Mario Draghi for Europe has recently presented the long-awaited European competitiveness reportalso called the “Draghi plan”, a document of almost 400 pages with one hundred and seventy proposals divided into five macro-chapters which also addresses the challenges of the automotive sector. The former Prime Minister and President of the ECB did not hesitate to highlight the lack of a coherent industrial policy by the Community institutions. “The automotive sector – writes Draghi – It is a key example of the Union’s lack of planning and the application of a climate policy without an industrial one.”
The Draghi Report for Europe contains five key points:
- Reducing the innovation gap, including skills-related aspects;
- Integrating decarbonisation and competitive growth;
- Increase security and decrease strategic dependencies;
- Support investments through appropriate financing instruments;
- Pstrengthen governance mechanisms.
DOWNLOAD THE FULL TEXT OF THE DRAGHI PLAN PART A – PART B
Draghi’s plan for Europe and the relaunch of the automotive industry
In his plan for Europe, Draghi underlines the economic importance of the European automotive industry and its progressive loss of leadership globally. The document echoes the numerous alarms launched by the sector, especially regarding the approach to decarbonisation and the inconsistency between legislative initiatives and the objectives imposed on the supply chain.
“The principle of technological neutrality has not always been applied in the automotive sector – declares Draghi – the ambitious target of zero tailpipe emissions by 2035 will effectively lead to the elimination of internal combustion engine vehicles and the rapid market penetration of electric vehicles. However, Europe has not followed up these ambitions with a synchronised push to convert the supply chain”.
Although the European Commission has launched the European Battery Alliance to build a battery value chain, Draghi points out that very little has been done for charging infrastructure.
Chinese cars in Draghi’s plan for Europe
Draghi in his report also highlights the growing threat posed by China. “China, by contrast, has focused on the entire EV supply chain since 2012 and, as a result, has moved faster and at a larger scale – Draghi explains – It is now a generation ahead in electric vehicle technology in virtually every sector, while also producing at lower costs.”
Chinese competition, boosted by massive industrial policies, subsidies, rapid innovation, raw material control and economies of scale, risks becoming a serious threat to European industry, which already lacks cross-sector coordination plans.
Draghi’s proposal for a new European Industrial Plan
So far the critical issues highlighted by Draghi and culpably ignored by the European institutions with the launch of the Green Deal. Therefore now it is necessary to relaunch the automotive sector and, in this regard, there is an urgent need to develop a specific industrial action plan for the automotive sector. In the short term, according to the former Italian Prime Minister, it is crucial to avoid a radical delocalization of production and the rapid acquisition of factories and companies by foreign producers subsidized by their states. In this sense, the policy of duties could help level the playing field. In the long term, it is necessary to define a “industrial roadmap” which takes into account horizontal convergence, i.e. electrification, digitalisation and circularity, and vertical convergence, i.e. critical raw materialsbatteries, transportation and charging infrastructure in the automotive ecosystem value chains.
Draghi’s report also includes recommendations to ensure competitive production costs, starting from energy factorto ensure regulatory coherence, to support the development of infrastructures, to support European projects in the most innovative areas and to focus on the training and requalification of the workforce.
De Meo responds to Draghi’s report
The publication of this report represents an important opportunity to rethink and strengthen the European industrial strategy, with the aim of maintaining and relaunch competitiveness of the automotive sector in the global context. The response came quickly from Luca DeMeoCEO of the Renault Group but also in his role as president of theEuropean Automobile Manufacturers Association (ACEA):
This could be the wake-up call Europe needed! Draghi’s report is out and its first virtue is to bring to the fore our most vital challenges: fostering innovation, strengthening industrial policy and ensuring that decarbonisation is in line with competitiveness. I would like to personally thank Mario Draghi for this colossal work!
Understanding the facts begins with recognizing the pillars of our sustainable prosperity. In this sense, recognizing the strategic importance of the automotive industry is a good sign. Having dedicated my entire career to this sector, I am convinced that our continent can regain its leadership if we make the right choices. And there is no doubt that this report will be of great help!
I fully support his insightful recommendations that remind us of the important mission we have! They resonate with me as I think back to the letter to Europe I shared earlier this year for European Auto.
To name a few:
- The need for European players to adopt an open and collaborative approach;
- The need for a holistic industrial policy, technology neutrality, green deal zones, manufacturing support and a clear regulatory agenda to promote innovation;
- The importance of small and affordable European electric vehicles.
Having a dedicated automotive section is very encouraging. At Renault Group, we are fully committed to building a more resilient, sustainable, inclusive and competitive Europe. Count on us to continue to be constructive actors and to bring contributions and ideas to the debate, in a frank and open manner.
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