CLEPA | Putting people at the centre of the mobility transition is essential to achieving the Green Deal

The mobility transition, which is unprecedented and already upon us, will have a tremendous impact on both jobs and consumers. The way in which we move people and goods will require a decisive shift towards carbon-neutral mobility. Electrification, in all of its forms, is a big part of the way forward, but a 100% reduction at the tailpipe as proposed in the European Commission’s CO2 standards for cars and vans effectively excludes existing synergies and parallel solutions that can and should play a role in a green AND just transition. Three Parliamentary Committees are currently rightly reviewing the high interests at stake.

in CLEPA, by Sigrid de Vries, 27-04-2022


Promoting sustainable consumerism through Life-Cycle Assessment

Having choices gives people more control over what they buy, allows for more competitive prices, and the greater the likelihood of finding what fits their needs. To help consumers make informed and sustainable vehicle purchases, EU countries are required to ensure that relevant information is provided, including a label showing a car’s fuel efficiency and CO2 emissions. Currently this label only assesses the emissions coming from the vehicle’s tailpipe. Meaning, it doesn’t look at the carbon footprint holistically – from cradle to grave. This gives consumers a false sense of security that their car can be entirely emissions free.

People deserve to know the actual carbon footprint of their vehicle to make the best informed decisions. Only through a life-cycle assessment (LCA) can you know how green your car truly is. All process and flows of resources and energy associated with production, usage and recycling must be considered. This is important in order to balance all technology options, given that most of the emissions from conventional vehicles come from the use phase, where for EVs for example, the production phase on average accounts for a larger share of total emissions.

Just last week, Green NCAP announced its first LCA results, examining the full environmental impact of some of Europe’s most popular cars in order to help car buyers make more sustainable choices. This is certainly a step in the right direction and sets the stage for the first long-term and harmonised vehicle LCA platform for the European market.

Further, the recently issued IPCC Climate Report confirms the necessity to act against climate change. It identifies electric vehicles as the most efficient way forward. However, the report also mentions that electrifying transport will require continued investment in supporting infrastructure to scale up deployment. It recognises that the mobility sector encompasses needs and technologies that are very diverse. For this reason, the IPCC takes into consideration the role that alternative fuels can play alongside electrification in decarbonising road mobility, especially in hard to abate segments, but not only. The report, therefore, recommends adopting an LCA approach to determine CO2 emissions along the entire value chain, and not just at the tailpipe.

Affordable mobility a thing of the past?

The EV transition is well underway, and it makes sense that the shift would be easier for premium car manufacturers who serve a market segment that can afford to be early adopters. The announcement that Volkswagen wants to move into the luxury segment could be considered a proof-in-point. Electrification is increasingly seen as the way forward for OEMs, especially in Europe, but the cost of building them is having an impact on the availability of affordable small and medium-sized cars.

Strong criticism on the cost of EV production and the current policy approach has come from the Stellantis Group’s president, Carlos Tavares, who argues that electrification is a political choice which drives up vehicle costs, and leaves aside cheaper and faster ways of reducing carbon emissions. The electrification race in Europe is also positioning foreign manufacturers, historically weak in Europe, to gain market share thanks to their affordable price points.

Reaching cost parity is also linked to many other uncertainties, such as energy prices, and new import dependencies in raw materials and battery cells. In the past days, German MEP Ismail Ertug warned against the danger of continuing to build interdependences with non-democratic countries, as recently seen in Russia with energy imports.

A technology ban risks over half a million auto supplier jobs in the powertrain segment alone until 2040. It also risks affordable mobility and limits consumer choice. A technology open approach, including electrification, sustainable renewable fuels, hybrid technology, hydrogen and other net-carbon solutions should be part of a balanced policy framework.

Tech openness empowers citizens, innovation, and resilience

We should be careful not to lose our global competitiveness and decades of investment by betting on only one solution and pricing out many citezens from personal mobility. The main objective with the mobility transition should be to reach climate goals while meeting diverse mobility and transport needs for all, regardless of financial means.

A transformation of such magnitude cannot happen without taking into account European citizens. Those that rely on advanced combustion engines for their livelihoods, and those for whom changing cars is a major investment, should not be forgotten. Policymakers need to safeguard economic and societal needs as well as protect employment.

While historically the focus has been on the tailpipe emissions of cars and light-duty vehicles, LCA demonstrates the importance of including emissions from the entire vehicle value chain, including for alternative powertrain technologies, to accurately assess a vehicle’s carbon footprint.

CLEPA supports the recent vote in the European Parliament’s Industry (ITRE) Committee to develop a methodology for the assessment and the consistent data reporting of the full life-cycle but believes this should come now. We also support ITRE’s decision to adjust the CO2 target to 90%, which allows for the further use of different technologies needed to better manage the transition to climate neutrality. This signal of technology openness is promising ahead of the upcoming Transport (TRAN) and Environment (ENVI) Committee votes on the CO2 standards. In order for the Green Deal to succeed, cars need to be green, affordable and fit for purpose.

Sigrid de Vries

CLEPA’s Secretary General

 

Automotive sector organisations launch joint vision for the transition pathway of the mobility ecosystem

Employees and consumers should be at the heart of the transformation of the automotive sector

in CLEPA, 26-04-2022


In January 2022, the European Commission published its vision for the transition of the mobility ecosystem. This document includes a range of scenarios for transforming the automotive, rail and shipping industries – encouraging synergies between these sectors.

In response, the European Association of Automotive Suppliers (CLEPA), the European Automobile Manufacturers’ Association (ACEA), the European Council for Motor Trades and Repairs (CECRA) and the European Tyre and Rubber Manufacturers’ Association (ETRMA) have published their ‘10-point action plan for a resilient, innovative, sustainable and digital mobility ecosystem’.

Employees and consumers should be at the heart of the transformation of the automotive sector, the associations argue. The environmental and digital implications of the Green Deal should be key pillars of the transition pathway, not forgetting recent supply chain disruptions caused by COVID-19 and the war in Ukraine.

 

Download the 10-point action plan

 

 

 

CLEPA | The European Parliament’s ITRE Committee sends an important signal of technology openness

  • Adjusting the target to 90% allows for the further use of all technologies needed to better manage the transition to climate neutrality, including plug-in hybrid electric vehicles
  • CLEPA supports the request to develop a methodology for the assessment and the consistent data reporting of the full life-cycle

in CLEPA, 20-04-2022


Today the European Parliament’s Committee on Industry, Research and Energy (ITRE) voted on amendments to the proposed CO2 standards for new passenger cars and light-duty commercial vehicles, published last July by the Commission as part of the Fit for 55 package.

A majority of ITRE members voted in favour of adjusting the 100% CO2 emissions reduction target proposed by the Commission to a 90% target, compared to 2021 levels. The targets for 2025 and 2030 remain unchanged. A proposal to recognise the contribution of renewable fuels for compliance with the targets was missed by two votes for a majority.

“The vote in the ITRE Committee sends an important signal of maintaining technology openness in the CO2 regulation, as a 100% target measured solely at the tailpipe would be a de facto ban on the internal combustion engine. Adjusting the target to 90% allows for the further use of all technologies needed to better manage the transition to climate neutrality, including plug-in hybrid electric vehicles,” says Sigrid de Vries, Secretary General of CLEPA, the association representing automotive suppliers in the EU.

Further, CLEPA supports the ITRE Committee’s request to the European Commission to develop a methodology for the assessment and the consistent data reporting of the full life-cycle CO2 emissions of passenger cars and light commercial vehicles by 2023. Ms de Vries goes on to say, “We are glad to see ITRE members underscore the strong need to put forward a methodology to accurately measure the full carbon footprint of a vehicle along its life-cycle. This is essential to effectively reduce emissions, and not merely displace them along the value chain. This holistic approach is indispensable to reaching climate neutrality, and we hope to see the Commission act swiftly.” Making the step towards recognising emissions reductions in the use-phase via renewable fuels is, however, overdue. With the crediting system, a fully developed, concrete proposal is on the table. It bridges the gap between the high level of ambition, which we need, and the monumental effort which is required to get there.

Furthermore, the committee maintains eco-innovations and rejects calls for an earlier phase-out of incentives for zero and low-emission vehicles (ZLEVs). “It is important to maintain incentives for the continued uptake of efficient technologies until a holistic methodology for life-cycle emissions is in place. ZLEVs will continue to require support, therefore maintaining incentives is a positive decision,” says Ms de Vries.

The vote in the ITRE Committee is not binding but gives a positive indication as to possible majorities in other committees and the Plenary. The leading ENVI Committee is scheduled to vote on its position on 11 May, the vote in the Plenary is planned to take place in June.

 


 

About CLEPA

CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3,000 companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative technology for safe, smart and sustainable mobility, investing over €30 billion yearly in research and development. Automotive suppliers in Europe directly employ 1.7 million people in the EU.

 

 

Cross-industry coalition calls for a robust policy framework to kick-start the mobility transition

The automotive, energy generation, electricity and charging infrastructure industries have come together to urge the European Parliament and Council to adopt strong, interconnected policies to accelerate the transition to zero-emission and CO2-neutral mobility.

in CLEPA, 18-03-2022


The sectors – which are all key players in the decarbonisation of road transport – launched their first-ever common appeal to policy makers at a cross-industry roundtable in Brussels today.

First and foremost, increased investment in charging and refuelling infrastructure for alternatively-powered cars, vans, trucks and buses is urgently needed, according to the industry coalition. The EU will therefore need to adopt higher targets for both public and private infrastructure than those foreseen in the European Commission’s Alternative Fuels Infrastructure Regulation (AFIR) and Energy Performance of Buildings Directive (EPBD) proposals.

To make charging and hydrogen refuelling stations commercially viable during the ramp-up phase of electric vehicles, public support, financial incentives, co-funding and mandatory targets are needed. This is crucial to ensure that a minimum infrastructure network becomes rapidly available across the EU, say the co-signatories. Public intervention is needed now for a limited period, especially in areas where the roll-out is slower.

The ramp-up of infrastructure should go hand-in-hand with the transition to zero-emission energy. Indeed, moving towards climate-neutral transport and mobility only makes sense if the transition to zero-emission energy happens in parallel. Incentives should therefore be given to encourage the use of zero-emission energy in the transport sector, the signatories argue. Accelerating permitting procedures to deploy the needed renewables generation capacity is key.

The end-user should also not be forgotten, with policies ensuring a customer-centric charging eco-system that is affordable and allows for EU-wide roaming, without prejudice to the contractual freedom of this market’s operators.

The industries were represented by their associations: the European Automobile Manufacturers’ Association (ACEA), the European Association of Automotive Suppliers (CLEPA), Eurelectric (the wider electricity industry), WindEurope (the energy generation sector) and ChargeUp Europe (the electric vehicle charging infrastructure industry).

 

DOWNLOAD THE FULL JOINT STATEMENT

 

 

CLEPA | Fit for 55 | After the summer enthusiasm, prudence seems to be gaining ground

Something seems to have shifted in the past few months. The enthusiasm triggered last summer by the European Commission’s ‘Fit for 55’ proposal on CO2 standards has been somewhat replaced by pragmatism, and a more sensible approach seems to be spreading among EU legislators.

in CLEPA, by Sigrid de Vries, 16-02-2022


As I already noted in my July 2021 editorial, rather than a political pact, the legislative initiative came in the form of a technology ban, de facto prescribing what automakers can produce, and what consumers can buy: full electric battery vehicles only as of 2035. Back then concerns were raised, and not only from the automotive supplier industry, but the emphasis often went to the positives, of which there are many, but that doesn’t take away from the fact that this transformation concerns people and businesses in a very real and disruptive way.

This is why CLEPA recently commissioned a study, carried out by PwC Strategy&, to better understand the practical implication on the 600K+ jobs currently in the Internal Combustion Engine (ICE) powertrain domain, with the aim to provide fact-based evidence and inform policy decisions to avoid unintended consequences. The results of which sent a stark warning that over half a million jobs in the powertrain domain are at risk until 2040 with an Electric Vehicle (EV)-only policy approach.

From a global perspective, no other major auto market has opted for a technology ban, instead recognising the importance of a mixed technology approach

One of our key arguments has been that maintaining a technology neutral approach, which includes rapid electrification in combination with sustainable renewable fuels, will enable us to reach carbon-neutral mobility while mitigating job losses and maintaining our global leadership position.

Let’s zero-in for a moment on this last issue – global competitiveness. Indeed, one way to maintain EU leadership is to ramp up electrification and to establish a battery supply chain, which the supplier industry not only fully supports but is actively investing in, despite existing uncertainties. And many automakers have, accordingly, revised their long-term strategies under regulatory pressure, with various announcements on ‘electrified engines only’ after X date. However, that’s basically only in Europe. From a global perspective, no other major auto market has opted for a technology ban, instead recognising the importance of a mixed technology approach.

In the U.S., the Federal government is pushing to scale up the sale of EVs and charging infrastructure, but without making commitments to ban ICE vehicles. China is betting on a multi-tech approach with an increasing market penetration of New Energy Vehicles, with no bans though. Such an approach was reflected in the last COP26, where the EV-only scenario lacked global consensus and failed to get the endorsement of main mobility-tech States and industry players, citing considerable social impacts, without ensuring an efficient and effective transition to reaching climate goals, as it left behind a wide range of green technologies (not to mention a wide cross-section of consumers). And in fact, in recent weeks, what seemed like a foregone EV-only conclusion has turned into a more measured discussion on, quite literally, leaving our options open.

Andy Palmer: the former CEO of Nissan, the man behind the launch of the first mass-market electric vehicle, warned legislators about the danger of focusing solely on electric vehicles to decarbonise mobility. Then Peugeot’s new CEO Linda Jackson, in an interview following her appointment, stressed that there is still a need for ICEs cars around the world. In the Financial Times, at the beginning of January, statements appeared from Toyota, Stellantis and BMW in a long-read piece, noting their hesitation to go ‘all in’ on electric vehicles. Shortly afterwards, BMW also announced that it is continuing to invest in advanced combustion engine technology, while Carlos Tavares, CEO of Stellantis, pointed out in an interview with four major (French, German, Italian and Spanish) newspapers the risks involved in a transition linked to “a technology chosen by politicians, not by industry.” Porsche announced investments in renewable fuels in South America, where there is an abundance of renewable energy, and its boss, Oliver Blume, highlighted the importance of needed solutions to address the 1.3 billion ICE vehicles running today worldwide, while Hyundai has denied that it is abandoning the development of combustion engines after a news report had claimed the contrary.

We would be wise to take note of the global context and what a one-size-fits-all solution in the EU would actually mean for our global competitiveness.

Of course, that’s not to say that these industry leaders aren’t fully dedicated to the mobility transition. All major OEMs are heavily invested in rapid electrification and committed to climate goals, but some have chosen to keep a technology open approach to address different market uncertainties and diverse consumer needs. We would be wise to take note of the global context and what a one-size-fits-all solution in the EU would actually mean for our global competitiveness. In fact, there are already signs that some foreign manufacturers are gaining new market share in European markets thanks to EVs, where they historically had difficulties competing with European manufacturers. Further, given that other markets will continue to sell ICE vehicles for the foreseeable future, Europe would be doing itself a disservice not to leverage the many years of investments and expertise in advanced combustion engine technology, bearing also in mind that investments into EVs will need to come from somewhere.

While the road to electrification is well marked, how we should transition is not. The complexity of the social and economic implications did not get enough attention at the start of this discussion, and certainly much work remains to be done, but it would appear that prudence is slowly but surely, at least starting to balance the haste.

With the on-going discussions in the Parliament, we have seen more than 650 detailed amendments tabled in the ENVI committee, including on the de facto ban on all but electric vehicles, and whether that decision is too soon to take now, or if we should hold off until 2028 to see how the transition is evolving, including the development of much needed charging infrastructure. Amendments calling for a voluntary fuel crediting mechanism, to account for the contribution of sustainable renewable fuels to emissions reductions, are also being contemplated. In the Council, heavyweights like Germany and France will play an important role in the outcome.

As our President, Thorsten Muschal, rightfully noted, “the fog in which we find ourselves is all the more reason to push ahead towards the certainty of climate neutrality. But this will require a full commitment to innovation coupled with a flexible regulatory framework that facilitates investment, anticipates change, and allows for the full scale of technological progress.”

Let us see if prudence is indeed hastened, towards a green AND just transition.

 

Sigrid de Vries

CLEPA’s Secretary General

 

 

 

CLEPA | Global production shortfall of nearly 10 million vehicles in 2021 highlights urgent need for EU Chips Act

Speed is of essence for an EU comprehensive semiconductor investment plan, as other regions move ahead.
CLEPA publishes a policy guide with concrete actions to ensure the success of the upcoming EU Chips Act.

in CLEPA , 02-02-2022


The chips shortage continues to pressure industry and presents a significant to existential challenge for automotive suppliers, highlighting the need for a dedicated semiconductor strategy and tangible action from policymakers. European automotive suppliers welcome the European Commission’s initiative for an EU Chips Act, due to be published 8 February, and present four concrete actions to make the EU’s semiconductor strategy a success.

During 2021, the global production of 9.5 million vehicles was delayed due to a shortage of semiconductor chips[1]. Although this year could show a modest recovery of global light vehicle production, supplier and market estimates still forecast, on average, production losses of 4 to 6 million vehicles.

The EU’s automotive industry is disproportionately affected by the current semiconductor shortage. One out of every four cars that wasn’t able to be produced last year due to the shortage, would have been produced in the EU. As a result, the EU’s share in global light vehicle production dropped from 18.6% in 2019 to 15.8% in 2021[2]. production[3]. Further to light vehicle production, disruptions in the production of trucks threatens essential areas of EU supply chains. Automotive is responsible for 37% of the demand for semiconductors in Europe[4], compared to 10% globally[5], highlighting that a successful strategy to foster a strong European industry for microelectronics should build on a central role for automotive suppliers.

The ongoing shortage highlights the need for a coordinated industrial and innovation EU policy that allocates substantial public investment and creates the right conditions for private investments to strengthen the semiconductor ecosystem and increase production capacity. CLEPA, the European Association of Automotive Suppliers, supports the EU’s commitment to adopt an EU Chips Act, but stresses the need for substantial investment beyond the commitment made so far. Where other regions have pushed ahead with comprehensive semiconductor investment plans, policy initiatives and investment commitments by EU governments are significantly smaller and lack in coordination and focus. If the EU takes too long to provide clarity on the investment framework, companies interested to invest in the EU, may instead look elsewhere, and there are signs that this is already happening.

Raising the perspective of the supply industry and contributing to this milestone for a successful chips strategy, CLEPA has published a policy guide for an ecosystem approach that invests in R&D and manufacturing capabilities, but also leverages the advantages of the automotive sector and facilitates developments in semiconductor application technologies, such as connected and autonomous mobility. The EU Chips Act should combine substantial public investment and improvement of investment conditions within the single market with a commitment to facilitate global trade and private investment.

“The EU Chips Act provides an opportunity to strengthen the resilience of supply chains and further cement the European automotive sector’s global leadership position on innovation. The EU’s strategy should build on strengths in chip design and automotive, while increasing manufacturing capabilities according to industry needs. The semiconductor and automotive industries are delivering high value solutions for consumers and businesses thanks to globally integrated supply chains. Policymakers should therefore maintain their commitment to an open market and help to diversify supply chains in cooperation with global partners where possible,” says Sigrid de Vries, CLEPA Secretary General.

 

See CLEPA’s Policy Guide

 


 

 

  • [1] LMC Automotive, 23 December 2021, data refined by assessments CLEPA Semiconductor Expert Group
  • [2] LMC Automotive, average of light vehicle production 2018-2025
  • [3] LMC Automotive, average of light vehicle production 2018-2025
  • [4] ESIA assessment of 2019 European semiconductor sales
  • [5] McKinsey, May 2021, data refined by assessments by CLEPA Semiconductor Expert Group

 

 

 

CLEPA President | The Transformation Continues | A Look Ahead to 2022

In many ways, this New Year will set the tone for the global economy “post-COVID”. We are seeing significant changes as we transition away from our dependency on fossil fuels, deal with the longer term economic impacts of the pandemic and adjust business practices to improve organisational resilience. We’ve also reached a turning point on EU Green Deal objectives, evidenced by the Fit for 55 package, which will this year set the course on how we get to carbon-neutrality.

in CLEPA, by Thorsten Muschal, 26-01-2022


However, this on-going and needed transformation is not without its challenges. Supply chain bottlenecks, uncertain production volumes and increasing energy costs are dominating the start of the year. Automotive suppliers in 2022 will have to navigate an uncertain economic climate while continuing to invest in, and hopefully capturing, opportunities related to the green and digital transition.

Three market trends will shape 2022

  • Doubling-down on innovation despite delayed recovery
  • Continued cost pressures and stressed supply chains
  • Moderate electric vehicle sales compared to 2021

These trends underscore that now, more than ever, our sector requires a regulatory framework that enables automotive suppliers to capitalise on strengths and that provides the flexibility to adapt to changing circumstances – be they technological breakthroughs, geopolitical events, or availability of resources.

Reinforcing innovation despite delayed sector recovery

European suppliers invested around 20 billion euros in R&D, despite vehicle sales being more than 12 million below 2019 levels due to shortages. T1-2 suppliers were responsible for more than 50% of R&D in electric mobility in 2021.

The past three years were marked by suppressed production volumes and revenues, but automotive suppliers across the EU have continued to invest in research & development and strengthened their innovative capabilities, nonetheless. Investments in e-mobility, battery supply chain, connected and autonomous driving and semiconductors have continued to increase, and the EU automotive supply chain plays a crucial role with its contribution. 2022 will be marked by the need for continued investment in the innovative arm of our sector.

Costs pressures and stressed supply chain

Energy prices, raw material and shipping costs more than doubled in 2021. Ongoing semiconductor shortage could delay global production of four million vehicles in first half of 2022, while energy prices are already resulting in aluminium mills shutting down.

2021 was marred by shortages as far ranging as magnesium, to aluminium, steel and polymers, but chips alone delayed the production of nine million vehicles globally. Supply chains are likely to remain a concern in the year ahead, even if chips shortages may become less acute in the course of the year. Elevated energy and raw material prices reinforced by an increasing carbon price are not only likely to pressure the full automotive ecosystem but may also shape the industrial strategy and Green Deal policy debates

Electric vehicle growth will moderate in 2022

Annual production of battery electric vehicles will for the first time surpass one million in the EU in 2022, reaching 1.5 million (against six million globally), but growth is projected to slow down to 42% in 2022, compared to 55% YOY.

Electrification gathered pace in 2021, with battery electric and plug-in hybrids reaching double digit market shares across the EU’s biggest markets. The uptake of EV’s across Europe and global markets will continue to grow, however, some industry experts suggest that EV growth in the EU could soon hit a temporary ceiling due to lack of charging infrastructure and range anxiety among non-urban consumers.

EU regulations require incomparable transition pace, coupled by supply chain and cost risks

2022 will be a crucial year for the EU’s Green Deal and its digital agenda, as policy makers will search for the majorities to turn last year’s proposals into law. The past couple of years have taught us how complex and fragile global supply chains are, and how important they are for the global economy and society. We would be wise to take note of the lesson, that huge transformations require flexibility. We should avoid single-solution dependencies. Electric vehicles will play a crucial role in reaching climate objectives, but both employment impact and the resilience of supply chains would benefit from a more holistic and open technology approach.

A CLEPA commissioned study, carried out by PwCStrategy&, found that an EV-only approach to the transformation would put over half a million EU jobs at risk. Further, the International Energy Agency warned earlier this year about shortages of crucial raw materials like lithium.

A mixed technology scenario allowing for both rapid electrification and sustainable renewable fuels would make the transition more manageable through the longer-term use of hybrid vehicles, and it would incentive the investments needed to scale up these clean fuels. This is particularly important for defossilising the existing car park of 300+ million vehicles.

I ask myself why is the EU putting all of their eggs in one technology basket? We have invested heavily over the years and are leaders in advanced combustion technology. We have a competitive advantage and would be doing ourselves a disservice not to leverage it in the future.

While there is broad support for EVs around the world, no major global car market (USA, China, Japan) is opting for technology bans – there is the realisation that transport needs are too diverse for just one solution. Technology openness gives industry the needed time to transition, while mitigating the social disruption often coupled with abrupt change, without compromising on climate

The digital transformation

Digitalisation is another key pillar of automotive suppliers’ strategy to deliver green, safe and smart mobility for society. The long-awaited proposal for an EU Data Act is expected late February and should facilitate the optimal use of data by regulating fair access to data. Currently, the data flow between a vehicle and the next point of communication is limited and does not allow a variety of market players and businesses to provide new services. The Data Act should improve automotive suppliers’ abilities to develop the technologies and monetise services for both the safety and sustainability of mobility. The expected proposal for an EU Chips Act could give EU industry the needed levers to improve resilience in the long term, but we should not forget that resilience requires openness for global trade and investment.

2021 brought a more prolonged recovery than hoped. The road ahead in 2022 continues to be covered in a cloud of supply chain disruptions, COVID uncertainty and high energy prices, but the fog in which we find ourselves is all the more reason to push ahead towards the certainty of climate neutrality. But this will require a full commitment to innovation, coupled with a flexible regulatory framework that facilitates investment, anticipates change, and allows for the full scale of technological progress.

Thorsten Muschal
CLEPA President and Faurecia’s Executive Vice President of Sales and Program Management

CLEPA | EV Transition Impact Assessment: 5 key questions answered

CLEPA and its members fully support the energy transition and the EU’s climate objectives. As key innovators, designing and manufacturing all of the systems and components needed for safe, smart and sustainable mobility, CLEPA members are in the frontlines of the mobility transformation.

in CLEPA, 20-01-2022


We fully support rapid electrification as a must to reaching climate objectives, in combination with other sustainable low and net-carbon options. Decarbonising the transport sector is absolutely essential, and this can only be achieved through a mixed technology approach, allowing Europe to transition in an effective and efficient manner, while preserving jobs, EU competitiveness, and consumer choice and affordability. A manageable and just transition is necessary for a successful Green Deal.

Given recent interpretations, we welcome the opportunity to complement the recent study commissioned by CLEPA, and carried out by PwC Strategy&, entitled ‘EV Transition Impact Assessment 2020-2040: Study on Workforce of Automotive Suppliers’, with additional educational elements and details about the methodology and conclusions, issued by CLEPA. Please see more on our position on climate-neutral transport and CO2 standards here and more Q&As on the study answered here.

1. What are the similarities and differences between this and other studies looking at the potential impact of electrification?

Earlier studies into the employment impact of electrification have either assumed a slower uptake of electrification than currently foreseen or focused on vehicle manufacturers rather than automotive suppliers. In addition, the negative job impact on automotive manufacturing has mostly been substantiated by macro-economic models that look at the wider European mobility ecosystem. Our recent study is the first of its kind in that it takes a more granular look at company, regional and supplier-specific challenges, where other studies look more widely at the mobility ecosystem as a whole. As suppliers represent more than 60% of employment related to automotive manufacturing, with one-fifth of this employment consisting of SMEs and highly specialised companies, the study provides a much-needed assessment of the impacts on the supplier industry.

As in earlier reports conducted by the Boston Consulting Group (June 2023), Fraunhofer (December 2018) and other leading institutes, CLEPA’s study results conclude that an electric only approach will have a significant social impact independently of the opportunities that may be created. The Boston Consulting Group estimated that in 2030, halfway through the transition, 274,000 jobs with internal combustion engine oriented suppliers and 166,000 jobs with vehicle manufacturers would become obsolete due to reduced labour requirements for battery electric vehicle production. The study suggests that the 237,000 jobs in battery production would likely be with other companies.

PwC Strategy& combined a macro-model with country, technology and supplier specific insight based on 199 collected surveys (mostly at plant level) and 33 expert interviews and workshops. Production levels that may be sufficient to maintain employment at the European level, may not be at a country or event company level, as a company cannot operate half a plant. Please find more on the methodology of the study here.

2. Is a mixed technology approach just a way to maintain the status quo and the internal combustion engine?

No. By 2030, 91% of light vehicle sales will be electrified powertrains and more than half of vehicles sold can be powered by electricity alone[1]. Sales of hybrid vehicles peak in 2035 while battery electric and fuel cell vehicles will continue their growth.

Our mutual objective with the EU is to reduce emissions and reach climate-neutral mobility. Technology is not the enemy, but rather fossil fuels. What is meant by mixed technology is rapid electrification, in combination with other sustainable low and net-carbon options, which would make the transformation more manageable without compromising on climate goals.

3. Is the term “zero-emission” accurate – how should the carbon footprint of a vehicle be measured?

The issue with the current tailpipe measurement (or Tank-to-Wheel) is that it only assesses emissions from the vehicle’s exhaust, ignoring emissions related to the production of vehicles or the fuels they use, including how electricity is generated. A more accurate term would therefore be zero tailpipe emissions. To incentivise technologies with the lowest overall carbon footprint, emissions from vehicles should ideally be regulated on life-cycle basis, with a Well-to-Wheel (WtW) approach as a first step, which considers the production and distribution of the fuel/electricity used to power a vehicle (Well-to-Tank). More explanation on the different phases of CO2 emissions measurements can be found here.

4. Are EVs the only way to meet Green Deal objectives, and to reduce transport related emissions?

There are more options than tailpipe-zero emissions. A technology open approach, including rapid electrification with clean and renewable energy, complemented by clean combustion technology with sustainable renewable fuels, allows us to reduce emissions both through renewable energy and net-carbon fuels. In fact, without sustainable renewable fuels, the EU will not be able to decarbonise the existing fleet of over 300 million vehicles, which is essential to reaching climate targets.

All available solutions that can help reduce transport related emissions should play a role in the path towards climate neutrality. The approach to decarbonisation should not risk EU competitiveness, massive job losses in a short time frame, or negate the affordability and choice that consumers enjoy today. A technology neutral approach based on a Well-to-Wheel analyses allows the regulatory framework the flexibility to adjust to new developments, be they technological breakthroughs, geopolitical events, or availability of resources.

5. Are the job losses in the ICE powertrain really going to be compensated by those in battery manufacture and electric motors?

The answer is no. Our study points at a net loss of 275,000 jobs in the powertrain domain until 2040 and reflects that while 80% of the job losses take place between 2030 and 2040, only 40% of all jobs created in the EV powertrain occur in the same time period.

Automation will play a considerable role in the future and, as illustrated by our Automotive Footprint Employment Portal, the employment growth in the EV domain after 2030 will significantly decrease. It should also be noted that 70% of the EV job creation is likely to be in the battery domain, which typically requires more academically schooled workers and less vocationally trained workers than the production of transmission systems, fuel tanks or other powertrain components.

As pointed out by the data in the Portal’s overview, there are job opportunities outside of manufacturing linked to the EV transformation, but these may be temporary in nature, require a different skill set or located in a different region.

CLEPA, furthermore, sees job opportunities related to connected and autonomous driving and other areas of digitalisation, but these jobs will be created independent of the type of powertrain, and will often concern different companies, people and regions. Therefore, to understand the employment impact and what is needed for a manageable transition, it is prudent to assess the jobs within the powertrain manufacturing domain.

 


About CLEPA

CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3,000 companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative technology for safe, smart and sustainable mobility, investing over €30 billion yearly in research and development. Automotive suppliers in Europe directly employ 1.7 million people in the EU.

[1] Includes battery electric vehicles, fuel cell electric vehicles, plug-in hybrid electric vehicles and full hybrid electric vehicles and excludes mild hybrids. Mild hybrids are included in the category of electrified powertrains.

 

#GreenANDJust: An effective mobility transition should be about emissions reductions and the social dimension, not a technology ban

  • Representatives from the European Commission, Council, the mobility industry and academia analysed the challenges and opportunities of the green and just mobility transition
  • A recent study commissioned by CLEPA and carried out by PwC Strategy& found that an EV-only approach, as currently proposed in the ‘Fit for 55’ package, will put over half a million jobs at risk
  • Organisations of the mobility technology industry ask policy makers to ensure a manageable transition to avoid disruption, and insist on the benefits of a mixed-technology scenario

in CLEPA, 12-01-2022


 

The upcoming weeks will mark important legislative milestones for the future of European road transport, and these are crucial times to consider what is at stake for the multiple pieces of the complex regulatory framework that is the “Fit for 55” package. To reach climate objectives, rapid electrification is a must, but how we get there requires careful consideration. Currently, around 600,000 automotive supplier jobs in the EU rely on the production of internal combustion engine powertrains. A recent study commissioned by CLEPA and carried out by PwC Strategy& found that an EV-only approach, as currently proposed in CO2 standards, will put over half a million of those jobs at risk. With the aim of taking a closer look at what these figures mean in practice and providing a platform for a compelling exchange of views by key stakeholders, CLEPA, the European Association of Automotive Suppliers, organised the public online debate, ‘The Sustainable Mobility Transformation – Green AND Just?’ on 11 January. 

European Commissioner for Jobs and Social Rights Nicolas Schmit provided the Keynote, raising the importance of assessing the employment impact of the sector transformation: 

“The automotive sector in general is a big deal when it comes to European total employment. Although this transition to climate neutrality will create opportunities, it will also disrupt our economy, and a certain number of sectors, with an impact on our labour markets… The green transition will only be successful if fairness, solidarity, and social measures are at its heart. The Commission welcomes CLEPA’s recently published study. We must produce precise forecasts regarding the employment, social and distributional impacts of this green transition. As described by CLEPA’s study, Europe IS on the transition path.” 

European Commissioner for Jobs and Social Rights Nicolas Schmit during his Keynote address on 11 January 2022

Asking the difficult questions, Financial Times’ Correspondent Joe Miller guided a panel debate with representatives from the Council, mobility and consumer sectors, as well as academia. Gábor Baranyai (Ambassador, Deputy Permanent Representative of Hungary to the EU), Laurianne Krid (Director General, FIA Region I), Stefan Pischinger (Professor at the RWTH Aachen, CEO of FEV Group) and Sigrid de Vries (Secretary General, CLEPA), looking at the results of our latest study, which Henning Rennert, Partner at PwCStrategy&, presented to the audience.  

The Electric Vehicle Transition Impact Assessment 2020-2040 is the first of its kind, evaluating three different transition scenarios until 2040, focused on powertrain production in the auto supplier industry. The assessment further identifies the risks and opportunities in seven major production countries for automotive components. 

On the key question, why automotive suppliers must have a say in the current mobility debate, it is crucial not to underestimate the employment capacity of the industry: The automotive sector is directly responsible for more than 8.6% of the overall manufacturing employment, with more than 60% of workers employed by automotive suppliers. This means 1.7 million direct jobs in the European supplier industry. The study found that a hurried transition will put over half a million of these jobs at risk. 

The study results also show that 70% of these jobs losses will occur in just a 5-year period, between 2030 and 2035, causing serious time pressure for SMEs and regions. While automakers have greater capacity to divest or insource activities to compensate for a loss of activity in the powertrain domain, automotive suppliers can react with less agility, as they are bound by long-term contracts with vehicle manufacturers. In addition, hundreds of specialised companies and SMEs have less access to capital to invest in the transformation of their business models. 

 “The automotive supplier industry is deeply connected with regional economies, composed of global leaders as well as many innovative SMEs. It is critical that we put automotive suppliers front and centre when managing the social and economic impacts of the transformation. We believe that a successful transformation starts with knowing the stakes. Obviously, emissions have to go down, and we fully support accelerated electrification as part of the solution, but we also need a transformation that is both Green AND Just”, says Thorsten Muschal, President of CLEPA and Executive Vice President of Sales and Program Management at Faurecia. 

CLEPA President Thorsten Muschal (Faurecia), setting the scene during the online event on 11 January 2022

Opportunities for a mixed-technology scenario 

The study shows a potential option for a brighter future for mitigating employment while still reaching climate objectives. According to the results, a mixed technology scenario would provide Europe with a safety net, consisting of all technology solutions that can play a role in reducing emissions. By complementing electrification, a mixed technology approach, allowing the use of sustainable renewable fuels, could deliver a minimum 50% CO2 reduction by 2030, while maintaining jobs, creating value-add and maintaining EU competitiveness in the global market. Additional volumes of net-carbon fuels can bring us to climate neutrality by 2050. 

The situation is very different from country to country. A one-size fits only approach would entail different levels of effort depending on the capacities of each Member State. In the study, Western European countries appear best placed to be strongholds in EV powertrain production, while employment in Central Eastern European countries will remain highly dependent on the internal combustion engine. “This sector is very significant for Hungary, it represents 5.6% of the GDP, and 170,000 jobs – that’s 4% of the total Hungarian workforce” explained Ambassador Gábor Baranyai, Deputy Permanent Representative of Hungary to the EU.  

CLEPA’s Secretary General, Sigrid de Vries, raises the stark warning from the study that an EV-only approach puts over half a million jobs at risk. “I believe there is not enough attention for the challenges associated with this transition. The emphasis often goes to the positives, of which there are many, but it doesn’t take away the fact that this transformation concerns real people and businesses. We see a focus on technology preferences, and we are concerned about the social dimension and the risks being downplayed.” 

According to Professor Stefan Pischinger, “Electromobility is an inevitable building block to achieve the CO2 reduction targets, but it doesn’t help the existing fleet – 1.6 billion vehicles worldwide – to become carbon neutral. The combustion engine itself is not the problem, but the fossil fuels. If the ultimate goal from policymakers is to achieve this CO2 reduction, which is absolutely necessary, we cannot leave out, for ideological reasons, different technologies that can achieve this.” He goes on to say, “If we say goodbye to the ICE, we miss the development and engineering where there is further potential for even cleaner and more efficient engines, other parts of the world are doing this, like China who has made this strategic decision.” 

Director General of FIA Region I, Laurianne Krid, also emphasised the need to provide drivers with the technical and relevant information to make their purchases and boost affordable options: “For mobility users it is very important to have an overview of the real carbon footprint, and what will allow us to do that is a ‘well to wheel’ approach. They need a real picture of what each technology can do.” She goes on to say, “In the next 10 years, people are not going to change their vehicle, it’s an important asset and a big investment for families,” further underscoring the need for affordable fuels to decarbonise the existing fleet.  

Automotive suppliers are on the move and ready to smooth the path towards a green and just mobility transition. Supplier companies, associated in CLEPA, have actively contributed to several assessments and are adapting their product portfolios, as illustrated by our most recent Pulse Check survey. In addition, the study´s methodology is complementary to previous studies (available through CLEPA’s employment portal, as it models figures from a company perspective.  

Find out more about the study

 

 

Moderator Joe Miller (Financial Times), Ambassador Gábor Baranyai (Deputy Permanent Representation of Hungary to the EU), Laurianne Krid (FIA Region I), Stefan Pischinger (RWTH Aachen, FEV Group), and Sigrid de Vries (CLEPA) during the panel discussion on 11 January 2022

 

 

 

CLEPA | An Electric Vehicle-only approach would lead to the loss of half a million jobs in the EU, study finds

  • Transition assessment confirms the essential role for electrification in reaching objectives of the Paris Agreement, but substantiates powertrain employment risks
  • 226,000 new jobs foreseen in EV powertrain production (assuming an EU battery chain), means a net loss of 275,000 jobs (-43% jobs) projected from now until 2040
  • 501,000 auto supplier jobs in Internal Combustion Engine (ICE) powertrain components production are expected to become obsolete if technology is phased-out by 2035
  • Of those half a million jobs, 70% (359,000) will most likely be lost in just a 5-year period from 2030-2035, highlighting the limited timeframe to manage considerable social and economic impacts
  • By complementing electrification, a mixed technology approach allowing use of renewable fuels could deliver a 50% CO2 reduction by 2030, while maintaining jobs and creating value-add

in CLEPA, 06-12-2021


CLEPA, the European Association of Automotive Suppliers, commissioned PwC Strategy& to assess the impact of three different Green Deal policy scenarios on employment and value-add1 among automotive suppliers across Europe2 in the period of 2020-2040. The scenarios represent a mixed technology approach, the current EV-only approach proposed in the Fit for 55 package, and a radical EV ramp-up scenario. All three scenarios assume accelerated electrification to meet climate goals, with a high market share for electric vehicles3 by 2030 of more than 50%, almost 80%, and close to 100%, respectively.

The automotive manufacturing sector is responsible for more than 5% of the overall manufacturing employment in 13 EU Member States4, with more than 60% of these workers employed by automotive suppliers. The study therefore provides a much needed European-wide assessment and further identifies the risks and opportunities in seven major production countries for automotive components (Germany, Spain, France, Italy, Czechia, Poland, and Romania). The study is also the first of its kind in evaluating the impact of different policy pathways to reach Green Deal objectives with a focus on automotive suppliers.

While automakers have greater capacity to divest or insource activities to compensate for a loss of activity in the powertrain domain, automotive suppliers can react with much less agility, as they are bound by long-term contracts with vehicle manufacturers. In addition to global and well capitalised industry leaders, the sector consists of hundreds of specialised companies and SMEs with less access to capital to invest in the transformation of their business models.

Transition vs disruption

The study forecasts that in the EV-only scenario, 70% of the employment impact will be felt already in the period of 2030-2035 and substantiates that electric vehicle opportunities hinge on the establishment of a deep EU battery supply chain, the timing and likelihood of which are still uncertain. Western European countries appear best placed to be strongholds in EV powertrain production, while employment in Central Eastern European countries will remain highly dependent on the internal combustion engine.

Henning Rennert, Partner at PwC Strategy& Germany, stated:

“While electrification puts powertrain employment at risk on the one hand, other workforce skills around areas such as software or infrastructure will be needed in the future. The future value-add and job creation in powertrain technologies depends on local battery production in Europe.”

 

CLEPA Secretary General, Sigrid de Vries, stated:

“The study highlights the risks of an EV-only approach for the livelihood of hundreds of thousands of people working hard to deliver the technological solutions for sustainable mobility. As automotive suppliers are responsible for most of the manufacturing employment in the automotive industry, it is critical that we put jobs with automotive suppliers front and center when managing the social and economic impact of the transformation. Innovations by automotive suppliers have made electric mobility increasingly accessible for consumers and an essential instrument to meet emission reduction targets. But society’s needs are far too diverse for a one-fits-all approach. A regulatory framework that is open to all available solutions, like the use of hybrid technologies, green hydrogen, and renewable sustainable fuels will enable innovation as we redefine mobility in the coming decades.”

An uncertain future for batteries

The study substantiates that up to 70 billion euros (70%) of the value creation related to electric powertrains will be connected to the processing of battery materials, the production of battery cells and cells modules, and the assembly of battery systems. It is important to highlight that these activities will not necessarily be with the same companies or in the same regions, as they require significantly different skills and expertise compared to conventional powertrain technology and are therefore unlikely to provide opportunities to most powertrain oriented automotive suppliers, in particular small and medium sized enterprises who employ around 20% of people working in the automotive supply industry. Earlier research by CLEPA illustrated that battery production provides relatively more jobs for academically schooled employees and less for the mechanical workers that are now producing parts related to the internal combustion engine.

Methodology

The study´s methodology is complementary to previous studies, (available through CLEPA’s employment portal) as it models figures from a company perspective. Data was gathered with the support of CLEPA5, national associations and companies in an explorative survey based on 199 questionnaires and validated with 33 expert interviews. To realistically model commercial decisions, production capacities at labour shift level (typically three eight-hour blocks) as well as country attractiveness, criteria have been assessed to develop wind-down scenarios for ICE vehicle technologies and ramp-up scenarios for EV technologies.

CLEPA’s policy recommendations6

The current Fit-for-55 proposal for CO2 emission standards for cars and vans look only at the emissions coming from the vehicle’s tailpipe, ignoring emissions related to the production of vehicles or the fuels they use, including how electricity is generated. To incentivise technologies with the lowest overall carbon footprint, emissions from vehicles should ideally be regulated on life-cycle basis, with a Well-to-Wheel (WtW) approach as a first step, which considers the production and distribution of the fuel/electricity used to power a vehicle. Emission reductions on the fuels/energy production side should be recognised when determining compliance with CO2 standards, for example through the introduction of a voluntary crediting mechanism, which enables an additional option for automakers to fulfill the fleet-wide targets with additional volumes of renewable fuels.

Technology openness gives industry the needed time to transition, while mitigating the social disruption often coupled with abrupt change, without compromising on climate. A planned and thoughtful transition consisting of a mixed technology approach keeps options open to adjust to new developments, be they technological breakthroughs, geopolitical events, or availability of resources, and at the same time, presents significant value creation opportunities in the automotive industry, one of Europe’s biggest industrial assets.

Sigrid de Vries goes on to say “A technology open approach should include rapid electrification with clean and renewable energy, complemented by clean combustion technology with sustainable renewable fuels. There are more options than tailpipe-zero emissions, and we need to recognise the role that climate-neutral fuels can play in reducing emissions, preserving consumer choice, affordability and towards maintaining Europe’s global competitiveness. Technology is not the enemy here but rather fossil fuels, and tech openness will be critical to deliver a just transition.”

 

Find out more

 

 


 

About CLEPA

CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3.000 companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative technology for safe, smart and sustainable mobility, investing over €30 billion yearly in research and development. Automotive suppliers in Europe directly employ 1.7 million people in the EU.

Contact
CLEPA’s Head of Strategic Communications Filipa Rio: f.rio@clepa.be

About Strategy&

Strategy& is a global strategy consulting business uniquely positioned to help deliver your best future: one that is built on differentiation from the inside out and tailored exactly to you. As a part of PwC, every day we’re building the winning systems that are at the heart of growth. We combine our powerful foresight with this tangible know-how to help you create a better, more transformative strategy from day one. We’re 100+ years, 3,000 strategy consultants, over 295,000 PwC professionals, and 156 countries strong.

Contact
Annabelle Kliesing, Senior Communications Lead: annabelle.kliesing@strategyand.de.pwc.com

 


 

Footnotes

1 – Value-add is defined as revenue minus material costs and describes the part of the company’s individual value creation that directly contributes to the country’s economy

2 – EU+UK+EFTA

3 – Battery electric vehicles, plug-in hybrid electric vehicles and full hybrid electric vehicles

4 – Slovakia, Romania, Sweden, Czechia, Hungary, Germany, Spain, Poland, Slovenia, France, Belgium, Austria and Portugal.

5 –  CLEPA is the European Association of Automotive Suppliers

6 – Policy recommendations are not within the scope of the study and represent CLEPA views only