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Brussels has pledged to potentially help Europe’s embattled car industry by using pan-EU subsidies to boost demand for electric vehicles.
Teresa Ribera, the European Commission’s executive vice president, told the Financial Times at the World Economic Forum in Davos that officials were still “shaping up” options for the stimulus program.
“It makes sense to see how we could figure out in a pan-European perspective, how to facilitate the measures instead of going through national subsidies,” said Ribera. She warned of “a race in which we could face one national model against another.”
German Chancellor Olaf Scholz revealed on Tuesday that the Commission is considering an EU subsidy program he proposed. The German government abruptly scrapped its own 2023 plan, leading to a fall EV sales.
Many EU member states offer incentives for electric vehicles, but terms vary widely, and several member states offer no purchase subsidies at all, according to the European Association of Automobile Manufacturers.
One of the challenges for Brussels would be to devise a scheme that would comply with WTO rules while avoiding subsidies flowing to Chinese carmakers, whose market share is growing rapidly.
Ribera admitted that there is a “complicated balance” to be struck between rapid electrification and “a mismatch with the capacity of European brands to deliver in terms of quantity and quality what we would like to see on our roads”.
The commissioner, who is responsible for the EU’s “green industry” strategy, said the possible stimulus scheme would be one of several measures to support a sector considered vital to the European economy. European automakers “needed a comprehensive look at how to update their capacity and catch up with what’s already being demanded around the world,” Ribera said. In contrast, US President Donald Trump pledged this week to end “unfair subsidies” for electric vehicles.
Ribera, a socialist and former Spanish deputy prime minister, rejected delaying the 2035 deadline to end new sales of internal combustion engines because the car industry wants “predictability and clarity”.
“There is no point in reopening the debate when it provides some certainty and would penalize first movers in earnest without any potential benefits for those yet to move,” she said.
But she said she was open to flexibility on annual electric vehicle sales targets and the penalties automakers face if they miss them. Ribera said there had been an “open conversation” with carmakers about alternative commitments they could make in terms of investment.
Automakers have complained that paying the fines will only hinder their plans to invest in electric vehicles, while buying credits from Chinese electric vehicle makers helps Chinese competition.
Ribera said it was important to “ensure that this legislation is applied in a way that facilitates what is the main goal” of phasing out gasoline and diesel engines.
She also said she was open to expanding technology transfer requirements for foreign carmakers looking to set up production facilities within the EU. Brussels said last year that it would require foreign companies that received EU grants to develop batteries share some technology with local partners.
There is a “good lesson to be learned” from China, which imposed strict joint venture and technology sharing requirements when European carmakers set up factories there 30 years ago.
Apart from the automotive sector, Ribera said she was willing to expand the available measures the Commission can take to benefit European industry.
Ribera said he would consider local content requirements to protect European turbine makers facing stiff competition from Chinese companies.
Shares in European wind turbine makers have taken a hit since Trump’s first policy announcements, including suspending leases for new offshore projects.
Ribera insisted that the EU would stick with decarbonisation, despite Trump’s move to leave the 2015 Paris agreement to cut emissions, which she was one of the architects of.
The devastating fires in Los Angeles showed that the US is already suffering the effects of climate change at a high cost, she said.
“The world is much bigger [than the US] and there are many other partners and players who understand why it is important to stay united,” she said.
