The move by the United States to protect its local auto industry could end up being echoed in Europe. The increasing dependence on China in the automobile sector in view of its digitization and electrification, it has found a controversial measure in the United States where only locally manufactured electric cars will be eligible for purchase subsidies. And now Europe, as much or more affected by this dependence on China, is beginning to study the possibility of follow in the footsteps of the United States by applying protectionist measuressomething that would have enormous consequences for good… but also for bad.
Something has to be done. This idea is the one that resonates in the heads of not a few legislators in view of the crisis in which the European automobile sector is plunged. The consequences of COVID 19, such as logistical problems and the increase in the cost of raw materials, have shown that globalization with China as the main supplier is a very serious problem.
There is an indisputable reality, manufacturing the same car costs much more in Europe than in China
And that is why The Government of Joe Biden decided to take a step forward and launch a crackdown on Chinalaunching a peculiar incentive program for the purchase of electric cars. We are talking about an aid program that can reach 7,500 dollars for the purchase of a new electric car ($4,000 if it is used), but will only apply to cars manufactured in the United Statesrequiring from 2023 that these vehicles do not have components imported from China.
Despite arousing quite a few criticisms after its announcement, This self-protective measure is managing to encourage not only the local American industrybut get that European and Asian manufacturers, both of cars and of crucial components such as batteries, are considering setting up factories in the United States so as not to be left out of the North American car market.
And we come to the million dollar question: Should Europe copy this protectionist model to stop China? The debate is already on the table of the European Parliament, since countries strongly linked to the automobile industry, such as France, have already spoken in this regard. Specifically, it was the French Economy Minister, Bruno Le Maire, who launched the proposal to subsidize only electric cars made in Europewhich would stop the advance of Chinese cars and their demolition prices in the old continent.
And now it is the European automobile industry itself that is making a clear statement in the face of the Chinese challenge. On the occasion of Paris Motor Show, an exhibition where the presence of Chinese cars has managed to outshine the local industry, CEO of Stellantis Carlos Tavares has spoken very clearly about his vision of this situation. Tavares demands that Europe make a move against the progress of the Chinese car, a car that has managed to improve a lot in recent years, so much so that it can compete with European cars in terms of quality, safety and technology, but offering much lower prices.
Implying that we are in a situation of unfair competitionthe proposed solution by Tavares points to the Imposition of tariffs on cars made in Chinasomething that in fact already applies China itself to the import of cars manufactured in Europe or the United States… for years.
Competing with the Chinese car is a problem, that Europe is unable to manufacture affordable cars is even more so
But Tavares wanted to go even further, highlighting the other major problem facing Europe, which is none other than the dependency of our industry on raw materials, a key aspect in the case of manufacturing the cells that give life to the batteries of electric cars. To this would also be added the energy crisis stemming from the war in Ukrainea conflict that has highlighted yet another dependency problem.
These two factors, added to increasingly demanding European legislation on safety and emissions, have been gradually raising the purchase price of the car in the old continent, reaching a record high level in recent years as a result of a industry unable to manufacture more cars due to lack of componentsbut also more greedy giving priority to the manufacture of cars with higher profit margins.
And while the Chinese challenge is a problem that Europe will have to deal with sooner or later, it is no less a problem that the European car industry is unable to produce affordable cars for its local market.
