Innovation to make Europe more competitive on automotive market
The European car industry is under pressure. The Drive Forward conference will discuss how Europe can regain its leading position.
Published on March 25, 2025
Bart, co-founder of Media52 and Professor of Journalism oversees IO+, events, and Laio. A journalist at heart, he keeps writing as many stories as possible.
The car industry - suitable for 13 million jobs and 13 million cars a year - is one of Europe's leading industries. But the sector is struggling. Chinese car manufacturers are entering the market with cheap EVs. For example, the Chinese company MG has seen its European sales double in four years. The transition to emission-free vehicles, digitization and increasing international competition are putting Europe under pressure.
So while China and the US investsuitable heavily in battery technology, digitization and new production methods, Europe must accelerate to maintain its position. Linking mobility sectors is essential to regain a strong position. The Drive Forward Conference (April 8 and 9 at the Automotive Campus in Helmond) aims to provide an initial impetus in this regard. The event will focus on three crucial issues that will determine the future of mobility: decarbonization, digitization, and improving competitiveness through innovation. In the run-up to Drive Forward, we will look at Europe's current position in the automotive industry in three episodes. Today: innovation & competitiveness. Read the first article here. And read the second article here.
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Continuous innovation
Europe is striving to regain its technological edge in the transportation sector through continuous innovation and by engaging in international competition. This is driven by legislation, investments in research and development and strategic partnerships between industry and governments.
The Horizon Europe program (2021-2027) is one of the EU's most important initiatives to stimulate innovation in the mobility sector. This program has a budget of €95.5 billion and focuses on smart and sustainable mobility, among other things. This funding includes projects such as the Zero Emission Waterborne Transport Partnership, which has allocated €530 million to developing emission-free shipping technologies. In addition, the European Investment Bank (EIB) has shifted its focus to supporting innovative companies in the mobility sector, with funding for start-ups and scale-ups working on autonomous vehicles, batteries and alternative fuels.
European Battery Alliance
To reduce its dependence on Asian suppliers, Europe has invested heavily in producing batteries for electric vehicles. The European Battery Alliance (EBA) aims to develop an entirely European battery production supply chain. Several gigafactories are currently being built, such as Northvolt in Sweden and ACC (a collaboration between Stellantis, Mercedes-Benz and TotalEnergies) in France and Germany. Although Northvolt is presently going through a difficult period, the company continues to operate and is striving for a restructuring to strengthen its position in the battery market. The outcome of these efforts will help determine the future of Northvolt and the broader European ambitions in the field of battery production.
American and Chinese investments are making it harder than ever to compete. With the Inflation Reduction Act (IRA), the US has set up an attractive subsidy policy for battery and EV production, while China is further expanding its dominance in the battery production chain. To compete, Europe must offer faster approval processes and more incentives to manufacturers who want to invest in Europe.
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Propulsion technologies
In addition to batteries, alternative propulsion technologies are also being researched. Hydrogen is playing an increasing role, with investments in hydrogen-powered trucks and buses. Germany and the Netherlands have set up large-scale hydrogen pilots, including the use of hydrogen in shipping and long-distance transportation. In Spain and France, e-fuels are being tested as a possible solution for existing combustion engines.
Europe invests heavily in autonomous vehicles and artificial intelligence (AI) for transportation applications. Germany passed a law in 2021 that allows autonomous driving on certain public roads, and several European cities are conducting pilot projects with self-driving taxis and shuttles. European players such as ZF and Bosch are testing more and more advanced driver assistance systems and autonomous vehicles.
Restrictions due to legislation?
Although European legislation is sometimes restrictive, it also offers a competitive advantage. Strict environmental standards and safety regulations force companies to innovate and raise the standard for vehicles entering the European market. This ensures that European companies are global leaders in regulatory-related technologies such as eCall systems (automatic emergency calls in case of accidents) and cybersecurity solutions for connected vehicles.
Europe has a strong foundation for innovation and competitiveness in the mobility sector, thanks to substantial investments, a well-developed R&D infrastructure and strict but progressive regulations. However, to remain competitive with the US and China, Europe must improve its financing mechanisms, accelerate production processes and create a more favorable investment climate. Strategic partnerships within and outside Europe will be crucial to maintaining and expanding the technological lead.