European Auto Industry Facing the Electric Challenge: Between Urgency and Restructuring

The European automotive industry is going through the biggest transformation in its history. In just a few years, manufacturers must abandon a century of expertise in combustion engines to switch to electric. A revolution that is disrupting the entire value chain. **The regulatory shock** The European Union has decided: from 2035, no new combustion engine vehicle can be sold on the European market. This decision, enacted in 2023, spelled the end of an industry that directly employs 2.6 million people in Europe. For manufacturers, the countdown has begun. Volkswagen plans to invest 180 billion euros in electrification by 2030. Stellantis (Peugeot, Citroën, Fiat, Opel) is betting 30 billion over the same period. Renault has created a dedicated entity, Ampere, to accelerate its transformation. **The industrial challenge: an electric car has 40% fewer parts** An electric motor contains about twenty moving parts, compared to more than 2,000 for a combustion engine. This mechanical simplification is a revolution for suppliers: fewer components means fewer jobs. According to the European Automobile Manufacturers Association (ACEA), up to 600,000 jobs could disappear in Europe by 2040 in the traditional automotive sector. Subcontractors specializing in gearboxes, injection systems or exhaust pipes are the first affected. **Chinese competition, the new nightmare** While Europe restructures, China advances. BYD, the Chinese giant, surpassed Tesla in Q4 2023 to become the world's largest electric vehicle seller. Chinese manufacturers offer competitive models at prices 20 to 30% lower than Europeans. Facing this threat, the EU has opened an investigation into Chinese subsidies and is considering additional tariffs. A fierce trade war is brewing. **Gigafactories: the new race** To control the value chain, Europe is building its own battery factories. France's ACC (Stellantis-Mercedes-TotalEnergies joint venture), Sweden's Northvolt, and several German projects should produce the equivalent of 500 GWh of batteries per year by 2030 — enough to equip 10 million vehicles. It's a race against time, as today, 80% of lithium-ion batteries are produced in Asia. **Key takeaway** The electric transition is not just a technological change: it's a complete overhaul of the automotive industry, its jobs, its territories and its geopolitical balance. Europe is playing for its industrial future.