Transition to Electric Vehicles
Competitiveness vs Technological Challenge for the EU Automotive Industry
The European Union (EU) automotive industry is facing challenges as Chinese electric vehicles (EVs) are increasingly gaining market share due to lower prices and perceived higher quality. In the last decade, the industry's reliance on foreign components has increased slightly (from 8% to 11%), but this modest increase masks the heterogeneity of EV and internal combustion engine (ICE) manufacturing. The distinction between EVs and ICEs is particularly important for inputs where the EU lacks a comparative advantage, such as batteries. Using a new methodology developed under the SMILE EU project, we disaggregate the automotive sector to separately assess technological differences and foreign dependencies for ICEs, EVs, and vehicle parts. Our analysis reveals that EVs have a significantly higher reliance on foreign components than ICEs (29% vs 13%, respectively). We find that this disparity is largely attributed to global value chain (GVC) strategies, rather than a domestic technological shortfall. These findings underscore the need for policy initiatives at an EU-wide level aimed at reducing outsourcing through GVCs and boosting European competitiveness in EV manufacturing.
DIAZ RINCON Andrea;
GENTY Aurelien;
RUIZ GARCIA Juan;
VERGOTE Wouter;
2026-03-05
European Commission
JRC145139
https://publications.jrc.ec.europa.eu/repository/handle/JRC145139,
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