Does Europe still have the means to successfully develop a strong low-carbon mobility industry?

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Brussels (2024)

Résumé:

Does Europe still have the means to successfully develop a strong low-carbon mobility industry?
By deciding that all new vehicles sold from 2035 onward should be zero-emission, Europe has chosen the fastest and most ambitious path among the world's major automotive markets. By comparison, both China and the US (including California) are still aiming for a mix of BEVs and PHEVs by 2035.
In a context where China has a virtually unchallenged dominance of the EV market and value chain, with 59% of global sales, 56% of global inventory and the control of 75% of the battery value chain by the end of 2023 (Alochet and Midler, 2023), we wonder whether Europe still has the means to successfully develop a strong low-carbon mobility industry.
We elaborate on and update, mainly for Europe, a recent report comparing the Chinese, European and American regulatory frameworks for the transition to a decarbonized road mobility (Alochet and Midler, 2023). Using a widely accepted definition of the EV lifecycle – from raw material extraction to (battery) recycling –, we summarize the key European regulatory frameworks that influence the course of the industry and identify the current strengths and weaknesses of the European electric mobility industry.
Our analysis of the European regulatory framework toward the decarbonization of mobility shows weaknesses in its implementation:
- Lack of systemic vision: we see a piecemeal regulatory approach being built, when what is needed is a regulatory and financial framework designed from the outset to cover the entire EV value chain.
- Lack of an industrial strategy which, despite the impetus given to battery cell production by European champions, which could bear fruit, results in a very insufficient level of deployment of the upstream battery value chain (refining of raw materials and production of components) compared to American ambitions and installed capacity in China.
- Lack of support for the industry to develop affordable vehicles when they are too expensive for most consumers.
- Lack of support for the industry to develop vehicles that are CO2 efficient over their entire life cycle.
While the analysis shows that all European automakers have embarked on the process of industrializing BEVs and PHEVs, more or less rapidly depending on their strategy, we also highlight some important findings regarding the battery value chain:
- Failure to anticipate lithium mining projects could lead to potential shortages and be the limiting factor in battery scale-up by 2030 on a global scale. Cobalt and nickel are also at least at risk.
- European battery manufacturers could have a market share of about 44% by 2030, with Korean and Chinese battery manufacturers each having 27% of the estimated 1 TWH production capacity.
- The European upstream battery value chain will not be able to produce more than 70% of the required Cathode Active Material and 20% of the required Anode Active Material by 2035.
- There is interesting potential to develop battery recycling ecosystems using production waste, most of which is sent to China.
As the path to a strong European low-carbon mobility industry becomes increasingly narrow, we conclude that Europe must act quickly to avoid losing further ground to its competitors.
In the very short term, the European Commission should consider providing a comprehensive regulatory and financial framework to support the production of lightweight electric vehicles with good aerodynamic performance and "low" battery capacity, as well as accelerating the deployment of the charging network and fast chargers.
This would contribute more effectively to the decarbonization of mobility and make vehicles accessible to as many people as possible. It would also reduce the demand for battery cells, thereby facilitating the establishment of the industry and the achievement of the (future) localization targets set out in the Battery Directive and the EU-UK Trade and Cooperation Agreement.
From a theoretical perspective, these data provide very valuable material to study how the Chinese automotive industry has leapfrogged foreign competitors thanks to a paradigm changing strategy (Wang and Kimble, 2013).

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