Reading time: 11 minutes
The European car industry is in crisis. European industry results in 2023 were record-breaking (Gemini’s analysis).
The crisis rears its ugly head: Mercedes sells the silverware and hands over its legendary retail network to investors. BMW shares have been on a downward slide this week. The VW brand has put the severance program (which has been running for a year) in the press and promises a “turbo bonus” for volunteers. Audi is on a communicative dive after a change in the Board of Management.
Only at Stellantis is Carlos Tavares looking for a successor for himself, because he knows: it doesn’t get any better.
And Luca de Meo, CEO of Renault and president of the manufacturers’ association ACEA, writes a “letter to Europe”.
Luca is the right person for this letter
After all, he is the prototype and role model of a European and an expert on the industry.
Luca de Meo is fluent in the five major languages of Europe: Italian, French, German, English and Spanish. He has worked in Italy, Belgium, Germany, Spain and now France. He has been with Toyota, Fiat, Audi, Volkswagen, SEAT/CUPRA and now Renault.
One of his standard statements behind closed doors: “This industry is full of bullshit.”
That sounds aggressive. To do this, you must know you are personally approachable and a visionary manager. It is true that he produces new ideas on an assembly line. But he has been pursuing important projects for decades – even in the face of resistance and deep-seated core convictions from car managers.
As CEO, he led the launch of the Fiat Cinquecento, which was brought to the Volkswagen Group in 2009. Two years later, the up! into the market. From 2015, he positioned SEAT as the development center for the ID.2 family, the Volkswagen Group’s small electric platform. At Renault, he has become the anchor of the brand again, with Clio, R 5 and Megan, while Capture, Austral, Arkana and Espace make the money.
The pan-European small car is what will be remembered from the brand letter and Luca de Meo in 20 years.
The branch on which we are sitting is very strong.
The “bullshit” in European industry arises from a Babylonian tangle of interests.
The main problem is that the industry is divided, pursuing old rivalries, and politics and industry are moving in different directions.
In Europe, we are witnessing the perfect automotive cacophony.
THAT’S why Luca de Meo reminds us of the similarities between the automotive industry in Europe.
The role of the car industry for Europe is too often underestimated. This industry alone contributes 8% of GDP in the EU. This means that almost a tenth of all economic activity in the 27 EU countries depends on this industry. The automotive industry accounts for a quarter of all R&D investment in Europe and over 20% of all tax revenues (€372 billion) in the European Union.
At the same time, the focus of car sales has shifted to Asia, where 51% of all vehicles are already sold. China is focusing on a long-term electric strategy.
The automotive industry is the largest supply chain on the planet. And it is global: all countries are interdependent on each other through this supply chain.
These dependencies are complex. More complex than many want to admit and can understand (due to their prior knowledge). Additionally, the global players interpret this dependence differently and use it to their respective advantages.
The future of the European car industry will be decided on the international market: What role will Europeans play in this global supply chain in 10 or 20 years’ time?
US promotes, CHN plans, and EU regulates.
All governments of the major industrialised nations take the car industry very seriously. It may not be the most important industry, but it is very important. Mobility is strategic.
With the Inflation Reduction Act and the Chips Act, the U.S. government has more favourable conditions for locating the supply chain in North America. In this way, the US is trying to become less dependent on Chinese dominance in electric vehicles.
China has already established dominance in the entire electric vehicle supply chain. From raw materials to research and development for cell production, production capacities for electric vehicles, charging infrastructure, generation of renewable energies, to battery recycling, China is systematically building up global dominance and will not be slowed down by market fluctuations.
The EU, on the other hand, according to de Meo, burdens industry with seven new laws every year, tying up to 25% of research and development capacities. This is lacking in the five other challenges in Europe that affect us all:
- The decarbonisation of transport.
- The shift to software-defined vehicles (SDV)
- The technological transformation, for example in battery technology.
- Access to stable, cheap raw materials and energy.
- The education and training of 25 million affected workers.
For me, the last point is the most important when it comes to finding answers to the challenges: what would happen to many laws if legislators had a better understanding of the complexities of the automotive supply chain? Are tariff barriers for cars from China beneficial for Europe? Who will develop the technical solutions for decarbonization, SDV, battery technology? Who shapes EU geospatial and industrial policy in such a way that access to raw materials is secured and energy is available infinitely and almost free of charge?
The current generation has brought us this far. Now a lot is changing. The world of 2030 will look very different from the world we knew until then. We need new skills and new approaches to meet these challenges.
The 25 million employees are not only in the car industry. According to ACEA, the car industry provides direct and indirect employment for 13 million EU citizens. That includes 2.4 million manufacturing jobs.
An Airbus consortium for the European small car.
Luca de Meo calls for a European industrial policy.
After all, we in Europe have a lot of common interests. The challenges are identical (see above). The experts need to come together and set long-term common goals. Laws must provide the framework and ensure that these long-term, common European goals are achieved.
What is needed are not more laws and fines, but intelligent framework conditions that enable us Europeans to achieve common goals.
We want decarbonisation. The prerequisite for this is an abundance of green, cheap electricity; then electric vehicles also make sense. To achieve this, today’s generation capacity must not only be decarbonized, but doubled at the same time. In today’s generation, transport and storage technologies are still too expensive and inefficient. In 10 or 20 years’ time, we will see technological breakthroughs on a global scale – the question is what role Europe will play in this.
Luca de Meo calls for more space for science and technology research.
Give public and private actors more freedom and more responsibility to develop mobility and the right cars. He mentions 10 projects (see figure).
|
European small car |
Electrification of the last mile |
Renewal of the vehicle fleet |
|
Expansion of charging infrastructure |
Raw material security for the EU |
Secure access to chips |
|
EU standards for SDV |
EU Industry Metaverse (Digitalisation and Tech Investment Ecosystem) |
EU standards for battery recycling |
|
EU hydrogen infrastructure |
|
|
Luca de Meo’s passion project is the European small car: the Cinquecento Clio-up! (a better name can be found). These small cars, for which Japan is famous, save up to 75% of the resources used. This is even more than the switch from combustion engines to electric!
And in doing so, he reminds us of a successful project of the Europeans: Airbus. No European country can produce a player in the aerospace industry. But together, France, Germany, Spain, and the UK produce civil and military aircraft on a global scale.
Still, one of the most important projects is missing from the list.
Please add: cross-industry mobility education platform.
Currently, all manufacturers, suppliers, and dealers are trying to prepare their staff for the new technologies and challenges. Enormous resources are being mobilised, and all avenues are being used to meet the challenge of education and training.
And they all do the same thing. But independently of each other. The waste of resources is enormous.
This is because the training programs are almost identical.
Why, analogous to the European small car, do we not come together and build a common educational platform for all Europeans? For employees in industry, but also for trainees and students. As a basis for more research and technical development. As a jumping-off point for standardisation, which the industry so desperately needs.
An entire ecosystem of universities, universities of applied sciences, business schools, and private educational service providers could settle here. Content and learning formats can become very high-quality and still very cheap per participant by scaling.
History shows that educational offensives always precede an upswing in research and development, which in turn leads to greater competitiveness of an economy.
The EU, whose main responsibility would be to establish a legal framework, could make initial investments. Existing structures, such as the European Institute for Innovation & Technology, are a first approach. There are already experiences here that can be built upon, but which also show what does not work.
After all, the task of training employees is ultimately the task of a manager: the manager, the master and the foreman. For this reason, the educational platform must also be organised in the private sector.
Because the Airbus small car will be built by the Europeans Renault, VW and Stellantis, not by the EU.
