states “Mobility is an essential part of our daily lives, and we need to find a way to reduce emissions without compromising affordability, jobs, the ability to innovate, and EU competitiveness. No one is questioning the green mobility transition, but parallel and complementary climate-neutral solutions just make sense in the current economic and political context. Energy prices and the IRA are two key challenges, but not the only ones”.

Electromobility will play a dominant role in personal mobility, but this requires critical enabling conditions, such as charging infrastructure, adequate grid capacity, a deep battery supply chain in Europe and access to raw materials, all powered by renewable and affordable electricity. Automotive suppliers advocate for an approach that encourages innovation and investment in a range of climate-neutral technologies, such as hybrids, hydrogen and sustainable renewable fuels, alongside electrification.

Benjamin Krieger goes on to say, “the solutions that allow for technology diversity in the regulations and to make vehicles compliant are available. These considerations are important for cars and vans as much as they are for heavy-duty vehicles.”

CLEPA urges policymakers to take a balanced and pragmatic approach that considers the impact of a narrow technology path on consumers, businesses, and innovation. Europe needs a coherent and supportive policy framework that incentivises the production and use of all available technologies that can help us meet our climate targets, of which there are many.

The competitiveness of the European automotive industry is at stake, and EU policy measures need to match foreign competition in the short-term, and in the long-term, a holistic industrial policy is needed that does not distort the single market, provides more access to finance and skilled labour, reduces burdensome regulations, while enabling innovation.

 

 

 

CLEPA | Automotive suppliers concerned insufficient infrastructure will undermine a successful mobility transition – February 2023 Pulse Check Results

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The automotive supply industry is investing in new solutions towards climate-neutral mobility, but suppliers are concerned that investment will not be matched by an equal public effort to ensure that the infrastructure is fully in place at the right time.

in CLEPA, 22-03-2023

Nearly all automotive suppliers (98%) are apprehensive about ongoing efforts and investments in climate-neutral mobility being undermined by insufficient charging and refuelling infrastructure. This data comes from the 13th edition of the CLEPA Pulse Check, a bi-annual survey of auto suppliers carried out by McKinsey in February 2022.

According to McKinsey research, the rapid uptake of electric vehicles (EVs) will require a public infrastructure of at least 3.4 million charging points by 2030. Based on this target, the current rollout of the recharging network needs to accelerate four times faster among EU countries to meet the needs of future vehicles.

CLEPA Secretary General, Benjamin Krieger, commented, “Ensuring a sufficient number of public charging points for EVs and refuelling stations for hydrogen-powered vehicles is an essential enabling condition to turn current industry efforts into a successful transition for Europe and our climate. We need to see the ambition matched at the member state level.”

Compared to last September, when industry sentiment hit an all-time low due to rising energy and material costs, there has been a significant improvement in the overall outlook of suppliers. In February, 35% of suppliers expressed a positive outlook, while another 35% indicated a negative outlook. This marks a stark contrast to September, when a staggering 70% of suppliers reported a negative outlook.

Despite 64% of suppliers expecting revenue growth over the year 2023, profit expectations remain bleak. Cost pressures and suppressed volumes due to the on-going semiconductor shortage continue to weigh on the profitability of the sector. A significant number of suppliers are facing intense margin pressure, with 67% of the respondents indicating that their operational profitability level is below 5%. In fact, roughly one in four suppliers are even operating at a loss.

Long-term investment capabilities of the sector are under increasing pressure and 37% of suppliers are reducing investment, with companies doing the utmost to maintain R&D budgets. While the automotive supply industry is making progress towards climate-neutral mobility, it requires public support and investment to ensure the necessary enabling conditions are in place. Without this, the industry’s efforts may be undermined, and the green mobility transformation may be compromised.

 

 

CLEPA | Net-zero industry: EU policy measures need to match international competition

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CLEPA, the European Association of Automotive Suppliers, welcomes the Commission’s proposal for a Critical Raw Materials and a Net-Zero Industry Act as part of the green industrial transformation in Europe.

in CLEPA, 16-03-2023

However, the association calls for the inclusion of the following principles to ensure a successful and competitive transition to a net-zero industry:

  • EU policy measures should match international competition in magnitude and time horizon to avoid investments being redirected
  • A holistic long-term industrial strategy should fast track permitting procedures and financially support upscaling of green and smart mobility and manufacturing
  • Access to skilled workforce and reinforcement of existing R&I programs will be essential enablers of a successful net-zero industry
  • Reduction of regulatory burden, and a technology open and market oriented approach will be key
    Automotive suppliers fulfill a crucial role in five of the six identified critical value chains, however, the Inflation Reduction Act (IRA) and high energy costs increasingly impact investment decisions.

Therefore, EU-funded instruments and policy measures should match policies of other trade blocks to avoid investments being redirected.

CLEPA Secretary General, Benjamin Krieger states, “The EU needs a holistic industrial strategy and the proposals are a first step. However, focusing on production targets for specific technologies overlooks the crucial role of critical value chains and smart manufacturing towards the long-term success of Europe. Industrial strategic objectives risk being undermined by incoherent regulations, an overload of bureaucratic requirements and a focus on technologies instead of objectives.”

The green transition will require increased focus on access to raw materials, circularity and resilient sourcing from as many trade partners as possible. The CRMA can support automotive suppliers in diversifying sourcing, strengthening the EU’s material supply chain and fostering circularity. Nevertheless, supply chain related reporting requirements and targets for use of recovered materials should be reasonable to avoid undermining business cases. The Act could contribute to our industry’s resilience, but will not secure the EU’s competitiveness.

The NZIA should anchor the EU’s long-term industrial strategy and provide investors with certainty that the EU is committed to stay an attractive place to invest. An EU funded program would be the best instrument to implement a strategy that will enable an unprecedented industrial transformation, both in terms of scale and pace.

The Commission and member states together have mobilised significant funds, but opportunities are scattered, lack scale and are difficult to access. The temporary adjustment of state aid framework can therefore, at best, be an intermediate solution to allow member states to limit the worst impact of the IRA and energy costs.

The Commission must develop a five to ten-year funding framework based on objectives linked to the green and digital transition for the fourteen industrial ecosystems and six critical value chains identified in 2021, building on globally integrated value chains and driving the further integration of the EU Single Market. Companies can then invest with confidence to scale the production of green and circular technologies and manufacturing processes.

 

 

CLEPA | Balancing ambition and reality in the Mobility Transition: Enabling conditions crucial for success

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The adoption of the proposed revision of the CO2 standards for heavy duty vehicles (HDVs) opens one of the last high profile public debates for the auto industry in this legislative period. The Commission calls a target of zero emissions at the tailpipe of city buses as of 2030. Trucks need to achieve a 90% CO2 reduction in 2040, with a significantly more ambitious trajectory over the 2030 and 2035 milestones than the current rules.

in CLEPA, by Benjamin Krieger, 23-02-2023

Together with flexibility in the definition of a zero-emission vehicle this makes a signal for technology diversity which is welcome. Electrification and hydrogen in fuel cells and the hydrogen engine will play an important role in the climate neutral mobility and transport of the future, but we need a realistic path to achieve it.

The very ambitious intermediate targets set in 2030 (45%) and 2035 (65%) represent a potential bottleneck that could harm and slow down the pace of the transition, if not supported by a reduction of technology costs and substantial policies that provide the needed infrastructure and encourage vehicle purchase. For the same reasons, the 2030 objectives fixed just four years ago were already uncertain. Achieving a sufficient level of zero-emission vehicle (ZEV) penetration in time is a significant challenge.

No single energy carrier and technology fits all user’s needs and use-cases. If sustainable renewable fuels would be considered for compliance in the CO? Regulation for HDVs, Europe could immediately accelerate the decarbonisation of the commercial transport sector including the existing fleet and provide flexibility to companies which need more time to invest in zero emission technology. However, the regulation does not give any impulse for the deployment of renewable fuels.

Putting all this pressure on the industry without all the necessary enabling conditions in place, transition risks missing its objectives and being detrimental to the competitiveness of the European companies. We will not succeed in the transition with ambitious targets alone, we need equal ambition on the rollout of a dense network of charging and refuelling points, availability of renewable fuels, hydrogen, and electricity, raw materials, and affordable vehicles.

 

Benjamin Krieger

CLEPA Secretary General

 

 

CLEPA | CO2 standards for HDVs: Intermediate targets require massive deployment of charging and refuelling infrastructure

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  • The 2030 and 2035 targets set by the Commission are extremely ambitious
  • The 2040 target allows for tech diversity, but enabling conditions remain uncertain

in CLEPA, 14-02-2023

The European Commission has today published its revision of the CO2 emission standards for heavy-duty vehicles (HDVs), proposing extremely ambitious intermediate targets in 2030 (45%) and in 2035 (65%). Although the proposal allows for technology diversity, with a 90% target in 2040, enabling conditions remain a major concern.

CLEPA Secretary General, Benjamin Krieger, states: “To decarbonise logistics, the EU needs affordable, climate-neutral solutions. We appreciate maintaining technology diversity by not setting a phase-out mandate, however, the increase in 2030 and 2035 targets is very challenging. Only four years ago the 2030 target was set, which was already ambitious, and this target should be fixed.”

The fulfilment of the conditions for the penetration of zero-emission vehicles (ZEVs) needed to meet the existing 30% reduction target in 2030 is already uncertain, as it requires both accelerated reduction of technology costs and substantial policies that support infrastructure and encourage vehicle purchase.

CLEPA urges policymakers not to increase the 2030 target and consider a reasonable trajectory towards 2035. For the transition to succeed, we cannot rely on setting targets alone. Enabling conditions like charging and refuelling infrastructure as well as renewable electricity, hydrogen and fuels, must be secured. Afterall, commercial road transport is a B2B market driven by demand, which encompasses a broad range of use-cases and operator needs, demanding a wide array of affordable clean technology options.

The proposal also neglects to include a comprehensive approach to measuring the actual carbon footprint of a vehicle, focusing solely on tailpipe emissions. CLEPA advocates for an LCA approach, starting with well-to-wheel as a first step. Europe risks lagging behind other regions if it does not undertake the work of developing a harmonised standard for Europe.

CLEPA appreciates that the proposal includes a review clause in 2028, which will be of utmost importance to gauge progress on enabling conditions, and other external factors such as affordable and renewable energy availability.

Find out more

CLEPA Position Paper on CO2 Standards for Heavy-Duty Vehicles

 

 

ACEA / CLEPA | Industry calls for holistic approach to decarbonising heavy-duty sector

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European commercial vehicle manufacturers (ACEA) and suppliers (CLEPA) are fully committed to swiftly cutting road transport CO2 and exhaust pollutant emissions and moving Europe to fossil-free solutions by 2040. A coherent and progressive regulatory framework is needed to establish the right market conditions for a successful sector transition.

in ACEA / CLEPA, 09-02-2023

Commercial road transport with heavy-duty vehicles is a B2B market driven by demand. Ensuring that conditions are in place so that transport operators will invest in and can profitably operate zero-emission vehicles is as important as fleet emission targets for vehicle manufacturers.

A successful decarbonisation pathway relies on a coherent policy framework that includes suitable charging and refuelling infrastructure, supportive and well-synchronised vehicle regulations, and an effective carbon pricing mechanism. However, several key regulations that will help convince transport operators to switch to the new powertrain vehicles, including AFIR and the ETS2, still need to be adopted in the interinstitutional process or implemented by member states. Moreover, co-legislators have unfortunately shown a remarkably low level of ambition to match and complement the ambition level set by, and for, vehicle manufacturers and our partners in the value chain.

In the upcoming revision of the HDV CO2 targets, the Commission should therefore set a fixed 2030 target considering the persistent, significant uncertainties regarding crucial enabling conditions. Targets for 2035 and 2040 should be set, while ensuring they are reviewed again in due time in order to assess the enabling conditions, especially the deployment of recharging and refuelling infrastructure.

While we are focused on making zero-emission vehicles the backbone of road transport, internal combustion engines, powered by fossil-free fuels, will continue to play a long-term role in heavy-duty applications. Therefore, a general phase-out date for the internal combustion engine or a 100% reduction target should not be considered at this point. Instead, policymakers should concentrate on establishing effective incentive mechanisms to encourage and enable transport operators to invest in zero-emission vehicles. Hauliers and transport operators invest in vehicles based on profitability considerations for their operation. Building a solid business case that favours zero-emission trucks and buses will lead to rapid market adoption of such vehicles, and swift decarbonisation of road transport.

Further, the CO2 emissions regulation for HDVs focuses on tailpipe emissions. But to effectively decarbonise road transport, Europe’s regulatory framework on climate needs to look at the broader perspective, ensuring that CO2 emissions are swiftly and effectively reduced in the entire road transport value chain. Europe should therefore aim for a pragmatic, progressive and technology-neutral approach that ensures scalable solutions can serve as the global pacesetter. Commercial road transport encompasses a broad range of use-cases and operator needs, demanding a wide array of technological solutions. As such, a targeted and customised policy approach is essential to defend and extend the competitiveness of Europe’s road transport sector and commercial vehicle industry.

In the transition to decarbonisation, a range of technologies will contribute to cutting CO2 emissions. However, with the current energy prices at record levels, high costs of raw materials, and persistent supply chain difficulties – all of which are negatively impacting the competitiveness of the automotive sector as well as its customers – the European truck industry needs flexibility in the face of competition from other major markets like the US and China.

The recent proposal for a Euro VII regulation for heavy-duty vehicles must not divert attention away from the transition to climate neutrality, be realistic in what is achievable, as well as being consistent with the investment needed for future CO2 standards. Close coordination between the CO2 and Euro VII files is essential with regard to the content of the regulations, the timelines for their finalisation and their implementation dates. Our industry’s efforts in investing to decarbonise road transport will benefit from a coherent regulatory package that strikes the right balance between improving air quality and encouraging a swift shift towards zero-emission vehicles.

 

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CLEPA | Key topic for 2023

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Key topics for 2023

in CLEPA, 31-01-2023

1. Climate Action & Sustainability

Every climate-neutral solution is a step towards sustainable mobility

Automotive suppliers contribute to personal mobility, but they also deliver the sustainable technologies needed for multi-passenger transport and the movement of goods. Last year’s climate agenda had a strong focus on passenger cars, and this time the discussion will be around the bigger vehicles on EU roads, with a new Commission’s proposal on CO2 standards for heavy-duty vehicles (HDV) expected on 14 February.

This proposal looks at a complex ecosystem: Freight transport includes very diverse transport modes—from buses and coaches, to trailers and trucks— but also very different use cases—from vehicles driving up mountains carrying heavy loads, to everyday urban deliveries. CLEPA sees this regulation as an opportunity to empower innovation through #TruckDiversity, supporting a wide-ranging set of sustainable technologies that contribute to climate-neutral mobility while giving truckers, fleet operators and local businesses the freedom to choose what suits them best.

Also looking at air quality, the proposal for new vehicle pollutant emission standards Euro 7, published in the last quarter of 2022, will be now discussed in the European Parliament. Overall, CLEPA sees this proposal as a significant step towards higher ambition. However, there are key elements of timing and both technical and economic feasibility that need to be addressed to ensure the new rules can be implemented and applied to realistic driving situations.

Sustainable vehicles: From cradle to grave

A successful technological transformation requires a number of critical raw materials that are essential to build safer and more sustainable vehicles, from electronics to lightweighting. When it comes to electromobility, the amount of these needed materials is expected to grow from 40kg in conventional vehicles, to 200kg in electric cars. The higher volumes are not the only concern. Dependencies on single sources, especially from countries with geopolitical risk, as we recently saw with the energy crisis, can have devastating effects on supply chains and affordability.

The Critical Raw Materials Act (CRMA) will be published by the European Commission on 8 March and has the aim to secure robust material supply chains for the EU. CLEPA’s position highlights the need to improve the recovery rate of materials through design innovation, certification of recycling companies and measures to combat the illegal or inefficient disposal of used vehicles, and further highlights the importance of trade and raw material agreements with economic partners across the world. The CRMA is unlikely to cover all required elements relevant for this sector, and some essential aspects will only be made clear with the revision of the End-of-Life-Vehicle Directive—expected in March 2023—and the revision of the Battery Regulation—finalised last December—now leading to extensive work for its implementation, including new rules on Battery Product Environmental Footprint.

 

2. Smart & New Mobility

Access to data: Unleash the untapped potential of mobility markets

Connectivity is shifting the way we conceive mobility and opening the market to new services and platforms that can drastically improve aspects such as safety, traffic management or the overall driving experience. It is estimated that 177 million vehicles of the EU car park will be connected by 2030.

Being aware of the potential of this market, in 2022 the European Commission published the Data Act, a proposal to establish a harmonised framework for industrial, non-personal data sharing in the European Union. The Industry Committee, which leads discussions on this file in the European Parliament, received MEP amendments at the end of the year and is now working on reaching compromises between political groups. Other committees will give their opinion during the final vote, slated for February.

CLEPA has consistently raised the need to complement the Data Act with a sector-specific regulation on access to in-vehicle data. Currently, the Data Act is not concrete enough to tackle the particular obstacles concerning the deployment of data-based services in the automotive sector. The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs acknowledged this opinion and announced the intention to work on such text and make it public over the next months. Raising the concerns of yet another potential delay in the publication of this sector-specific proposal, CLEPA, together with 9 other European associations addressed a petition to the Commission to consider the negative impacts that this would entail for consumers and EU competitiveness.

Semiconductors to get milestone regulation in the EU

Automated, connected driving solutions and artificial intelligence applications are leading to more automotive demand for chips. In fact, the share of specific chips used by the automotive industry is forecasted to grow from about 2% today to 10% by 2030. As a response to the global semiconductor shortage, the European Commission published a legislative proposal for a Chips Act, with the aim of boosting EU production of semiconductors and addressing future supply chain crises.

This policy file has just gotten through an important legislative milestone. Member States have agreed on a set of amendments to the proposal. The European Parliament’s lead committee last week also endorsed a set of amendments, bringing the regulation close to adoption over the next months and paving the way for billions of public support for projects in the EU semiconductor ecosystem. The EU Chips Act provides an opportunity to strengthen the resilience of supply chains and further cement the European automotive sector’s global leadership position on innovation. CLEPA calls upon the European Commission, Parliament and Council to prioritise its adoption.

 

3. Innovation & Competitiveness

Reshaping automotive supply chains

The mobility transformation requires significant investments, particularly upstream in the supply chain, to ensure sufficient access to green steel, aluminium, polymers, battery cells and chemicals. The US decision to support green technologies with billions of state aid could divert investments from the EU to the US. President von der Leyen recently announced in Davos the Commission’s intention to publish a Net-Zero Industry Act, which could speed up permitting procedures and ease state aid rules.

In the meantime, the work on the regulatory framework to move sustainability to the centre of corporate strategy continues. The European Parliament is currently discussing legislation to impose far-reaching social and environmental responsibilities on companies and their value chains through the Corporate Sustainability Due Diligence Directive (CSDD). The European Parliament is expected to reach a position in March. CLEPA supports the initiative to regulate supply chain due diligence requirements, but together with coalition of industry associations, raised concerns that the current proposed framework will undermine the ability of EU businesses to take part in critical supply chains.

Last year, the European Commission published the EU Taxonomy Regulation, a green finance rulebook, that establishes a common language on which economic projects and initiatives are considered ‘sustainable’. Its guidelines consider both the purchase of a zero-emission vehicle component and its installation in the car by a vehicle manufacturer as sustainable business activities, but do not recognise the production of that very same component as such. CLEPA has recently launched the social media campaign #FairTaxonomy, with statements by industry leaders, asking the European Commission’s Directorate-General for Financial Stability (DG FISMA) to correct course, as limiting access to green finance to the industry can have a huge impact in suppliers’ ability to keep the green transition at pace.

US working on addressing EU concerns about EV vehicle incentives

Taking recent headlines in the media, is the United States bet towards economic protectionism brought by their US Inflation Reduction Act (US-IRA). This regulation—signed at the end of last summer—introduced a measure for which consumers could get up to $7,500 in purchasing incentives for an electric vehicle. This incentive would, however, not apply to most cars assembled in the EU or cars with an EU-manufactured battery. Organisations all over the European auto sector have since raised concerns around violation of WTO treaties. The issue became political, and the EU-US Trade and Technology Council between the European Commission and US government representatives, have held several meetings.

The Commission asks the US that the EU is provided with the same exemptions as Canada and Mexico. The US treasury department indicated end of December that it would adopt an expansive definition of which countries have a free trade agreement with the US. Potentially an agreement on cooperation on raw materials between the EU and US could then serve as an exemption of local content requirements for EU cars. Furthermore, the department also issued guidance for a separate tax credit for clean commercial vehicles which could offer opportunities for EU manufacturers using US dealerships. CLEPA continues to make the case that globally integrated supply chains and free trade are a source of prosperity, and local content requirements undermine the global trading system. CLEPA therefore encourages the Commission to continue the dialogue with the US to address sector concerns.

 

4. Road Safety

Paving the way towards global harmonisation

As the technology within vehicles continues evolving to improve road safety, so does the regulatory framework incorporating measures around these advancements. Over the last period, the United Nations has adapted some of its Working Groups and created new ones, both of which will see a boost in activity in coming months.

The United Nations World Forum for Harmonisation of road vehicle Regulations–WP. 29–started discussing potential regulatory needs for vehicle-to-vehicle V2V and vehicle-to-anything V2X communication, following concerns expressed by China and the International Telecommunication Union (ITU) on absence of harmonisation in the context of Automated Driving Systems. CLEPA submitted its initial feedback and foresees active participation also in the United Nations, on definitions around artificial intelligence and harmonisation at global level. In parallel, CLEPA is working within the UN Cybersecurity and Software updates group in preparing global guidance principles on data security.

The WP. 29 has also recently reviewed its “Framework document on vehicle whole-life compliance” and welcomed the CLEPA proposal, supporting the initiative to further evaluate the level of safety and environmental performance of vehicles, equipment and parts along different stages of their life but stressing the predominant role of the Contracting Parties to the United Nations 1958 and 1998 Geneva Agreements in the evaluation of vehicle safety and noting the importance of confidentiality, IP protection and data security. Now the dedicated UN Periodical Technical Inspection WG will address the concerns expressed by CLEPA, that were supported by several member countries of the United Nations.

Euro NCAP to include new parameters of connectivity and automation in safety assessment

The Euro NCAP (the European New Car Assessment Programme) is a European voluntary car safety performance assessment that provides information to consumers about the performance of their vehicles when it comes to safety. The programme has recently launched the Euro NCAP Roadmap 2030 with the aim to better encompass assisted and automated driving in their methodology, having announced that the current overall safety rating will be replaced in 2026 by a new scheme based on the four distinctive phases of an accident: safe driving, crash avoidance, crash protection and post-crash safety.

The main update concerns the introduction of a 3-year update cycle for cars and commercial vehicles with a first one in 2026 and a second one in 2029. CLEPA is working closely with Euro NCAP on the coming updates for 2026 impacting the overall rating. In this context, a new V2X working group has started, as V2X technologies act as an enabler of existing safety functions. A penalty/reward approach will be adopted for cars offering assisted driving systems. The speed assistance protocol will be overhauled to incorporate the latest technologies. Several updates will be introduced for in-cabin monitoring to ensure a proper driver engagement in all situations and especially when advanced assisted driving systems are used. Scenarios for autonomous emergency braking (AEB) will be also updated. Regarding crash protection, virtual testing is under development and is expected for 2025-2030. Other minor protocol updates are tentatively planned. Euro NCAP is also currently working on Over-the-Air-Update, cybersecurity and data access.

 

 

Outlook 2023: Investment support will be key for a successful mobility transition

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The last few years have been challenging for the automotive sector, which has to manage the green and digital transition, despite the impact of the pandemic, the devastating war in Ukraine, supply chain shortages, volatile prices, protectionist measures abroad and the risk of a recession. Even so, the industry has shown great resilience and continues to invest and deliver on carbon-neutral mobility. There is no crystal ball, but three factors will indeed be important for the year ahead.

in CLEPA, by Thorsten Muschal, 26-01-2023

Three market trends shaping the automotive supply industry

1 – Policymakers need to support industry investments in innovation and manufacturing in the EU

Automotive suppliers, who provide over 70% of a vehicle’s value and deliver the innovation for climate-neutral mobility, are essential to the success of the green transition.

Despite ongoing challenges, such as access to raw materials, rising costs for energy, labour and transport, suppliers have cut costs and maintained investments in R&D: as of today more than 55% of R&D in the automotive industry is financed by suppliers.

However, 70% of suppliers saw their profitability drop to levels that could start to undermine their ability to invest in R&D, the workforce, and new business activities. This endangers needed investments by suppliers which are essential for the future of the industry. In 2023, regulatory action and public financial support will be crucial for maintaining the EU’s global leadership position and ensuring a stronger, greener future.

2 – Energy and supply of materials remain factors of uncertainty

Gas prices in the EU continue to be significantly higher than pre-pandemic levels and five times higher than in the US, despite recent price drops. This, coupled with significant public investment in the US, could undermine the business case for investment in the EU. Production backlogs and a COVID-19 recovery in China could support global vehicle demand but could also create LNG scarcity, a risk for European energy supplies towards winter.

Raw material prices and availability are continued concerns going into 2023. Demand for battery raw materials is likely to surpass supply, driving up prices and pushing back the timeframe for EV and ICE cost parity. A new spike of energy costs could further undermine energy-intensive industries in Europe and lead to local issues in sourcing steel, aluminium and chemical products.

Industry cannot absorb such high costs in the long-term, especially in the face of competition from other major markets like China and the US. Political action is needed to avoid new import dependencies and to ensure access to affordable energy and raw materials. All energy carriers have a role to play.

3 – Production levels will not reach levels like before the pandemic, competition for electric vehicle market share getting tougher

At the end of 2022, production backlogs were still double the average and inventories remain unusually low. Forecasts show that production within the EU will grow by up to 5% compared to 2022. Still, production volumes of around 13.9 million vehicles are still far away from pre-pandemic levels. In 2023, nearly 45% of new vehicles will be electrified (including mild hybrids). Battery electric vehicle production volumes are set to grow by 50%, reaching a production level of close to two million vehicles.

The question becomes, how much of the EVs will be made in Europe? Chinese and US vehicle manufacturers present an increasingly competitive challenge. High production costs compared to other regions could also mean relocating plants outside the EU. It is imperative that we maintain a global level playing field to ultimately speed up decarbonisation in the EU automotive sector.

A holistic approach is needed to reach climate-neutral mobility

Industrial policy and adoption of the Fit for 55 package will dominate the policy agenda in 2023. CLEPA will continue to underline that the green and digital transition can only be delivered if policymakers put the right framework conditions in place. 2023 will require a rethink of industrial policy, including state aid rules and smarter use of public funds across the EU, but also concrete progress on delivering charging and refuelling infrastructure and ensuring access to finance and data for automotive suppliers. The EU’s future as an automotive manufacturing powerhouse will not be secured by formulating ambitious targets in regulation alone.

Digital innovation in the mobility ecosystem would benefit from a sector-specific regulation that ensures equal access to data. Access to capital is also crucial to finance investments in the green mobility transformation. Policymakers should urgently repair the EU’s classification system for its sustainable finance taxonomy to ensure that investors also consider the most critical parts of the supply chain.

Finally, two key emissions regulations, the recently published EURO 7 regulation and the upcoming CO2 standards for heavy-duty vehicles, should be considered in a comprehensive way. The industry will need enough lead time to develop and implement new EURO 7 technologies, and for trucks, cost parity will be the key issue.

Automotive suppliers are committed to making climate-neural mobility the backbone of road transport, and stand ready to work with policymakers and stakeholders this year and beyond.

 

Thorsten Muschal
CLEPA President and Group Executive Vice President of Sales and Program Management, FORVIA

 

CLEPA | With unprecedented challenges, EU support for the mobility transition is urgently needed

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As this challenging year comes to a close, it is a good moment to take stock on where we are and what comes next.

Only a few formal steps remain for the EU to finalise the decision on the path to climate neutrality for cars and vans. With a 100% target in 2035, electrification of the drivetrain is the main way forward, either with a battery or a fuel cell to propel the vehicles.

in CLEPA, by Benjamin Krieger, 15-12-2022

This is as much a challenge for the industry as for policymakers. For electrification to take off as expected, framework conditions need to be put in place, for recharging, refuelling, for hydrogen production and green electricity. For the existing fleet, only with CO2-neutral fuels can we defossile the car parc. The debate on the related policy files needs to be finalised as swiftly as possible.

This is even more urgent for trucks. A proposal for CO2 standards is expected at the beginning of next year. The diversity of use cases for commercial vehicles requires a wide array of clean solutions. From electrification and hybrids to hydrogen in fuel cells and engines, to eTrailers, options are needed to meet specific needs, while lowering emissions and remaining affordable. Total cost of ownership is the decisive criterion for new technologies to succeed. Both regulations on CO2 standards must be in sync with other dossiers, notably Euro 7, which will be discussed in the coming months.

The automotive supply industry is delivering the technology for the transition to climate neutral mobility. But the industry needs support, as does the entire ecosystem. As shown in our Fall 2022 Pulse Check survey and November Data Digest, our industry is currently investing heavily in the full development of sustainable mobility, despite current inflation and rising costs that in many cases are reducing profitability margins.

I was able to raise these concerns at a recent roundtable event organised by DG GROW on the ‘Transition Pathway for the Mobility Ecosystem.’ It is good to see the Commission take the initiative to discuss these challenges with industry, but concrete political support is needed, particularly with regards to funding a just transition for the automotive sector.

Today, CLEPA’s President Thorsten Muschal, will on invitation by Commissioner Breton discuss potential bottlenecks and key performance indicators to make the transition to climate neutral mobility a success. Swift deployment of infrastructure for electricity and hydrogen is a key criterion, but the impact on the industry and jobs, the capacity to transform and to innovate, and the affordability of mobility also need to play a central role.

EU in global competition

The effort of suppliers is critical in the success of the mobility transition. Investments in innovation are needed to mitigate the impact of a sustainable supply chain on consumer prices.

This is why we believe that the EU Sustainable Finance Taxonomy should recognise the role played by automotive suppliers. In the current delegated act, EV component production is not eligible as sustainable investment, as is the case for vehicle assembly. Key R&D and manufacturing activities of technologies related to EVs may find it harder to be recognised as sustainable investments, where activities related to the assembly of the vehicles are. This could reduce the required funding towards critical innovation, and puts at risk the success of the transition. CLEPA will be launching a #FairTaxonomy campaign to raise public awareness on the issue, which was recently covered by Politico.

Further, targeted measures to maintain European industrial competitiveness are crucial. Increased competition from and sourcing dependence on China have been on the radar of industrial strategists for a while. More recently, concerns about fair competition from the US have gained ground in our industry.

The Inflation Reduction Act (IRA) introduces significant subsidies for the production of batteries in the US and introduces consumer subsidies for electric vehicles produced in North America. The EU has seen strong investments in the development of a battery supply chain over the past years, but several companies have recently indicated a shift in investment projects from Europe to the US. The high energy costs in the EU and more generous subsidy schemes in other countries presents a significant risk for the competitiveness of EU industry.

A subsides race should be avoided. Goldman Sachs calculated at €160 bn, the investment needed between the US and Europe together to reduce the singular dependency on Chinese battery materials and cells by 2030, highlighting the need for collaboration. CLEPA appreciates the significant efforts from the European Commission to better align green industrial policies on both sides in this regard.

To secure and diversify supply of critical raw materials, the European Commission is currently working on the Critical Raw Materials Act proposal expected in January. In the meantime, the EU Chips Act passed an important legislative milestone. Member States agreed their position on the Commission proposal, bringing the regulation close to adoption next year and paving the way for billions of public support for projects in the EU semiconductor ecosystem. This is a step forward towards a more comprehensive EU industrial policy, and the automotive ecosystem must be part of the strategy given its role as one of Europe’s key industrial sectors.

The green transition will only succeed by laying a solid foundation to sustain European competitiveness next year and beyond.

 

Benjamin Krieger

CLEPA Secretary General

 

CLEPA | Euro 7 proposal: A significant step towards higher ambition, but technical challenges a concern

Joana Madureira Deixe um comentário
  • CLEPA supports a sensible further development of pollutant emission standards. Automotive suppliers are committed to sustainable mobility, to improved air quality and public health.
  • The Euro 7 proposal introduces more stringent limits, covering also new pollutants, as well as extended testing conditions.

in CLEPA, 10-11-2022

The European Commission published today its proposal for new vehicle pollutant emission standards. The Euro 7 proposal, which covers light- and heavy-duty vehicles, aims to improve EU air quality and public health by continuing to lower pollutant emissions coming from road transport.

Overall, the proposal makes a significant step towards higher ambition. However, there are key elements of timing and both technical and economic feasibility that need to be addressed to ensure the new rules can be implemented and also apply to realistic driving situations.

Benjamin Krieger, CLEPA Secretary General, says: “A balanced Euro 7 will encourage innovation and improve air quality, benefiting the environment, consumers, and industry. But it needs to remain realistic as to what is technically achievable with current and near-future technologies.”

He goes on to say, “If the advanced internal combustion engine has a role to play in future mobility, its environmental impact has to be further improved. This, alongside controlling emissions from other sources, such as brakes and tyres, which aren’t related to the drive train.”

CLEPA stresses the importance of the lead time needed by industry to develop and validate the new Euro 7 technologies, and also in consideration of the time required for the co-decision legislative process. The specific technical parameters for vehicle testing are key factors influencing the overall severity of the new regulation; these parameters are not yet known and will come via several implementing and delegated acts, which should be completed as soon as possible to enable a swift implementation of Euro 7. A lead-time of at least 24 months after the finalisation of the secondary legislation is necessary for light-duty vehicles. For heavy-duty vehicles, 36 months are needed.

Further, in light of the upcoming CO2 standards for heavy-duty vehicles slated for beginning of 2023, CLEPA calls for a coherent legislative framework in this regard.

A smooth progress of the complete decision-making process, resulting lead-time and final content, including implementing and delegated acts, remain critical to a successful implementation.

Automotive suppliers stand ready to contribute and actively engage with policymakers to achieve a successful implementation of Euro 7 and other climate policies, balancing environmental, social and economic goals.