Fit for 55: Doubling-down on tech openness is more essential than ever – Newsletter Editorial March 2022
Only a few short weeks ago, our world changed drastically. Russia’s invasion of Ukraine violated the fundamental principles of democracy and rule of law, and the automotive supply industry fully recognises and supports the need for firm action in the way of sanctions as a unified EU response to this unprovoked and unjustified attack.
Automotive suppliers’ primary concern, as with any crisis, regards the workforce, their families, and ensuring their safety and well-being. Our focus must, however, also go to the immediate as well as longer-term economic impacts of these troubling times. More specifically, how do the successive shocks impact the mobility transition, energy independence, security of supply and rising inflation in relation to Green Deal objectives?
Industry sentiment for 2022
The results of the latest CLEPA Pulse Check survey reflect the expectations of automotive suppliers and provides an outlook into an increasingly volatile business environment, with the Russia-Ukraine crisis exacerbating an already stressed supply chain.
The survey indicated that suppliers are increasingly prepared to deal with the green and digital transition. In fact, as of last October, investments in R&D and talent acquisition have increased 10% and are seen as the best way to prepare for future opportunities. Moreover, 66% of suppliers plan to reskill a significant share of their workforce in the coming months to respond to new trends in autonomous, connected, electric and shared vehicle (ACES) trends in the sector.
However, over 70% and 60% of automotive suppliers see the ongoing global supply chain disruptions and cost inflations, respectively, as key challenges for the industry. Auto suppliers are proactively responding to supply chain disruptions and chip shortages, but cost pressures of raw materials and energy prices prevent a full recovery post COVID-19, and the Russia-Ukraine crisis is likely to only intensify the situation for the industry.
The policy choices that will be made in the coming months will be crucial in defining the future of mobility, and above all, whether it will truly be a revolution within everyone’s reach.
The unpredictability we find ourselves in is all the more reason to move full speed ahead towards the certainty of climate neutrality. Our industry firmly stands by this commitment. But this requires full dedication to innovation, a flexible regulatory framework that facilitates investment, anticipates change, and allows for the full scale of technological progress.
The Ukraine crisis has exposed further vulnerabilities in the global supply chain caused by import dependencies. Diversification of energy and materials supply is key and should be a fundamental principle for policymaking. Europe can afford neither isolationism nor betting on singular options.
The principle of technology neutrality should be embraced as a cornerstone of EU policy, and not just in words but foremost in deeds. This is especially true for the transport sector, where the needs of consumers and businesses are highly diverse, geographical and infrastructure conditions widely differ and Europe risks choking a cutting-edge industrial asset by forcing disruption rather than an accelerated yet well-managed transformation.
As our recent study shows, an electrification-only approach risks over 500,000 jobs until 2040 in the powertrain segment alone. It risks affordable mobility and creates new import dependencies in raw materials and battery cells. A technology-open approach, including electrification, sustainable renewable fuels (bio and synthetic), hybrid technology, hydrogen and other low and net-carbon solutions should play a role in a balanced policy framework.
This is not an argument against electrification, it is an argument for diversification. A technology mix helps keep options open, prices down, and lessens dependencies on any one technology, energy, fuel, or region– without compromising on climate goals.
Supply chain resilience
Indeed, we are shifting paradigms from years of relative stability to a situation of high volatility, inflation, supply chain disruptions and new business models. Striking a balance between immediate needs and long-term planning is becoming increasingly difficult.
The lack of semiconductors continues to limit production, taking away revenues that could be invested elsewhere. There is a widespread challenge to find suitable talent, as well as a tremendous need to manage the transition in terms of employment impact. Energy and raw material prices have shot up without warning, putting pressure not only on businesses but also on households, who find themselves with higher bills and more expensive consumer goods.
This is why CLEPA advocates for balanced and pragmatic choices. Doubling down on technology openness, diversity and a partnership approach is now more essential than ever to sustain the mobility ecosystem, making it inclusive and fit for purpose, also in the future.
Sigrid de Vries
CLEPA’s Secretary General
In: CLEPA News