MEPs battle over green tech cars as EU automotive industry faces Chinese EV competition

A debate in the European Parliament on Tuesday over the "crisis" facing Europe’s car industry saw the European Commission defend a de facto ban on sales of new petrol and diesel cars from 2035 – and underlined a left-right split among MEPs over the key climate policy goal.

“The target has created certainty for manufacturers and investors,”  it has also provided enough time to plan for a fair transition, economy Commissioner Valdis Dombrovskis told MEPs in Strasbourg. “It has also provided enough time to plan for a fair transition.”

There were also binding targets for the deployment of infrastructure like charging points, Dombrovskis stressed, while acknowledging that the roll-out across Europe had been ”uneven” so far. “There is an urgency to expand and evenly distribute charging infrastructure to support the anticipated surge in electric vehicle adoption across all EU member states.”

Jens Gieseke, transport policy lead for the centre-right European People’s Party (EPP) picked up on the same issue as evidence that “the transformation is not working”. Europe was not prepared for the transition and lacked “the necessary infrastructure for electric vehicles”, the German lawmaker said.

Gieseke – followed by other MEPs from the EPP and parties further to the right – also pointed to a looming deadline for an interim target for reducing the average CO2 emissions of cars.  Carmakers are way off target and face billions of euros in fines if they don’t radically change their sales portfolios by the end of 2025.

“For 2025 we are seeing the risk of millions to be paid” warned Gieseke, adding “The automotive industry is in a huge crisis. The legislative framework is too narrow and inflexible. The consequences are dramatic”.

'Focusing on electric vehicles is a dead end'

There were 10.7m passenger cars sold in 2023 across the EU, Norway and Iceland, with an average of 106.6g of CO2 emissions per kilometre under test conditions, according to provisional data released in June by the European Environment Agency.

This is comfortably below the current limit of 115.1g – but that is set to tighten 93.6g next year under legislation in place since 2019.

In fact, with carmakers facing a penalty of €95 per vehicle sold for every gramme by which their fleet average exceeds the limit, last year’s sales and emission data would translate into a fine of over €13 billion across the industry if repeated in 2025. Missing the target for vans would likely add a couple of billion more to the total.

For Gieseke, the solution lies in repealing the ban on combustion engines, which he noted was “an old request” of German conservatives within the EPP. He also called for “a broad approach” to decarbonisation. “Focusing on electric vehicles is a dead end, we need a broad mix of technology, we need also to recognise climate-neutral fuels,” the MEP said.

Mohammed Chahim of the centre-left Socialists & Democrats group warned that China was “outpacing” the EU in developing its electric vehicle industry, echoing Dombrovskis’s remark that European manufacturers faced energy and raw materials costs some 30% higher than their main competitor.

“Chinese electric cars are significantly cheaper – they have taken the lead in that technology,” the Dutch lawmaker warned. But he argued that the solution was not to abandon climate policy targets.

“Companies and colleagues who are lobbying for delays and rolling back legislation are only thinking of the short term gain and not the future for workers – and, more importantly, European consumers,” Chahim said.

Despite Chahim’s word, the debate between lawmakers seemed to miss the issue of addressing the technological gap with China’s electric vehicle and the closing of plants across the EU. The EU has sparked a tit-for-tat trade war by imposing tariffs on imports of Chinese electric vehicles, citing unfair state subsidies denied by Beijing.

Chinese industries enjoy an advance “on battery, software, infotainment systems,” Dombrovskis warned in his opening remarks. “There’s a global race for net-zero technologies,” he said, noting the International Energy Agency has forecast that one out of every five cars sold this year will be electric.

“Europe cannot afford to fall behind and lose its competitive edge in this race”, the commissioner warned.