EditEU confronts the “mortal danger” facing the European automotive industry
Brussels sounds the alarm as Chinese competition, sky-high energy costs, and regulatory burdens push Europe’s car industry to the brink
Rising competition from China, high energy costs, regulatory barriers, and technological delays have placed the European automotive sector in one of its most difficult periods in decades. During a debate in the European Parliament, the European Commission announced new measures to protect the industry and jobs, but MEPs remained divided on how to resolve the crisis.
“The European automotive sector is in mortal danger,” declared Stéphane Séjourné, Executive Vice-President of the European Commission responsible for prosperity and industrial strategy.
He noted that the Commission had been aware of this for a year, and the threat extends beyond vehicle manufacturers to the entire value chain – from component suppliers and battery producers to car makers.
The stakes go far beyond corporate balance sheets. As the Commissioner emphasized, “millions of jobs are at risk,” and employment in the automotive sector also means prosperity and social cohesion in many European regions.
“Our goal is to protect jobs in Europe and prevent mass layoffs at component manufacturers, which is why we are taking action for the entire electromobility sector,” he assured.
Séjourné highlighted the sector’s structural weaknesses, noting that it lags technologically and its supply chains have become vulnerable to geopolitical instability. Additional burdens include tariffs, barriers to external markets, and “dumping practiced by China on the European market.”
“From the manufacturers’ perspective, the massive influx of Chinese cars – which already account for over 15% of the electric vehicle market in Europe — is leading to situations where factories are cutting production and preparing layoffs,” the Commissioner explained, calling for “urgent action.”
Automotive package and Industrial Acceleration Act
In response to the outlined crisis, Séjourné assured that the European Commission is “conducting a strategic dialogue with the entire sector to create a genuine industrial policy for European automotive.” The pillars of the new strategy are the automotive package presented in December and the Industrial Acceleration Act unveiled in March. He stressed that these documents, for the first time, provide “a comprehensive strategy for the entire automotive value chain.” A key element is an attempt to reconcile two goals often presented as contradictory in public debate: climate ambitions and industrial competitiveness.
“The strategy takes into account CO₂ emission controls and appropriate regulations, while providing a degree of flexibility while meeting the set targets,” Séjourné assured.
One manifestation of this flexibility is the regulation on fleet decarbonization, which – according to the Commissioner – “gives manufacturers greater stability and predictability, while making it easier for European households to access used cars.”
Key priorities for further Commission action include simplifying regulations, developing affordable small electric cars, and supporting battery technologies using available funding.
“This will enable the building of a strong European battery manufacturing industry, implemented through the Industrial Acceleration Act,” the Commissioner argued, pointing to areas where Europe remains structurally dependent on Asian, including Chinese, suppliers.
Séjourné also emphasized that “all European institutions share joint responsibility for the fastest possible adoption of the legislative acts currently on the negotiating table.”
“We must reverse the unfavorable trend, stop the loss of added value and market share, and completely change the current situation,” he stated, adding: “It is our duty to take these actions both for European industry and for all the people directly affected by this situation.”
He noted that this position is shared by Commissioner for Sustainable Transport Apostolos Tsitsikostas, Climate Commissioner Wopke Hoekstra, and the entire European Commission.
Investments under pressure from imports
The debate revealed a deep divide over ways to save the European automotive industry — but not over whether it needs support. From EPP representatives to the Left, from Greens to critics of the Green Deal – all speakers referred to the same facts: the loss of over 200,000 jobs, Volkswagen’s announcement of another 100,000 layoffs, growing competitive pressure from China, and uncertainty about the pace and direction of technological transformation.
Differences concerned the diagnosis of causes – excessive regulation versus delayed transformation, management errors versus unfair foreign competition – and, consequently, the proposed solutions.
Massimiliano Salini (EPP) recalled that billions of euros have been invested in recent years to meet new challenges and ensure the European automotive industry can continue producing competitive vehicles.
“The share of non-European cars is constantly growing and could reach as high as 64%. It is precisely this perspective that gives the proposed actions such great importance: they are meant to create appropriate market operating conditions, ensure consumers access to affordable vehicles, and expand the appropriate charging infrastructure for electric cars,” he noted.
Speaking for the S&D group, Mohammed Chahim clearly opposed allowing production plants to close and relocating activity outside the European Union. He also criticized the industry’s and decision-makers’ previous approach.
“For too long, the development of electric cars was underestimated, until it suddenly became clear that this was a serious mistake. Electric cars are not a temporary curiosity or a technological whim,” he stated, calling for facing reality. To support his words, he pointed to long queues of customers in front of showrooms in Brussels and many other places, stressing that demand for combustion engine cars is declining, while interest in electric vehicles – including used ones – is systematically growing.
Chahim acknowledged that “part of society would like to stick with existing technologies,” but the rest of the world “is decisively moving toward electromobility.”
In his view, a dynamic shift to electric drive is underway worldwide, and by 2035 half of all sold cars will have such a drive. He summarized that the question is no longer whether this transformation will happen, but where factories and jobs will be created – whether they will remain in Europe or move to China.
Accurate diagnosis, wrong treatment
Klára Dostálová (Patriots for Europe) critically assessed the proposed solutions.
“A correct diagnosis does not, however, mean the right treatment,” she declared.
In her opinion, the Commission declares simplification of regulations but in practice creates further barriers. It announces support for innovation, yet instead of leaving technologies free to develop, it increasingly imposes specific solutions.
“European car manufacturers do not need further strategic documents, but cheaper energy, predictable regulations, less bureaucracy, and a genuinely technology-neutral business environment,” she argued, warning at the same time that if production costs in Europe remain significantly higher than in China or the United States, the experience of European engineers and high production quality will not be enough, because “costs will decide victory.”
Elena Donazzan (European Conservatives and Reformists) recalled that the Chamber had already debated the situation of the automotive sector in 2024, and since then the Commission’s approach has practically not changed, while the market situation has clearly worsened.
“China has significantly increased its presence on the market, and Europe has already lost over 200,000 jobs. The Volkswagen Group has already announced another hundred thousand layoffs, which often concern men supporting entire families. Factories are closing, and with them, companies serving the entire supply chain are collapsing,” the Italian MEP stated.
Management responsibility and spending priorities
Sara Matthieu (Greens) described the situation at the Volkswagen Group as dramatic, noting that hundreds of thousands of workers and their families live in uncertainty. She also cited the example of Audi plants in Brussels, where mass layoffs occurred and many people painfully felt the effects of those decisions. She recounted dramatic stories of workers, including those who had worked for thirty-three years and learned of the loss of employment from a letter, without even the possibility of collecting their belongings from the workplace.
Matthieu assessed that if Volkswagen’s management had paid more attention to competition from Chinese electric car manufacturers instead of focusing on other activities, many of them would still have jobs today. “Let’s not repeat this mistake,” she appealed.
Left representative Martin Schirdewan pointed out that workers certainly do not want to sacrifice their future solely to increase shareholders’ dividends and CEOs’ salaries. He noted that in Germany further plants are being closed, while millions of euros are paid to top management. He acknowledged that the European automotive industry faces international competition and digitalization, but emphasized that “the responsibility of managements, which are deepening the current crisis, cannot be overlooked.”
The debate in the European Parliament clearly showed that while there is agreement on the seriousness of the threat to the European automotive industry, deep divisions remain on the diagnosis of causes and the most effective remedies. The coming months will show whether the announced measures – the automotive package and the Industrial Acceleration Act – will be sufficient to reverse unfavorable trends and protect millions of jobs in one of Europe’s key industrial sectors.
The article in Polish by EUalive’s partner FocusEurope.pl can be found here.
Caption: Cars for export wait for shipment at the port in Emden, Germany, 23 April 2026. Autoport Emden is the third-largest automobile handling port in Europe, with an annual handling volume of around 1.24 million vehicles, mainly brands from the Volkswagen Group including VW, Audi, Porsche, Bentley and Lamborghini. EPA/CHRISTOPHER NEUNDORF
Updated: July 8, 2026 - 17:36
