Italy, a founding member of the European Union, has initiated a call for a reassessment of the EU's 2035 petrol car ban. This policy, part of the ambitious European Green Deal proposed in 2019, aims to achieve climate neutrality by 2050. However, concerns are mounting about its potential impact on the automotive industry, which contributes approximately 7% to the EU's GDP.
Gilberto Pichetto Fratin, Italy's energy minister, stated, "The ban must be changed." His colleague, Adolfo Urso, the industry minister, emphasized the need for a pragmatic approach, asserting that the current ideological vision has fallen short. These statements reflect growing apprehension across Europe regarding the slowdown in electric vehicle (EV) demand and the continent's automotive sector potentially lagging behind competitors in China and the United States.
The automotive landscape has evolved significantly since the first practical production EV emerged in 1884. China, which became the world's largest EV market in 2015, along with the United States, have benefited from substantial government subsidies. This has put pressure on European manufacturers to keep pace.
Volkswagen, Europe's top carmaker by revenue and Germany's largest industrial employer, has recently warned about potential factory closures in Germany. The company, founded in 1937, has been grappling with rising energy costs following the loss of affordable Russian gas in the wake of the invasion of Ukraine, which began on February 24, 2022. Additionally, Volkswagen's EV sales stagnated in the first half of the previous year, leading to the indefinite postponement of its latest electric sedan launch in the US.
In response to these challenges, Volkswagen announced plans to invest up to $5 billion in Rivian, an American EV manufacturer founded in 2009. This move aims to bolster its position in the competitive EV market, where companies like Tesla, which became the world's most valuable automaker by market capitalization in 2020, have gained significant ground.
The situation is further complicated by Germany's economic struggles, particularly in its crucial manufacturing sector. As Europe's largest economy and the fourth-largest globally by nominal GDP, Germany's industrial challenges have far-reaching implications for the EU's automotive industry.
Italy's call for a review of the 2035 petrol car ban highlights the need for a balanced approach to the clean energy transition. While not opposing EVs, Italian officials argue for the inclusion of other technologies in this shift. This stance aligns with the historical development of alternative fuel vehicles, such as the first mass-produced hybrid car, the Toyota Prius, launched in 1997.
As the European Commission, established in 1958 and responsible for drafting EU laws, faces pressure to reconsider its targets, the automotive industry's future hangs in the balance. The EU's "Fit for 55" package, proposed in 2021 with the goal of reducing net greenhouse gas emissions by at least 55% by 2030, may require adjustment to address the complex realities of the market and technological advancements.
"In an uncertain landscape, which is affecting the German automotive industry, clarity is needed to not let the European industry collapse. Europe needs a pragmatic vision, the ideological vision has failed. We need to acknowledge that."
As the debate continues, the EU must navigate the delicate balance between ambitious climate goals and the economic realities of one of its most vital industries. The outcome of this reassessment could significantly shape the future of European mobility and its global competitiveness in the automotive sector.