The ban on the sale of new internal combustion engine cars from 2035 marks a major step forward in the EU's climate strategy, given that 15% of total greenhouse gas (GHG) emissions in Europe come from passenger cars. The success of this ban is not guaranteed, however, as it depends both on the transition by carmakers to 100% electric ranges (Battery Electric Vehicles, BEVs) and on the development of suitable infrastructure to encourage their purchase by European users.
The European automotive industry represents 7% of the EU's GDP and is one of the continent's last industrial bastions. Europe's ability to produce its own electric vehicles (EVs), over and above its climate objectives, therefore represents a major economic challenge. Despite their growth, sales of BEVs in Europe are still insufficient to achieve the objective of 100% electric vehicles by 2035. BEVs, the only vehicles authorised for sale from 2035, accounted for just 12.5% of total vehicle sales in mid-2024, far behind hybrid (HEV) and internal combustion vehicles. The current rate of growth is also largely underpinned by imports of Chinese electric cars... at prices that are often much lower than those of European manufacturers.
EU struggling to meet its own targets
The share of Chinese imports illustrates the difficulties the EU is having in meeting its ambitions in terms of EV production. Insufficient industrial capacity, particularly in mining and battery production, is a major obstacle. Despite recent mining projects, only a small proportion of critical materials requirements can be met.
Despite €3 billion mobilised through the European Battery Alliance created in 2017, only 3% of the investment needed in the battery supply chain has been made. The same applies to charging infrastructure, of which there are too few. The target of 3.5 million charging points installed by 2030 is still a long way off, despite the 220,000 new charging points installed in 2024.
The final barrier to the adoption of EVs is their cost. Although subsidies exist in several EU countries, they are not uniform and do not fully compensate for the price differential with combustion and hybrid vehicles.
China takes centre stage
These European difficulties are underlined by China's meteoric rise in the sector. Beijing's industrial strategy, supported by considerable subsidies, has enabled its national champions such as BYD and CATL to take a dominant position on the world market throughout the value chain - from mining to car manufacturing.
The Chinese government has invested more than $231 billion in the EV industry between 2009 and 2023, in addition to subsidies for battery manufacturers and producers of essential raw materials such as lithium. As a result, by 2023, BYD will have surpassed Tesla in terms of vehicle sales, and CATL will account for 40% of global battery production.
The EU faces a strategic dilemma
This competition from China presents the EU with a strategic dilemma: how to protect its jobs and its automotive industry while meeting the ambitious climate targets set for 2035?
The vote on 4 October to further increase customs tariffs on imports of Chinese (electric) vehicles was a wake-up call for Europe. But this is not enough. The customs surcharges applied are too low to stop Chinese EV exports to Europe. In the medium term, they could even push these same manufacturers to further reduce their already highly competitive production costs in order to maintain their high margins on the European market.
The challenge now for the EU is to invest massively in its EV value chain and charging infrastructure, while at the same time attracting foreign investment - particularly from China, but also from Japan and South Korea - to increase its domestic EV production capacity. BYD, for example, has already started building its first factory in Hungary.
In the current geo-economic context, it is questionable whether the EU really has sufficient negotiating levers to meet both domestic industrial challenges and strong Chinese competition.
