【Text by Observers Network, Qi Qian】

"Anxiety" is a common consensus among the European Commission and member state leaders.

Seeing their own traditional car manufacturers may not keep up with the times and fall behind China and the US, the EU has become so anxious that it is even willing to shake up the "environmental protection" and "free trade" principles.

On November 7th local time, Stefano Cuzzolino, the Executive Vice President of the European Commission in charge of industrial strategy, said in an interview with the Italian newspaper "La Repubblica" that the Chinese and American competitors are coming strong, and the EU needs to take action to help its automotive industry, including re-evaluating the EU's zero-emission targets, and setting conditions for Chinese investments, targeting Chinese car manufacturers' production bases in Europe.

"We should protect the automotive industry from threats from China and the US, we Europeans are very naive," according to Reuters and the Italian energy website Energia Oltre, Cuzzolino said in the interview, "we must be less naive and return to the standards of major world economies."

Cuzzolino said: "Europe is the only continent lacking strategic thinking on industrial policy."

He warned that if no intervention measures are taken, the number of cars produced and sold in Europe will decrease from 13 million to 9 million within ten years.

He continued, the latest data shows that in the first nine months of this year, the sales of Chinese cars in Italy alone increased by 150%; "more worrying is", it is estimated that by 2035, the market share of European cars will drop from 70% to 55%; "worse still" is the component share, which will fall from the current 85% to below 50%.

Cuzzolino proposed three suggestions: being flexible towards climate goals, seeking diversified exports, and establishing new rules to protect European production.

Video screenshot of Stefano Cuzzolino, Executive Vice President of the European Commission in charge of industrial strategy

He first emphasized: "We must show flexibility towards the goal of completely stopping internal combustion engine vehicles by 2035."

In March 2023, the EU decided to ban the sale of new fuel-powered passenger cars and small commercial vehicles that cause carbon emissions from 2035 onwards. Under Germany's request, new fuel-powered vehicles using carbon-neutral fuels are expected to continue to be sold after 2035. The EU stated that according to this regulation, the carbon emissions of new fuel-powered passenger cars and small commercial vehicles will be reduced to zero by 2035.

Reuters reported that the EU is expected to review this target by the end of the year to respond to concerns from European car manufacturers.

Cuzzolino said that European car manufacturers should open up new markets to increase sales, while EU institutions should reduce bureaucratic obstacles. He gave an example that the EU is currently negotiating with India, where India currently imposes a 150% tariff on European cars.

In this interview, Cuzzolino also hinted at taking measures against Chinese production bases in Europe. He pointed out: "Currently, in Spain and Hungary, there are car manufacturers using Chinese parts and Chinese workers to assemble Chinese cars, which is unacceptable."

When asked whether Europe should take protectionist measures, Cuzzolino said: "It is necessary to set conditions for foreign investments in Europe." He also added that he does not agree with increasing tariffs, as tariffs could trigger trade tensions and damage production.

Additionally, he proposed that in order to reduce dependence on Chinese rare earth mines, Europe should consider new suppliers such as Brazil, Canada, and African countries, introduce usage restrictions, strengthen recycling, and invest in potential local mining sites.

This week, Cuzzolino previously revealed that the European Commission plans to launch a broader strategy on December 10th, announcing the creation of a new class of affordable small electric vehicles to counter competition from China and revitalize the domestic market.

BYD's European headquarters building in Budapest - BYD official website

As one of China's "new three" exports, new energy vehicles have shown strong momentum in going overseas this year. According to CCTV News, in the first four months of this year, the production and sales of Chinese cars broke through 10 million units for the first time, with over 640,000 new energy vehicles exported.

At the end of July, JATO Dynamics, an industry research institution, released the latest analysis showing that in the first half of this year, 5.1% of new car registrations in 28 European countries (including the UK) were from Chinese brands, a record high, almost doubling from last year.

"European leaders can complain about Chinese electric vehicles flooding across Europe, but their resistance may be futile," a media outlet noted in August, this summer, more and more transport vehicles have been seen on German highways transporting vehicles from BYD, ZR Automotive, and Great Wall Motors from ports to dealers. On the roads in Sweden and the UK, XPeng and Polestar cars have also become increasingly common.

Felepe Muñoz, global analyst at market research company JATO Dynamics, said: "European consumers have made a positive response to Chinese car brands. It seems that these brands have successfully solved the awareness and recognition issues that previously troubled them."

The global automotive industry is undergoing unprecedented changes, and the rapid rise of Chinese electric vehicles has posed a serious challenge to European traditional car manufacturers. European industry executives have warned that the EU's increased tariffs on Chinese electric vehicles last year will make technology sharing more difficult.

Ola Kallenius, CEO of Mercedes-Benz and chairman of the European Automobile Manufacturers Association (ACEA), previously pointed out that the intensification of protectionism would hit Europe the hardest, as European companies benefit the most from globalization. He called for an open market and creating a fair competitive environment as much as possible, "letting the best market participants win."

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