CLEPA | Innovating, cooperating, and achieving a future with safer roads

This week marks the 6th annual Global Road Safety Week, a time for society to reflect and be educated on an often undervalued concept of daily life. Under the patronage of the UN World Health Organisation, many stakeholders will take a concentrated stance this week to inform people and policymakers of new developments in road safety requirements, to prevent loss of life and the bereavement that devastates friends and families of people involved in fatal collisions.

in CLEPA, by Sigrid De Vries, 20-05-2021


This year’s road safety week coincides with the UN Road Safety Collaboration (UNRSC) issuing its draft of the new Decade of Action (DOA), which, once finalised, will serve as the foundation for new policy guidance on road safety from 2021-2030. Great strides have been made in safety during the last decade, but more needs to be done to prevent unnecessary injury and loss of life on roads.

The UN will enter the new Road Safety Decade with expert allies to achieve its plan of action

CLEPA has recently joined the UNSRC, the consultative global mechanism whose goal is to facilitate international cooperation and strengthen global and regional coordination among UN agencies, governments, civil society and other international partners to implement UN General Assembly Resolutions on road safety. A draft plan of intended actions has been released for public viewing and interaction by the World Health Organisation and includes a list of resolutions under the Stockholm Declaration declaring the official goals of the DOA, intended approaches to encourage state and private entities to cooperate to achieve these goals, and state engagement to encourage standardising UN safety standards across the world.

Road safety is an aspect within national policies that rightly claims high priority, with figures to date showing over 3700 daily, or 1.35 million annual fatalities occurring globally. These incidents result in injury, emotional devastation, loss of life, and from an economic perspective, a 2010 study funded by the Center for Disease Control and Prevention placed an estimated global cost of road collisions at $1.8 trillion from 2015-2030.

The UN Road Safety Week hosts a range of online activities this year that are accessible to all, with educational webinars delivered by international entities such as the World Bank’s “Saving lives on the road through streets”, and “Road safety and security in the age of new mobility” brought by the International Transport Forum. In the spotlight, at this year’s Road Safety Week is the Streets For Life Campaign, which is calling for 30 km/h streets where people and traffic mix help prevent road traffic deaths and promote physical activity. The policy associated with the campaign has been derived from standard UN Safety Policy values and the Stockholm Declaration, with an open letter appealing to the public and policymakers to support it.

CLEPA and the UNRSC will strive for road safety in the next decade in cooperation with a diverse range of state representatives on an international scale, UN agencies such as UNECE, Development Banks including the World Bank, NGOs, academia, philanthropic foundations, and private sector to deliver the next DOA which aims to reduce global road deaths and injuries by 50% before 2030.

Technology and innovation are what bring these safety advancements to reality

The automotive supplier industry in Europe has been at the core of the technology innovations that have helped in making safety milestones to date a reality. Suppliers pursue a future of zero mobility-related road deaths through a roadmap encompassing a combination of technology, infrastructure improvements, regulatory initiatives, safety education, and cooperation between stakeholders and policymakers.

Early traditional approaches to road safety were focused primarily on vehicle technology and driver protection, rather than acknowledging that existing road infrastructure and other factors were also key contributors.

The “Safe System” perspective, rather, is used in modern strategies such as “Vision Zero” and holds every part of the road safety system accountable for collisions, while advocating for “forgiving infrastructure”, so that if one part of the system such as the driver, vehicle design, or road infrastructure is compromised in a potential incident, the other parts of the system can compensate and prevent an incident or minimalise impact. The adoption of this system and its universally recognised value both on the innovators and policymakers side of the fence has been instrumental in the success of global safety campaigns and must be employed to an even greater level of cohesion to keep the next DOA on track towards its goals.

Automotive suppliers hold road safety as a devoted priority and have delivered life-saving innovations in passive safety systems like seatbelts, and airbags, which suppliers are currently in the process of reinventing through more diverse testing procedures and crash impact simulations. Automotive innovators continue to astound through active safety system developments in areas like anti-lock braking, electronic stability control, blind-spot detection, lane-keeping assist, emergency braking and a range of other advanced driver-assistance systems.

As technology is developed and improved, society will see increased levels of automation and the active safety benefits associated with it. The mechanism of new car seating positions and new seatbelt requirements following the dawn of autonomous driving is something suppliers have anticipated and prepared for, where in recent years testing procedures for force application have become increasingly more diverse and scientific, to encompass humans from any gender, age, or physical build.

Many of the technologies underpinning this goal are already in production with increasingly more sophisticated and effective safety systems being developed. More advanced virtual testing software and tools, as well as completely new protective technologies for driverless vehicles, are on the way.

The ambition to reduce a further 50% in road casualties by 2030 is something the automotive industry is committed to making a reality. Such is evident in the pledge between automotive suppliers through CLEPA, vehicle manufacturers through ACEA, and the road and vehicle users through the Federation Internationale de l’Automobile (FIA) in 2019 which states the intention to work towards these goals, where cooperation between industry and policymakers will be of paramount importance when formulating standards and implementing safety applications and systems in vehicles.

Optimism in cooperation, entering the new decade

The previous DOA has laid the foundation for the next, and we will enter the new era of road safety with a wealth of testing evidence, global safety bodies, and partnerships. Perhaps the most significant development in the approach to road safety is in the fact that the new DOA encompasses road safety as a key pillar of governance alongside healthcare, education, and employment, and declares that road safety cannot be traded off or compromised for other social benefits.

The EU Commission has proven itself as a strong ally for automotive suppliers in its valuation of safety standards, such being evident in the recently approved General Safety Regulation and Smart and Sustainable Mobility Strategy, which seeks to assert the EU mobility safety standards on a global stage to further solidify cross-continental cooperation and make mobility safer for all road users, wherever they may be.

From industry expertise to the frameworks of partnerships and collaboration, CLEPA is confident that the next decade’s goals to minimise road tragedies can be achieved through the cooperation of stakeholders, innovators, and policymakers. Automotive suppliers will stand ready and eager to work in conjunction with new safety policy alongside the UNRSC membership to deliver a societal framework of mobility where road tragedies are a thing of the past.

Sigrid de Vries

CLEPA  Secretary General

 

 

Automotive suppliers work towards carbon-neutral mobility, prioritising both human health and the environment

  • Safe manufacturing, use and proper disposal of vehicle parts are a high priority for automotive suppliers.
  • The sustainability criteria are followed both for materials sourcing, and during the design and production of vehicle parts, components, and systems.

in CLEPA, 06-05-2021


The 13th edition of the CLEPA Materials Regulations event confirms that sustainability ranks high on the list of priorities for the automotive supply chain. New developments such as new powertrain technologies, lightweighting, and the use of recycled and bio-based materials are a few of many that are contributing to the long-term success in reducing emissions of the sector, building on consistent innovation strategies and global efficiency in the value chain. The annual edition of the CLEPA Materials Regulations event gathers experts in the field, discussing the impact of regulation on materials & substances and presenting the efforts that are delivering towards the sector sustainability.

The Green Deal objectives include the implementation of the EU’s Chemicals Strategy for Sustainability, setting new requirements for materials compliance that bring considerable challenges for the automotive industry. This strategy includes no less than 56 legislative and regulatory actions, such as the revision of REACH and meets circularity objectives as will be transposed in the End-of-Life Vehicle (ELV) Directive, and reporting duties in the SCIP database.

In her keynote speech, CLEPA Secretary General Sigrid de Vries remarked the importance of the EU chemicals regulation “Since REACH came into force, the automotive industry has put considerable effort into implementing the complex requirements of EU chemicals regulation throughout its complex and global supply chain, to follow the sector-specific guidelines. Any new regulatory measure needs to take into account the actual exposure to chemicals, the wider benefit for society and the need for a level-playing field that does not undermine the competitiveness of the EU automotive industry. This can only be achieved by an effective dialogue between policy-makers and industry, as well as the involvement of stakeholders at each stage of the process.”

The opportunities that come with the European Commission’s Circular Economy Action Plan were also part of the discussion. Suppliers are at the forefront of these initiatives, which includes optimisation in the use of materials and minimisation of waste through advanced design and zero-defect manufacturing, providing high-quality products with long lifetimes and promoting repair, remanufacturing and recycling to allow for re-circulation of a larger share of materials. “Making our value chains more circular brings about new business opportunities and helps reinforce the security of supplies. CLEPA is committed to a high-level dialogue to co-create an adequate path to circularity, combining the objectives of the Green Deal and smooth implementation” added de Vries.

The event counted with experts from the European Commission, who presented the possible outcome of the revision of the End-of-Life Vehicle (ELV) regulation, and is currently consulting with stakeholders with the intend to present the first results of the exchange in a workshop planned in Q4 2021. The legislative proposal is planned to be presented in Q4 2022.

The several activities carried out by suppliers in the different regions of the world were also presented, such as the developments and implementation of the SCIP database, provisions for ELV and chemicals in Asia and the US. Global management via GADSL and the International Material Data System (IMDS) were also discussed.

On the second day, the focus was on Sustainability & Corporate Social Responsibility, including some key initiatives from the industry.

In his closing remarks, Mathieu Schwander, CLEPA Technical Regulations Manager highlighted that “Sustainability is a key priority for automotive suppliers. CLEPA, through its different specialised groups, is driving sustainable growth in the industry both in the technical implementation and the societal dimension.”

The 14th edition of the Materials Regulations Event is scheduled for Spring 2022 and it may take place in the Stuttgart area (Germany).

 

EU Industrial Strategy: In-depth review comes at the right time; building on existing technology strengths is essential

  • Commission sees automotive as one of the 14 critical ecosystems in the EU.
  • Industrial policy should provide the right conditions to boost high-quality jobs and sustainable and safe mobility globally.
  • It is crucial to strengthen critical supply chains, but to keep a strong industrial base the EU should also build on existing strengths in areas such as connected and autonomous driving technologies.
  • Even if public investment has a strong role to play towards accelerating innovation to deliver the green and digital objectives, the industrial strategy should not overlook the importance of providing the right conditions for private investment and access to scalable markets.

in CLEPA, 05-05-2021


CLEPA welcomes today’s publication of the European Commission’s updated industrial strategy and the announced in-depth review to strengthen the resilience of supply chains in critical areas including raw materials and semiconductor technologies. Europe’s automotive suppliers will be a crucial partner to deliver climate neutrality by 2050 while safeguarding jobs and capitalising on the opportunities of the digital transition. The EU’s new industrial strategy has the potential to provide favourable framework conditions for private investments, enable businesses to diversify sourcing where appropriate, and address undesirable independencies while maintaining the advantages of a global supply chain and access to markets.

Public investment in infrastructure and a framework of Important Projects of Common Interests can co-finance and accelerate private investment in critical technologies that are not yet commercially viable but are necessary to enable the green and digital transition. Nevertheless, private investment will play a leading role and an excessively restrictive definition of green taxonomy and regulatory standards with limited technology openness could make it harder for automotive suppliers to deliver the green transition.

CLEPA Secretary General Sigrid de Vries says: “The Commission identified automotive as one of the 14 critical ecosystems for Europe’s economic and industrial fabric. The relevance of automotive for other industries in Europe is particularly strong. Automotive suppliers directly employ 1.7 million people, on top of the 1.2 million people employed by vehicle manufacturers and create significant employment further down on the supply chain in sectors such as steel, chemicals, and capital goods. The automotive sector can play a crucial role in the continued development of the adjacent European electronics ecosystem. Analysts estimate that under the right conditions, the automotive industry alone could create 400,000 European jobs related to electronic and software components for vehicles.

Advanced driver-assistance systems and innovations to optimise powertrains have increased the value share of electronic and semiconductor systems to 35% of a car’s cost, and are likely to rise to 50% with the continued development of autonomous driving technologies and electrification. The current shortage of semiconductor chips unveils supply chain vulnerabilities, but also brings forward new opportunities for a policy that builds on the global leadership of the EU’s automotive sector to stimulate growth in adjacent sectors—like the semiconductor industry. The automotive industry is accountable for 37% of the demand for European semiconductors, highlighting the importance of our sector to meet the EU’s objective to manufacture up to 20% of all leading-edge semiconductors by 2030.”

In this context, the European Commission identified earlier this year connected and autonomous vehicles (CAVs) as a strategic cluster that offers the EU economy significant potential. The European supply industry holds roughly 60% of all global patents in autonomous driving and an estimated 70% of CAV innovations come from European suppliers. An accommodative policy framework that allows industry to expand its leadership on CAV technologies will result in higher demand for more advanced semiconductor chips and increase the EU’s attractiveness as a location for investment in semiconductor production capacity. Research and Innovation funding along with other forms of public investment could help CAV technologies to make the jump from research labs to the market. Where possible, the European Commission should therefore reassess whether committed budgets to projects such as the Cooperative, connected and automated mobility (CCAM) partnership are sufficiently ambitious.

A successful industrial strategy will be reliant on the long game of supporting R&I investment, standard-setting and improving Europe’s role in artificial intelligence research, skills and a strong research and education ecosystem to develop talent. It is furthermore of critical importance that suppliers keep access to markets to allow the production of fledgling innovative technologies at a global scale and remain open for foreign direct investment. If the right conditions are provided, the automotive sector has the potential to be a global leader of sustainable and safe mobility solutions while serving as an essential bridgehead for the wider European industrial base, and an example of a more sustainable, digital, resilient, and globally competitive economy.

 

CLEPA | Smart and safe mobility: The time to come together and advance innovative data-based technologies is now

The spotlight in Brussels is on digital topics this week, with a proposal for regulating the use of artificial intelligence (AI) in the EU and a three-day conference on connected and automated driving, highlighting the contribution of data-based technology solutions to making mobility smart, safe and sustainable.

in CLEPA, by Sigrid de Vries, 22-04-2021


CLEPA welcomes the Commission’s initiative on AI regulation as an important step towards legal certainty for market participants and bolstering consumer confidence in artificial intelligence. AI will be a game-changer in reducing accidents on the road, and automotive suppliers are key players in making the ‘Vision Zero‘ a reality, one of the objectives of the Commission’s Sustainable and Smart Mobility Strategy as well as the United Nation’s sustainable development goals.

The use of AI is becoming more prevalent every day in automotive, particularly in applications providing safety solutions. Features such as emergency braking or lane-keeping systems frequently rely on machine learning AI to recognise lane markings, obstacles, pedestrians, or other vehicles. The amount of software lines in a car far exceeds those in aeroplanes. And with a 30% share today, the value of electronic components in a vehicle is rapidly on the rise.

Within 5 years, most active safety systems in new cars will be—at least partially—AI-based and by 2030 all new vehicles will have AI technology. Further in the future, fully autonomous vehicles will make extensive use of AI. An appropriate legislative framework can boost the development and uptake of AI, provided that requirements remain proportionate to the possible risks. The importance of not hindering innovation unnecessarily cannot be stressed enough.

AI and other data-driven mobility and transport solutions were at the heart of the discussions held this week during the EUCAD2021 conference, the third of its kind since 2018, which focused entirely on how to accelerate Cooperative Connected Automated Mobility (CCAM) in Europe.

Efforts to boost innovation are at the centre of industrial and policy developments. The conference’s marked the birth of the new EU CCAM Partnership, bringing together over 140 private and public partners, including CLEPA and several of its member companies. Over the next few years, EU CCAM will direct €500 million of funding from the Horizon Europe R&I framework programme into pre-competitive research and innovation projects as well as pilot and testing projects.

The CCAM Partnership is an important milestone on the road to safe, sustainable, smart and inclusive mobility. Society needs to advance rapidly towards a new horizon, where vehicles are equipped with advanced technologies communicating with each other while perceiving their environment, road infrastructure, and other road users. The transfer of information and the access to data will be key for vehicle automation in cooperation with other road users, taking the management of traffic and mobility to the ultimate level. Taking an integrated, systemic approach is the only way to dramatically improve road safety and inclusiveness of road transportation.

Is society ready for the automation of transport?

A further key hurdle that needs to be navigated is to do with mindsets. Public and private partners must work to enable confidence in technology. The understanding and acceptance of future driverless cars and trucks needs to be fostered. Is society truly ready for automation? This is a question that the CCAM Partnership must face head-on.

From the perspective of automotive suppliers, important strides have already been made in developing key vehicle technologies.  Further progress is still required to improve precision and robustness, focusing particularly on real-time driving decision-making which must be performed in an entirely safe and unambiguous way.

With the CCAM Partnership, the target is to achieve ‘level 4’ automation: a situation wherein a vehicle can drive itself without human intervention in a wide range of pre-defined, set situations, referred to as the ‘operational design domain’. Examples include highly automated highway-driving applications, where the driver would be free to do other things during the journey as the vehicle controls itself, and automated parking or ‘valet parking’ including to and from a parking space.

‘Sense, think, act’ – the focus of the automotive supply community

The focus of the automotive supply community is on so-called ‘sense, think, act’ technologies and solutions. ‘Sense’ refers to the scanning of the driving environment, ‘think’ regards interpreting the data and making decisions, and ‘act’ is about manoeuvring the vehicle on those basis’. Important targets for innovation include guaranteeing safety and reliability, and further improvement of the human-machine interface.

The CCAM Partnership has been conceived to align R&I efforts between all involved stakeholders. Fragmentation is a real risk since so many different actors must work together: member state governments, member state road authorities and operators, providers of digital and physical infrastructure, cities, and of course also industry, research institutes, and service providers.

CLEPA sees alignment as crucial to avoid fragmentation and, hence, accelerate the implementation of innovative CCAM technologies and services across Europe. Now is the time that we must come together: we all have common issues to solve, and we are still in the pre-competitive phase.

This leads to another important dimension of the CCAM Partnership: European leadership. By working together, we need to ensure the future within an increasingly competitive global market.  Other regions around the world are certainly not standing still. Particularly in Asia and North America, where huge strides are being taken.

Europe needs to move rapidly to remain at the forefront

Europe needs to move rapidly to utilise our strengths in innovation at all levels and in all sectors of the future mobility and transport systems to remain at the forefront.  At the same time, we need to be open to international cooperation. We need to be well-aligned, globally on the framework conditions, defining technical regulations and setting standards.

The target, as highlighted in the CCAM’s Strategic R&I Agenda, is “European leadership in safe and sustainable road transport through automation”. The €500 million of European funding should provide the catalyst to accelerate the innovation ‘reaction’. At the same time, significant additional public and private investment will still be necessary to make connected and automated mobility a reality in Europe and around the world in the coming decade.

Europe can indeed assume a leading role and it is an opportunity we should not miss. CLEPA is convinced that the CCAM Partnership will help move Europe in the right direction, and the automotive suppliers in Europe are supporting every step of the way.

Sigrid de Vries

CLEPA Secretary General

 

CLEPA | Artificial Intelligence Regulation: A coherent regulatory framework for automotive products is essential

The Commission put forward a legislative proposal today aimed at regulating artificial intelligence (AI) in the EU and fostering innovation in this fast-paced area. The proposal focuses on “high-risk” AI applications and sets mandatory requirements that AI system providers must fulfil before placing them on the market.

in CLEPA, 21-04-2021


CLEPA welcomes the Commission’s initiative and its work providing legal certainty to market participants and bolstering consumer confidence in artificial intelligence

A balanced AI legislation can accelerate the development of safer vehicles and the EU’s own objective to eliminate road casualties by 2050

Artificial intelligence is becoming more prevalent every day in automotive solutions, particularly in those providing safety benefits. Applications such as emergency braking or lane-keeping systems frequently rely on machine learning AI, which trains them to recognise lane markings, obstacles, pedestrians, or other vehicles. Within 5 years, most active safety systems in new cars will be—at least partially—AI-based and by 2030 all new vehicles will have AI technology. Further in the future, fully autonomous vehicles will make extensive use of AI.

Sigrid de Vries, Secretary General of the European Association of Automotive Suppliers, highlights: “An appropriate legislative framework can boost the development and uptake of AI by providing market participants more legal certainty and bolstering consumer trust. However, the importance of not hindering innovation unnecessarily cannot be stressed enough. Burdensome requirements would jeopardise the development of safer vehicles and the EU’s own objective to eliminate road casualties by 2050. Regulatory requirements should always remain proportionate to the possible risks.” CLEPA considers that the proposal published today goes in the right direction by ensuring that automotive products remain primarily regulated through their sector-specific framework.

The legislative proposal is now in the hands of the EU’s co-legislators, the Parliament and the Council. In this context, automotive suppliers wish to reiterate the need for a coherent regulatory framework on AI. The automotive sector is already subject to strict ex-ante conformity controls designed to ensure the safety of vehicles. CLEPA believes that AI-related technical requirements for automotive products must be implemented into the existing vehicle type-approval framework, rather than duplicating certification, testing, and market surveillance. Automotive suppliers trust that the co-legislators will support the Commission’s approach in this regard.

CLEPA’s views on artificial intelligence are further outlined in a position paper adopted in December 2020. The automotive supplier industry stands ready to support EU policymakers throughout the adoption process of this new regulatory framework for AI.

 

Read the position paper

 

 

EU Green Deal too important to fail environment and industry

The envisaged early review of the CO2-emission targets for cars and trucks for 2030 confronts the European Commission with an uncomfortable dilemma. The review offers a compelling opportunity to increase the efficiency of the available regulatory levers, allowing manufacturing competitiveness and employment to be preserved while delivering on ambition.

in CLEPA, by Sigrid de Vries, 17-03-2021


However, the timeframe of the forward-hauled review is so tight—it is set to be accomplished by June this year—that any serious rethinking of the available instruments is deemed ‘too cumbersome and too complex, while inviting the risk of unwelcome delays.’ Or so it echoes in Commission corners.

Are these concerns credible?

The EU Green Deal, coined as a green growth strategy, is too important to fail. There is too much at stake for the environment, workers, citizens and industry alike. It would be equally ‘unwelcome’ to risk massive collateral damage as a result of EU policy that is rightly aiming for bold and ambitious reforms.

As laid out in detail in the new CLEPA position paper on climate neutral transport, the Commission should seriously consider solutions that can make a difference and that actually already exist, within the current framework of policies and legislations. This is neither complex nor cumbersome, and it does not need to cause delay.

Simply upping the target levels without accompanying measures to making them viably implementable will not do the trick for the environment and cannot be considered as responsible policy making either. Such an approach risks doing an irreparable damage to the economic fabric that is fundamental for Europe’s capability to innovate and meet its goals.

What do the available policy levers consist of?

First, there is a need for the large-scale delivery of electric charging infrastructure to enable the current plans for vehicle technology targets to be achievable. At present, the number of public charging stations stand at 220 thousand, disproportionately spread across the EU. Significantly more stations will be needed to achieve the existing 37.5% reduction target for cars, and every additional percentage point will require correspondingly more charging stations and power infrastructure to serve them. The pending revision of the alternative fuels infrastructure directive should be used to mandate member states to make the necessary investments.

Second, technology should be allowed to deliver on climate neutrality, rather than regulation prescribing or banning technology. The full range of efficient technologies, renewable energy and climate-neutral fuels will be needed, so that the right technology can be chosen depending on the use case: highly-efficient piston engines powered by hydrogen or sustainable renewable fuel, electric vehicles (battery electric and fuel cell electric), hybrids and plug-in hybrids.

Importantly, technology openness will offer a choice to those consumers and businesses for which electrification is not a practical or cost-effective option, enabling them to take older, higher-emitting vehicles off the road. The definition in green procurement standards of zero and low emission vehicles should therefore include all technologies enabling zero and low emission driving. Plug-in hybrids with an electric range of 80 km should be treated the same as battery and fuel cell electric vehicles. Suppliers support the implementation of on-board fuel consumption meters to reflect as much as possible real driving emissions. Technology can also help secure electric-mode driving.

Policy should activate a link between CO2-targets for vehicles and incentives to invest in defossilised fuels

Third, policy should activate a link between CO2-targets for vehicles and incentives to invest in defossilised fuels to deliver on the objective of climate-neutral transport and mobility. Complementing electromobility, it is realistic to expect vehicles with an internal combustion engine on the roads up to 2050 and beyond.

With the use of renewable and low carbon fuels, CO2 emissions would decline from the get-go. Defossilising fuels has an immediate effect on emissions from all cars and trucks on the roads, not only new vehicles. Renewable fuels can be deployed in the existing fuel infrastructure, and can be produced efficiently.

Clean combustion is a viable option, also regarding air quality, as recent data from the UBA, the German Energy Agency, has demonstrated. The regulatory framework should recognise and foster the reduction potential of renewable fuels in transport. This doesn’t need a major overhaul; the instruments are there, such as the existing sustainability certification scheme for transport fuels in the Renewable Energy Directive.

A system, for example, of providing CO2 credits in exchange for the use of renewable fuels can deliver substantial CO2 savings cumulatively by 2030, as calculated by Frontier Economics, 2020 for the German ministry of economy. Such crediting scheme can provide a pull to market-driven carbon-neutrality, facilitating the efficient use of different technologies. The scale in road transport would also help to pave the way for the use of renewable fuels in hard-to-electrify sectors such as shipping and aviation.

The direction of travel and the speed of the journey are crystal clear and automotive suppliers are heavily invested in the change

To be clear, this is not an argument against electrification of the drivetrain, nor do automotive suppliers argue to slow anything down. The direction of travel and the speed of the journey are crystal clear and fully supported. The industry is heavily invested in the change, as illustrated this week once more by the CLEPA Pulse Check survey of its members.

Ours is an argument in favour of a pragmatic approach, a ‘win-win’ for climate and jobs, one that harnesses EU industrial capacity and creates a level playing field for technology options to compete in the marketplace in the EU, but also globally.

There are significant opportunities for the mobility industry to remain a key contributor to well-paid employment, and to help secure the EU’s role in a global green and digitalised economy. But there are also significant risks involved. Especially when forced disruption takes precedence over rapid yet efficient transformation. The jobs at risk are, in many cases, not easily interchangeable with newly created jobs elsewhere in the mobility value chain. Many livelihoods will be impacted dramatically.

Industry and society need to be given the chance to manage an ambitious transition. The current regulatory framework has the instruments in place to help deliver short-term. They need to be seriously considered and mobilised.

Sigrid de Vries

CLEPA Secretary General

Automotive supply industry confidence picks up considerably – CLEPA Pulse Check

  • Profitability expected to stabilise on back of growing order intake
  • Sentiment positive despite hindrances in supply of semiconductors and other critical materials
  • Nine out of ten suppliers are reviewing and adapting product portfolio

in CLEPA, 16-03-2021


Automotive suppliers have become significantly more optimistic with their outlook on 2021, with 38% of surveyed suppliers showing positive forecasts compared to just 8% six months ago. Yet, 31% of respondents still hold a notably negative view, a much higher share than in pre-Corona times. This follows from the latest CLEPA Pulse Check survey on business sentiment in the sector, held late February into early March.

The majority outlook is robust in response to the much faster than expected rebound of the global automotive market, with four out of five suppliers expecting to increase order volumes in the next 12 months. Profitability is foreseen to stabilise further, with numbers above 5% in reach for over four out of ten respondents again.

“Sentiment is improving despite the continued concern on the impact of the pandemic and the current difficulties with deliveries of semiconductors and other critical materials, like steel and plastics, and constraints in transport and logistics capacity, all of which do have a dampening effect”, said Sigrid de Vries, CLEPA Secretary General. Over 60% of respondents in fact indicate to be impacted by these difficulties, resulting in delayed or interrupted production.

Respondents acknowledged that the semiconductor crisis has unveiled flaws in the just-in-time supply chain management. This has been compounded by low upfront chip commitment, and competing with strong demand in consumer electronics and a saturated capacity with base-chip manufacturers. Short-term recovery is not expected before at least another 3 months, and concerns are raised about the traditionally strong consumer demand  in the third and fourth quarters ahead of Christmas shopping. De Vries: “Suppliers and OEMs must work to increase their visibility on demand along the whole chain and leverage the rapidly growing automotive demand toward other sectors.”

Situation on the ground 

A closer look at the overall sentiment reveals a considerable number of both bullish and more bear-sighted respondents, with the share of neutral views fading. De Vries: “The situation on the ground differs depending on exposure to global markets, impact of the COVID-19 crisis, level of advancement towards new opportunities in connected and automated driving and alternative powertrain solutions including electric motors, axles and battery management systems, and the need to manage change in a shrinking market.” The rebound in order volumes is mainly seen in China and the US, with Europe lagging behind. 

The pandemic is accelerating the structural transformation of the sector on the road to digital and carbon-neutral mobility, which had already started before 2020. “During the crisis, many companies have drastically cut costs and these measures are now paying off. With expectations on the pace of the economic recovery in 2021 until only recently having been much more modest, companies now see their order books filling up fast, allowing for an uptake in investment spending and planning.”  

Dramatic change 

Market watchers agree that the need for further structural measures has not gone away. “The race to stay competitive is on, and there will be winners and losers as a result. This is indeed visible in the CLEPA Pulse Check. Only 4% of respondent do not foresee dramatic change in their businesses in the next 5 years. This number has not yet been so low”, added De Vries. 

Change is expected to culminate in further consolidation of the sector (70% of respondents rank this number one). 68% refer to an expected shift in profit pools from traditional components to software. Half of respondents point at the increasing importance of activities involving key high-tech components.  

So-called sunset components are believed to become even more commoditised with lower margins resulting consequently. For those active in combustion engine related technology, the increasing demand for electrified solutions puts significant pressure on their business model. With global automotive volumes not foreseen to reach beyond 100 million units again any time soon, the overall pie is also shrinking.   

Portfolio shift 

For many, the challenge is to maintain revenues while making substantial investment in alternative solutions, without an immediate return in sight. The demand for electrified vehicle is increasing but the overall share in sales is still modest, reaching 11% of market share in Europe in 2020. The same applies to smart mobility and connected services. The fight for a part of the future share is, however, taking place right now. 

Nine out of ten suppliers are currently reviewing and adapting their product portfolios. The Pulse Check reflects the various strategies they currently deploy to manage change. Foremost, 61% of respondents ranked in-house development of new technologies a priority, secondly, 51% opt for change of strategic focus within the existing portfolio, with consolidation and mergers and acquisitions ranking almost equally third (32%) and fourth (29%). Interestingly, half of suppliers also actively explore markets for their technology solutions outside of the automotive realm, notably in household appliances and charging solutions. 

CLEPA performs the Pulse Check survey twice a year, surveying CLEPA members with the support of McKinsey who aggregate the data. 

 

European steel users call on Commission to terminate safeguard measures on 30 June 2021

In response to today’s announcement by the European Commission that it will review the safeguard measures on steel, in place since 2018, a coalition of downstream users of steel is urging the Commission not to extend the measures beyond their expiry date this June.

in CLEPA, 26-02-2021


While the COVID-19 pandemic has severely impacted manufacturing activity across all sectors in Europe during 2020, production levels are now increasing and are expected to continue to do so as the economy recovers during 2021.

As a consequence, and since the second half of 2020, companies are facing surging prices for steel products and long delivery times because of an insufficient domestic supply. Due to the safeguard measures currently in place, reduced competition from third countries means that import alternatives aimed at easing cost and lead-time pressures on European manufacturers have been limited.

The possibility of extending the safeguard measures beyond June 2021 adds to the uncertainty and adverse market conditions that steel users are currently facing.

It is in the interest of downstream users to rely on a strong and competitive EU domestic steel industry. Excessive protection will only result in an uncompetitive European steel industry, to the detriment of downstream users and final consumers. Therefore, the steel safeguard measures should expire on 30 June 2021 as foreseen.

 

The coalition of EU trade associations representing the interests of downstream users of steel consists of ACEA, APPLiA, CECE, CEMA, CEMEP, CLEPA, Orgalim, and WindEurope.

 

2021.02.10 Joint PR-Review of Steel Safeguard Measures_vF

 

 

CLEPA welcomes the European Commission’s new trade strategy and is ready to continue to engage

CLEPA recognises that today’s communication confirms the EU’s growing attention for sustainability and level playing field. CLEPA will continue to play a constructive role ensuring that trade policy initiatives that aim to address legitimate concerns regarding level playing field, supply chains, human rights and sustainability are shaped effectively and do not result in counterproductive outcomes. It will be crucial to ensure that trade policy instruments do not circumvent or undermine the WTO. Instruments that could be perceived as protectionist should be carefully considered and trade partners should be consulted to avoid trade tensions and a spiral of retaliation measures. Trade in innovative and sustainable technologies will play a key role realising the objective of a sustainable and circular economy, highlighting the importance of a trade strategy that facilitates a global flow of goods and access to markets.

in CLEPA, 18-02-2021


CLEPA Secretary General Sigrid de Vries said: “CLEPA welcomes the European Commission’s new trade strategy and the clarity the communication provides on the core objectives of the EU’s trade policy. Europe’s automotive suppliers agree that an open trade regime is at the centre of Europe’s economic prosperity and competitiveness. Continued access to global markets and a stable, global trade environment will be crucial for our sector to recover from the current crisis and continue to invest to maintain our leading role as innovators in sustainable and safe mobility.   

The openness of the Single Market and Free Trade Agreements create opportunities for businesses across the world and help attract investments, creating jobs and strengthening Europe’s economic fabric. CLEPA will continue to support the Commission in its efforts to negotiate trade agreements with third countries and endorses ratification of concluded agreements, including the FTA with Mercosur. The Commission rightly pursues reform of the World Trade Organisation, as it will play a crucial role providing a secure and stable framework for international trade and investment.  This is particularly true for automotive suppliers who rely on an open and stable trade environment to fulfill a leading role in the global supply chain. The scale of the global market allows our industry to provide 1.7 million direct jobs in the EU alone and invest €30 billion a year in innovation.

CLEPA | Sheer dimension of chip shortages requires rethinking by industry and policy makers

The sheer dimension of the semiconductor shortage and the complexity of solving both short and long term issues requires rethinking of supply chain options by both industry and policy makers. It also signals how 2021 may well become a year of great volatility for manufacturing industries.

in CLEPA, by Sigrid de Vries, 17-02-2021


Many elements are coming together in the current semiconductor shortage in the automotive industry: from the fall-out of the COVID-19 crisis and the unpredictability of crisis recovery, to increased automotive demand for chips due to assisted-driving functions and electrification, to geopolitical and natural disaster ‘de-risking’, to competing demand from other sectors.

In the first wave of the pandemic, the automotive industry came to an almost complete standstill and had to dramatically adjust production volumes to fence off costs, with little to go on as regards timing and speed of the recovery. When demand then picked up rapidly, many were still wary on how solid the trend would be. The automotive supply chain for advanced chips is typically long and this added complexity: many actors need to align and sync their demand and supply.

Marked volatility may also hit sourcing of other key materials

In January 2021, the sector saw itself confronted with a large gap between ordered and produced vehicles, coupled with a higher demand for 2021 than scenarios foresaw and much lower stocks than usual. In addition, demand for electric vehicles started soaring driven by acceleration of the green transition, increasing pressure on semiconductor demand.

Industry and market watchers expect the disruptions to last well into the second half of the year, with great variety in who will be hit and for how long. Industry sources also warn that similar patterns may occur throughout 2021 in the sourcing of other materials needed to build cars as well as industrial goods and consumer products. A continued, marked volatility in demand, driven by uncertainty around the containment of the pandemic, regional variations, and difficulty to predict purchasing behaviour, may cause disturbance in the supply of essential resources. Logistics may be vulnerable too, with demand soaring in China taking away capacity from elsewhere.

The unmistakable trend, however, is that automotive demand for semiconductors will continue to grow big time due to the increasing share of automated and assisted driving technologies to keep drivers comfortable and safe, as well as the electrification of vehicles with the required sophisticated management of battery performance and other electronics.

Automotive demand for semiconductors will continue to grow big time

On average, a vehicle today already contains around a hundred advanced semiconductors chips, a steep increase compared to only a decade ago, but the value of semiconductor content of electrified vehicles can be up to three times higher. Expert estimations hold that electronics and semiconductor materials could represent up to 45% of the value of a car by 2030.

Automotive supplies are already heavily invested in vehicle electronics, covering the wide range of applications from on-board comfort and infotainment systems to active-safety features to battery and wider powertrain management. With activity and employment rapidly diminishing in combustion engine based technology, the expansion into ‘digital’ offers substantial opportunities.

Whereas the European semiconductor ecosystem currently provides employment for 200,000 people, McKinsey estimated in 2019 that under the right conditions, the automotive industry alone could create 400,000 European jobs related to electronic and software components for vehicles. Currently, 1.7 million people are employed by the automotive suppliers in Europe, on top of the 1.2 by vehicle manufacturers.

However, the investments needed amount to billions of euros and the return in both revenue and employment levels is years off in comparison to the impact of the restructuring costs and R&D efforts made in the here and now. In this light, the semiconductor events not just underline the attention required for the diversification and resilience of the supply chain. They also raise strategic questions for Europe.

Questions that the European Commission will try to partly address through a Microelectronics Alliance for Europe, to be launched next month, in analogy to the earlier established European Battery Alliance. The German and French governments are also looking to increasing industrial activity in this field, as voiced in a joint statement this week, notable through the IPCEI instrument (Important Project of Common European Interest), and argue that the European Recovery and Resilience Funds should be used for this.

Focus should be on R&I and market demand, rather than on subsidies and reshoring

The European Commission will look at both manufacturing options as well as strategic R&I, and this is the right approach. Both aspects need careful consideration. Successful industries do not result from subsidies and government intervention towards reshoring, but follow market demand and concrete business cases. The focus on R&I will be critical, as will the availability and strengthening of digital skills and competence throughout education and employment in Europe.

The key challenge will be to secure advanced semiconductor development and production in Europe, sharing base technology between players while allowing enough space for diversification, on a scale to profitably supply a home market as well as players abroad. The Commission has rightly identified automotive as one of four sectors to focus on. Automotive globally is responsible for around 10% of semiconductor demand, yet in Europe for 37%: there will be no successful European semiconductor strategy in which automotive won’t play a key role.

European semiconductor strategy cannot be successful without a key role for automotive

The future semiconductor strategy is connected to the wider question of how to ensure that EU industry as a whole captures business and employment opportunities in electronics, software and artificial intelligence and secure its future relevance. In this light, also the upcoming Digital Decade Strategy of the Commission and the review of the EU Industrial policy will need careful calibration. The many strategies and initiatives must be coherent and mutually reinforcing.

A successful industrial strategy will have to rely on the long game of supporting R&I investment, standard setting and improving Europe’s role in artificial intelligence research, skills as well as its attractiveness for international talent. The automotive sector has the potential to serve as an essential bridgehead for the wider European industrial base to capture opportunities of an increasingly digital economy.

Sigrid de Vries

CLEPA Secretary General