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Current State of the European Automotive Industry
The European automotive industry has been a significant contributor to Europe’s economic growth, innovation, and prosperity, accounting for almost 7% of the region’s GDP1. It directly or indirectly employs almost 14 million people1. However, the industry is facing massive ongoing transformations, such as the shift from internal combustion engines to electrified powertrains and a shift in focus from hardware to differentiation through software1.
Economic Benefits
The European automotive industry has been a critical force in the continent’s economy and industrial success for decades2. It directly accounts for four million jobs and 3% of Europe’s GDP2. The industry is also the poster child of Europe’s industrial success, with four out of the top ten global automakers by revenue coming out of Europe: Volkswagen, Mercedes-Benz, Stellantis, and BMW2.
Environmental Benefits
The European Commission is working on reducing emissions from vehicles and non-road mobile machinery, noise reduction, and environmental aspects of mobile air-conditioning systems3. The automotive industry is also driving towards a sustainable future with a focus on the development of electric vehicles (EVs), improving battery performance, and expanding the charging infrastructure4.
Social Benefits
The European automotive industry has been an engine powering prosperity and growth, employment, and innovation and has contributed to Europe’s image and perception on the global stage1. The sector’s more than 17,300 companies form a network of OEMs and suppliers of all tiers1.
Challenges
The traditional sources of the auto industry’s strength are seriously threatened. The European automotive cluster developed deep expertise in complex internal combustion engine (ICE) vehicles. But the advantages that European OEMs had in ICE design and high-quality engineering are increasingly losing their importance as the changeover to electric and software-defined vehicles accelerates2.
Technological Advancements
The top five automotive technology trends for 2022 include automakers reviewing their approach to hardware sourcing, digital giants integrating the car into a holistic ecosystem, open data and open-source collaboration models gaining momentum, established automakers ramping up OTA as their main digital revenue channel5.
Future Trends
The future trends that will shape the future of the automotive industry include a focus on sustainability with a shift to simpler less labor-intensive EV architecture6, development of autonomous vehicle technology slowing down somewhat as manufacturers redirect and refocus on the refinement of the electric vehicle7, and a shift towards software-defined vehicles2.