The recent French experiment with a social leasing scheme for electric vehicles (EVs) demonstrated the potential of progressive green policies. However, this success was short-lived as the sudden surge in demand exceeded the capacity of French carmakers. On the other hand, EV sales in Europe are struggling due to the withdrawal of subsidies, lack of charging infrastructure, and competition from Chinese manufacturers.
This challenging landscape is affecting iconic European car brands like Volkswagen and has raised concerns about meeting zero-emission targets by 2035. The European Commission is considering imposing tariffs on Chinese EVs to address the unfair advantage enjoyed by Chinese manufacturers. However, this move could lead to a trade war and further complications for European exporters.
To address these issues, proactive measures such as subsidies and investments at scale are needed to support the green transition and ensure affordability for consumers. The economic prospects analysis by Mario Draghi emphasizes the importance of sustainable policies to sustain industry and consumer confidence. Without a change in approach, the challenges facing the car industry during this crucial transition period are likely to intensify.
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