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

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

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

  • 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.

 

 

CLEPA Statement: Data Act is important but has to be complemented soon by sector-specific legislation on access to in-vehicle data

A delay of a sector-specific legislation risks further reducing competitiveness and limits consumer choice

in CLEPA, 08-11-2022


The horizontal Data Act is a relevant regulation to ensure a more level playing field between the different actors in the data economy and, therefore, CLEPA strongly supports its overall goal and approach. However, this proposal is not concrete enough to tackle the particular obstacles concerning the deployment of data-based services in the automotive sector. For that reason, the Data Act needs to be complemented by a sector-specific legislation as soon as possible.

Automotive technology is rapidly advancing, with vehicles generating and collecting ever greater quantities of data to operate and monitor systems. This data offers a huge potential to improve and develop new services for the benefit of consumers. However, automotive suppliers and other third-party service providers currently rely on the willingness and conditions of vehicle manufacturers to provide access to this data. Such a level of control on the market carries the risk of creating “gatekeepers”, with a detrimental effect on fair competition, innovation and consumer choice.

CLEPA sees the horizontal Data Act as an important first step in improving the situation by ensuring that third parties can provide innovative services to the end user. Moreover, the association welcomes that the proposal puts the consumer in the centre and imposes obligations on data holders.

Yet, we think that the Data Act does not fully reflect the complexities of the deployment of data-based services in the automotive sector. Therefore, we strongly advocate for a swift publication of the proposal for the complementary sector-specific regulation which is currently being drafted by the European Commission.

“A prompt publication of the sector-specific proposal on access to in-vehicle data, functions and resources by the Commission will contribute to improving competition, boosting innovation capabilities of thousands of automotive supply companies, and protecting consumer rights and choice”, says CLEPA’s Secretary General Benjamin Krieger. “The technical work and discussions behind this legislation have been at full speed for the past years. Going ahead with the proposal now would make a huge difference and allow for its adoption still during the current legislative term.”

Key considerations for a successful sector-specific regulation

  • Complementing the Data Act, the new sector-specific regulation should at least provide:
  • Transparency on available data by vehicle identification number incl. metadata and formats;
  • The definition of a common set of data supported by all vehicles;
  • Sector-specific definitions of product, data holder, and data, especially with regards to the data protected by IP rights;
  • Granting access to vehicle resources like display, audio, Google Android/Apple CarPlay environments and embedded software routines;
  • The provision of a common automotive API (Application Programming Interface);

A governance body or forum to assign roles, rights, authorisations, and liabilities, as well as processes for the provision of user consent and API releases and the regular revision of a common data set.

 

 

 

CLEPA | The success of the Green Deal is directly linked to European competitiveness

The mild October temperatures provided some relief in Europe to cope with the energy crisis, but the predictions for the coming winter and next year leave little room for optimism: continued supply chain distortions, rising energy and raw materials cost, overall inflation, as well as the weakening demand for vehicles form a perfect storm.

in CLEPA, by Benjamin Krieger, 02-11-2022


The CLEPA Pulse Check, a biannual survey of automotive suppliers conducted together with McKinsey, shows that despite optimisation of production costs and other short-term measures, 23% of suppliers expect to record losses this year. For 2023, the outlook is gloomier still with 27% expecting a loss. The Pulse Check clearly documents the pressure that automotive suppliers are facing, which is likely to be exacerbated this winter. With nearly 70% of the suppliers operating far below EBIT margins of 5%, the financing of the green and digital transition is becoming increasingly challenging.

Suppliers hold strong to their commitment to R&I spending, but without access to affordable energy in the EU and fair sharing of the cost burden from inflation along the supply chain, competitiveness and the speed of innovation in the sector will diminish.

This is an unprecedented situation that requires urgent political action, as the global competitiveness of the European automotive ecosystem is at stake.

Unprecedented regulatory pressure

At the same time, the EU has now confirmed to phase-out the internal combustion engine (ICE) by 2035. The 100% CO2 reduction target at the tailpipe, is in fact, an implicit ban on the ICE technology and the most ambitious target worldwide. Automotive suppliers support the objective of climate-neutral mobility and have the technologies to make this a reality. However, the most ambitious electrification target will not succeed, if it is not accompanied by policies to ensure charging and refuelling infrastructure, green energy, access to raw materials and a just transition. Environmental targets must take into account the social and economic dimensions.

The negotiations on the rules for renewable energy, charging infrastructure, energy taxation and other pieces of the puzzle have yet to be concluded or will only start later, such as the planned policy for critical raw materials. These key files need to result in a coherent framework that can be implemented successfully.

The CO2 regulation foresees a review in the year 2026, which will cover not only the deployment of zero-emission vehicles but also of charging infrastructure, availability of green energy and fuels, affordability of vehicles and the impact on the industry. This review must be an opportunity to correct course where needed.

CLEPA strongly supports technology diversity to ensure that the most efficient and effective approach to cutting emissions prevails and to ensure a manageable transition that leaves no one behind. Technology diversity includes full electrification, hybrid drivetrains and vehicles running on hydrogen, either in gas engines or fuel cells. All of these technologies are climate neutral if running on renewable energy, in the form of green electricity or renewable hydrogen and fuels.

The CO2 regulation for cars and vans, in principle, contains a role for sustainable renewable fuels also in new vehicles. For this clause to have a real world impact, it is up to the Commission to make a proposal for its implementation into law.

Even more than for cars, a technology-open approach is necessary to decarbonise heavy-duty vehicles, which travel long distances typically across borders, are made up of fleets, and have specific use-cases. Hydrogen or carbon-neutral fuels, for example, can effectively reduce emissions to net-zero, alongside electrification, especially for the existing parc of nearly 7 million vehicles. The debate on technology diversity must continue once the proposal for the revision of CO2 targets for trucks starts, and the new Euro7 pollutant emission standards are adopted later this year.

#JustTransition – no easy feat

Meanwhile, the transition is at full pace and requires political support, as CLEPA points out, together with a coalition of unions, trade associations and environment NGOs. A series of publications have quantified potential job losses, gains and expected changes in the automotive sector. BCG concluded that the transformation in the passenger car segment alone would require the upskilling and retraining of 2.4 million workers. The European Battery Alliance argues that 800,000 skilled workers are needed for EU e-mobility ambitions. And CLEPA’s recent study indicates that 501,000 jobs in the ICE-supply chain, or 84% of the current ICE powertrain employment, will become obsolete.

Whilst new jobs will be created in the electromobility ecosystem, jobs will not be easily interchangeable as they are often located in different places, along different timelines and require different skill sets. Policy support is vital in addressing this challenge, with targeted funding for training, reskilling and upskilling of workers in the automotive sector.

Given the number of jobs at stake and the magnitude of the ongoing transformation, social disruption due to a badly managed transition might severely undermine the ability of the European Green Deal to succeed in a sector which has so far defended its position as a global export champion.

 

Benjamin Krieger

CLEPA Secretary General

 

 

CLEPA | Trilogue on CO2 standards concluded: 100% target requires matching ambition for charging and refuelling infrastructure and a thorough review

The European Commission, the Council of the European Union and the European Parliament reached an agreement in Trilogue on CO2 emission standards for cars and vans. The co-legislators confirmed the 100% reduction target in 2035, the revision of the text in 2026 and the recital 9a on the role of CO2-neutral fuels after 2035.

in CLEPA, 27-10-2022


On the outcome of the agreement, CLEPA’s Secretary General Benjamin Krieger states:

“The 100% target, the implicit ban on the internal combustion engine, is the most ambitious such target worldwide. We stand for climate-neutral mobility and stand ready to deliver the technologies to make climate-neutral mobility a reality. The most ambitious vehicle target will not succeed, if not accompanied by policies to ensure charging and refuelling infrastructure, green energy, access to raw materials and a just transition.”

The regulation foresees a review in the year 2026, which shall cover not only the deployment of zero-emission vehicles but also of charging infrastructure, availability of green energy and fuels, affordability of vehicles and the impact on the industry.

Benjamin Krieger goes on to say:

“Electrification needs to play an important role in the implementation of this regulation, but there are uncertainties, which we need to acknowledge: Availability of raw materials, affordable vehicles, tightly knit charging and refuelling infrastructure and sufficient renewable energy are important for its success. Not least, in times of rapidly rising energy prices. With a large proportion of raw materials concentrated in few sources, the risk of new dependencies rises. The review must be an opportunity to correct course where needed.”

Automotive suppliers are investing billions in innovation, reskilling programs, and new facilities, but the capacity for investments is at risk. Up to 70% of automotive suppliers have seen their profitability drop to unsustainable levels amid inflation and rising cost for energy and raw materials. It is increasingly important to strike a balance between climate, industrial and social needs.

Suppliers have long been arguing for technology diversity to ensure the most efficient and effective approach to cutting emissions prevails and to ensure a manageable transition. Technology diversity includes full electrification, hybrid drivetrains and vehicles running on hydrogen, either in gas engines or fuel cells. All of these technologies are climate neutral if running on renewable energy, in the form of green electricity or renewable hydrogen and fuels.

“The regulation calls for a role for renewable fuels also in new vehicles. It is up to the Commission to make a proposal for this to materialise, alongside a methodology for life-cycle-analysis to ensure effective emission reduction”, says Krieger.

Ambassadors and European Parliament have yet to formally ratify the agreement before the regulation can enter into force. The next step is the adoption of a proposal for CO2 standards for trucks foreseen in the coming months, revising the reduction targets set in 2019. Even more than for cars, a technology-open approach is necessary to decarbonise heavy-duty vehicles.

Hydrogen or CO2-neutral fuels, for example, can effectively reduce emissions to net-zero, alongside electrification, which may not be the most cost-efficient approach for all commercial transport needs.

 

 

CLEPA | Automotive suppliers’ profits continue to drop amid rising costs, putting the ecosystem at risk

  • Sentiment among automotive suppliers drops to historic lows
  • Energy and other cost pressures are impacting operational profitability
  • Despite challenges, the automotive supply industry remains committed to investments in R&I
  • Over the last four years, profitability in the automotive ecosystem has grown, except for suppliers

in CLEPA, 26-10-2022


The 12th Pulse Check survey edition shows that despite optimisation of production costs and other short-term measures, 23% of suppliers expect to record losses this year. For 2023, the outlook is gloomier still with 27% expecting a loss. The concern is reflected in the general sentiment towards the future: 70% of respondents report a negative outlook, significantly up from only 18% who felt this sentiment in the Fall of 2018.

“The Pulse Check clearly documents the pressure that automotive suppliers are facing which may turn worse during winter. With nearly 70% of the suppliers operating far below EBIT margins of 5%, the financing of the green and digital transition is becoming increasingly challenging. Suppliers hold strong to their commitment to R&I spending, but without access to affordable energy in the EU and fair sharing of the burden from inflation along the supply chain, competitiveness and the speed of innovation in the sector will diminish”, says CLEPA Secretary General Benjamin Krieger.

This outlook stems from ongoing difficulties combined with looming threats: 96% of suppliers report a significant profitability impact from energy costs and potential shortages. Raw material inflation is affecting 85% of suppliers, while semiconductor shortages continue to have a significant impact on the profit margins of 65% of the suppliers surveyed.

A key challenge in the industry is fair burden sharing of increasing costs. Around 80% of suppliers receive no or limited compensation from vehicle manufacturers for rising energy and freight costs or supply chain disruptions, while 42% struggle to get compensation for raw material costs.

The limited ability of suppliers to pass on prevalent production cost increases is very critical for many – some even fear bankruptcy of smaller suppliers or suppliers moving to adjacent industries – putting at risk the integrity of the whole automotive ecosystem. Despite widespread pressure, 85% of respondents will not reduce investment in R&I to compensate for losses, showing that the commitment of the automotive supply industry towards new mobility solutions remains strong. The question then becomes – for how long this will be sustainable – given the current economic outlook. Reducing investments in innovation would severely undermine the mobility transition, as well as the sector’s long-term competitiveness and growth.

Looking at the entire automotive ecosystem, in the last four years, suppliers are the only ones registering decreasing profitability margins along the value chain, while OEMs, Retail and Aftermarket recorded significant improvements in profitability between 2017 and 2022.

 

 

 

CO2 standards trilogue: Urgent need for inclusion of a Just Transition framework for Europe’s automotive workforce

Next week it is anticipated that the trilogue on the revision of EU CO2 standards for cars and vans will conclude. As industry, trade unions, employers and environmental organisations, we have been jointly calling for a Just Transition framework within the new rules which will accelerate structural change in the industry.

in CLEPA, 24-10-2022


Currently, there is no such framework for the 16 million workers in our mobility eco-system, and notably Europe’s automotive sector which is a powerhouse of industrial employment. The auto sector accounts for more than 6% of European employment overall and 8.5% of European manufacturing jobs. Pre-crisis, the sector produced nearly 10% of GDP in Germany alone, along with 40% of the country’s research and development spend. The sector plays a key role in trade, with Europe responsible for more than 50% of the world’s exports of auto products. This is an industrial revolution of historic proportions.

A series of publications have quantified potential job losses, gains and changes in the automotive sector due to the current transformation. BCG concluded that the transformation in the passenger car segment alone would require the upskilling and retraining of 2.4 million workers. The European Battery Alliance argues that 800,000 skilled workers are needed for EU e-mobility ambitions. Whilst new jobs will be created in the electromobility ecosystem in battery production and charging infrastructure for example, jobs will be lost in the ICE-supply chain companies and specific regions. Jobs will not be easily interchangeable as they are often located in different places and require different skill sets. The European Commission has already identified the regions depending on the automotive industry as being exposed to multiple challenges while the EU is decarbonising, making the need for regional policy support vital.

A Just Transition framework must support the anticipation and management of change, including, but not exclusively, skills and training, and be underpinned by strong social dialogue. Despite the importance of the industry and scale of transformation underway, a clear, granular mapping of the employment consequences and trends of a shift towards a climate-neutral automotive industry is still to be done. We welcome the proposed amendments to the Regulation from the European Parliament strengthening the Commission’s proposal with the creation of a dedicated fund to accompany the automotive sector (Article 8) and by including regular reporting and monitoring of the transition underway (Article 14a).

The existing EU Just Transition Fund’s resources cannot be spread thinner as they are already needed for the important challenge in the coal-dependent and carbon-intensive regions and industries, however they can offer a model for a Just Transition for the broader automotive and mobility eco-system.

Therefore, we call on negotiators to include the following proposal in the next trilogue discussion on 27th October on the setting up of Just Transition funding to accompany the value chain: “By 31 December 2023 at the latest, the Commission shall present a report setting out in detail the need for targeted funding to ensure a just transition in the automotive sector, with the objective of mitigating negative employment and other economic impacts in all affected Member States, in particular in the regions and the communities most affected by the transition. The report shall, where appropriate, be accompanied by a legislative proposal to establish a Union funding instrument to address the identified needs and to finance the training, reskilling and upskilling of workers in the automotive sector, especially in small and medium-sized enterprises.”

Given the number of jobs at stake and the magnitude of the ongoing transformation, social disruption due to a badly managed transition might severely undermine the ability of the European Green Deal to succeed. We are conscious that the world is watching how the EU implements its climate ambitions, we would like Europe to lead the world in implementing Just Transition as well.

We call on negotiators from all 3 institutions to integrate an effective Just Transition framework within the final joint text of the amended Regulation.

Yours sincerely,

Luc Triangle
General Secretary
industriAll European Trade
Union

Sigrid De Vries
Director General
ACEA

Delphine Rudelli
Secretary General
CEEMET

Benjamin Krieger
Secretary general
CLEPA

Luca Visentini
General Secretary
ETUC

William Todts
Executive Director
Transport and Environment

 

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Energy crisis: Impact on competitiveness of EU auto sector – Joint statement from the European automotive ecosystem

Auto sector: a backbone of the EU economy

The automotive sector and its whole value chain is a backbone of the European economy. It represents:

  • Jobs for 13 million Europeans
  • 11.5% of EU manufacturing employment
  • €374.6 billion in tax revenue for European governments in major markets
  • €79.5 billion trade surplus for the EU
  • 8% of the EU’s GDP
  • €58.8 billion invested in R&D annually, or 32% of total EU spending

in CLEPA, 21-10-2022


In summary

Rising energy prices and increased production costs are putting the entire automotive ecosystem under strain. High inflation rates, unprecedented concerns about energy prices and supply, and lower incomes for Europeans are alarming the whole value chain, from the largest manufacturers to the smallest SMEs, as well as the aftermarket.

The sector appreciates recent policy initiatives at the national and European levels. However, uncertainties about the implementation and effectiveness of these measures persist. A structured dialogue with the sector is therefore urgently needed.

What are the issues?

  • Rising energy prices, coupled with high costs of raw materials and other components, are negatively impacting the automotive sector as well as its customers.
  • Costs of production are therefore skyrocketing, undermining profitability and putting investments and the very survival of critical industries within the automotive ecosystem at risk. Industry cannot absorb such high costs in the long-term, especially in the face of competition from other major markets like the US or China.
  • As Commissioner Breton pointed out, energy prices in Europe are currently seven to eight times higher than in the US. This clearly undermines the global competitiveness of the EU industry and requires a comprehensive and coordinated policy response. We need a global level playing field.
  • Cost increases will have to be passed on along the supply chain and to customers, at a time where high inflation is already limiting the incomes of European households. Affordability of new vehicles is a concern, as it will impact fleet renewal, and ultimately the speed of decarbonisation. Indeed, sales of new vehicles are already down by almost 10% so far this year.
  • High costs for industry also jeopardises employment. Industry is doing its utmost to re- and up-skill its employees but cannot do so alone. This also requires active labour market measures from member states.
  • Equal conditions must be ensured across the EU. Single market and state aid rules must not undermine fair competition between production sites in different member states. Here, the European Commission has an essential role to play.

The need for strong political action

The whole automotive value chain – represented by the European Automobile Manufacturers’ Association (ACEA), the European Council for Motor Trades and Repairs (CECRA), the European Association of Automotive Suppliers (CLEPA), European Tech & Industry Employers (CEEMET) and the European Tyre and Rubber Manufacturers’ Association (ETRMA) – is concerned that, without significant political action, it will become increasingly difficult to make the case for manufacturing and investments in the EU.

Additional political initiative is urgently needed to avoid new import dependencies and to ensure access to affordable energy. All energy carriers have a role to play.

We need strong and coordinated EU-wide action that supports both the sector and consumers.

We stand ready to work together with policy makers to ensure the success of the mobility transition.

 

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New technologies for green and digital mobility take first prize at the CLEPA Innovation Awards 2022

  • CLEPA has awarded cutting-edge technologies driving forward smart, clean, and sustainable mobility
  • The winning applications provide enormous contributions in two main domains: Smart & Safe and Clean & Sustainable

in CLEPA, 14-10-2022


The most advanced technologies ready to enter into the road mobility market took centre stage on Thursday in Brussels at the ceremony for the seventh CLEPA Innovations Awards.

The event celebrates the achievements of the biggest private R&D investor in the EU, the automotive supply industry, which every year invests €30 billion in developing the solutions for the mobility of tomorrow.

The final eight winners were selected by an international jury of 28 experts from academia, industry stakeholders, and research & innovation centres who thoroughly reviewed a record 93 applications, assessing the innovations’ impact and readiness to enter highly competitive and cutting-edge markets in the two categories of Smart & Safe and Clean & Sustainable.

In general, the 2022 results reaffirm the need for new solutions driven by the rolling out of electromobility and autonomous driving, currently two key market trends for the whole automotive industry.

Smart & Safe mobility nominees

The winner of the category Smart & Safe was GMV with its GSharp, a highly accurate, safe Global Navigation Satellite System (GNSS) for autonomous vehicles. In addition to being ready to use in autonomous vehicles, this innovation promises to be available at a competitive price in the market.

Plastic Omnium developed Smart Tailgate, a next-generation rear-closure solution that boasts cutting-edge functionalities as well as onboard intelligence, which was awarded the second prize. With four times fewer components than metal substitutes, it weighs up to 30% less, contains 20% recycled carbon fibres and produces a staggering 30% fewer emissions compared to metal rear.

The third prize went to Brigade for its CarEye® Safety Angle (CSA), a next-generation intelligent blind-spot assistant designed specifically for heavy-duty vehicles, buses and coaches. This technology combines a wing camera with pixel recognition and artificial intelligence (AI) placed at the side of the vehicle, that can reliably detect pedestrians or cyclists in an extended monitoring area alongside the vehicle.

NoTraffic received the SMEs mention in the category thanks to a traffic management platform for urban mobility that optimises traffic lights in real-time based on smart sensors. Placed at eye level at each road intersection and using computer vision and radar, the sensors classify all road users, including bicycles, scooters, pedestrians, cars, heavy trucks, and emergency vehicles.

Clean & Sustainable mobility nominees

Joyson Safety System won in the Clean & Sustainable category with a device that disconnects the flow of high voltage current from an electric vehicle battery to the surrounding electric vehicle systems in case of emergency. The pyrotechnic battery disconnection protects the vehicle occupants and the rescuers in the event of a fire outbreak.

Schaeffler, with the second prize, presented Enertect PC+, a thin, high-performance coating for the Proton-Exchange Membrane (PEM) fuel cell bipolar plates, which significantly improves fuel cell performance for green hydrogen-powered transport.

Forvia received the third prize thanks to its innovative seating design that completely rethinks seats from frame to foam, covers and accessories. Seat for the Planet reduces the carbon footprint at every step, from seat architecture and sustainable materials to industrial processes and life-cycle management.

The winner in the SMEs category was NGV Powertrain, which has developed a technology that allows existing High Duty Vehicle (HDV) diesel based-engines to run with biofuels and e-fuels. Applications include off-grid fast-charging stations of electric vehicles enabling e-mobility everywhere.

Celebrating cutting-edge innovations in Brussels

The ceremony took place on Thursday, 13 October, at the Claridge Events Room in Brussels, where over 100 guests participated in the presentation of the Awards and the announcement of the winners. Organised by CLEPA, the European Automotive Suppliers Association, with the support of Deloitte, the CLEPA Innovation Awards are an exceptional testing ground for the entire ecosystem of automotive suppliers.

The competition is open to any company from the supply industry, and the assessment considers innovation elements such as ambition, market relevance, impact and quality, in determining their score. These criteria are assessed by the international jury of experts from industry, academia and European institutions to determine the finalists in each category, which this year were brought from four to two, to provide a better representation of the industry’s evolution.

CLEPA’s President Thorsten Muschal and CLEPA’s Secretary General Benjamin Krieger opened the celebration, addressing mobility experts and representatives from the selected companies.

“What we are celebrating tonight is not just the winners of a competition but the true spirit of our industry, which has always linked its success to the ability to take the results of the most advanced research and make them available to drivers on the road”, said CLEPA President, Thorsten Muschal.

“For our members, investing in innovation means investing in people: empowering new talents, funding programmes for young minds that bring new skills and ideas to the industry; investing in making new competencies more accessible for workers; and ultimately, increasing comfort, sustainability, and safety of the mobility experiences that citizens choose. In other words, automotive suppliers’ innovation comes from people and has true contributions to society as a whole”, noted CLEPA Secretary General, Benjamin Krieger.

Deloitte Global Automotive Sector Leader Harald Proff, also added: “Transformation needs innovation – so much of the new normal still has to be fully developed. The thorough assessment of the innovation opportunities is paramount to supporting suppliers maximise their capabilities. Deloitte is fully engaged with the transformation of the automotive sector and joins forces with CLEPA to recognise the role that innovation has in delivering the technologies that can solve tomorrow’s challenges”.

CLEPA INNOVATION AWARDS 2022 – FINAL RESULTS

Smart & Safe

  • WINNER: GMV – GSharp
  • 2nd PRIZE: Plastic Omnium – Smart Tailgate
  • 3rd PRIZE: Brigade – Car Eye Safety Angle
  • SME WINNER: NoTraffic – Real-time, Plug-and-Play Autonomous Traffic Management Platform

Clean & Sustainable

  • WINNER: Joyson Safety System – Pyrotechnic Battery Disconnect for Electric & Hybrid Electric Vehicles
  • 2nd PRIZE: Schaeffler – Enertect PC+ – Coating for Fuel Cell Bipolar Plates
  • 3rd PRIZE: Forvia – Seat for the Planet
  • SME WINNER: NGV Powertrain – Carbon-Neutral HDV Engine

Information on all the selected technologies is available on the CLEPA Innovation platform.

 

Watch the videos of the winning technologies