CLEPA believes the strength of the industry is threatened by some growing challenges that are undermining its competitive position. although this industry remains an important pillar of the EU economy. One should not forget, as AutoRevista explains, that while the EU was struggling with a huge trade deficit of 440 billion euros in 2022, the European automotive industry generated a trade surplus of more than 110 billion euros.
Despite ambitious investments in the battery supply chain Importing batteries has reduced the trade surplus in automotive components, which, once solid, has eroded by more than 60% since 2018.
In the past 18 months, the US has experienced a remarkable rebound, attracting nearly three times the investment that the EU was able to sustain in automotive and battery supplies. “Perhaps most worrying is that auto parts suppliers are at a crossroads and are beginning to give away market share to foreign direct investment. It’s an image of resilience, coupled with vulnerabilities, that forces the industry to navigate a changing environment in order to maintain its fundamental role within Europe’s economy,” they explain in the aforementioned publication.
on your side, Nils Poel, deputy head of market affairs at CLEPA, wanted to emphasize that EU suppliers have become world leaders over the past decade, resulting in an annual trade surplus of almost €30 billion. “If current battery import growth continues, the EU could become a net importer of automotive components by 2024.”
Despite the stagnation, suppliers are maintaining their quotas.
In the midst of a period of stagnation, EU automotive suppliers still hold a slightly higher overall market share (15.9%) than total manufacturing (15.7%). However, both sectors remain below pre-COVID-19 levels.
Foreign direct investment (FDI) continues to flow into the EU’s automotive supply chain, albeit with significant differences compared to the US. In the last 18 months, non-EU companies have invested more than €14.3 billion in the EU, while the US has attracted a staggering €42.8 billion over the same period. In addition, the US leads in battery production capacity, which raises important questions about EU industrial policy.
Although EU-based automotive suppliers recorded €16.4 billion in investments outside the EU in 2022 and the first half of 2023, their global FDI share has fallen from 43% in the first half of 2022 to just 12% in the same period of 2023.
In 2022, the EU automotive supply industry achieved total exports of 51.7 billion euros, thus maintaining its global top position. However, this dominance is gradually eroding as China’s exports grew by 9% in 2022, while the EU saw an 8% decline. If the gap narrows, it could be that this year or next will be the year China takes power. This developing trend illustrates the stagnation of the EU in the face of the growth of its competitors.
The trade surplus in components fell by 11%
The EU trade surplus for automotive components shrank by 11% in 2022 and fell by 56% if battery trade is included. The total business value of lithium-ion batteries tripled in 2022 compared to the previous year. Although investments in the EU battery supply chain should eventually dampen imports, the value of battery imports almost doubled in the first quarter of 2023 compared to the same period in 2022. At the same time, full-year battery electric vehicle sales increased by more than 53.8% in Q1 2023.