Draghi's recipe: How Europe's cheap electric cars will be produced

The former Italian prime minister calls on Europe to write a grand plan for the electric car focusing on batteries, charging stations and raw materials

Mario Draghi

Photo by: European Commission

By: Riccardo Ciriaco

Published by: Brian Potter

Sep 10, 2024 at 4:54am ET

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"An industrial action plan for the sector": Mario Draghi prescribes the medicine for the European electric car, which has long been suffering from declining sales due - in part - to what the former Italian prime minister calls "a key example of the EU's lack of planning, which applies a climate policy without an industrial policy".

The warning is put in black and white in the report "The future of European competitiveness", presented by the economist together with president Ursula von der Leyen to chart the Old Continent's new course. In short: now we must work well, because there is time to heal, but we must not lose any more. The risks are relocation of production and takeovers of companies by foreign competitors.

More aid and consistency

The first steps should be more aid for companies and a consistent roadmap on the electrification of mobility and the development of batteries, raw materials and charging stations. Only in this way will "small and affordable European electric vehicles' emerge and become competitive."

Draghi also argues that the Union should make better use of its resources, through the extraction and recycling of raw materials, because it is true that the Critical raw materials act (Crma) has already reduced by 3-5 times the time it takes to authorise work in mines, but it is always better to "speed up the pace". Following this recipe, in 2050 "the EU could potentially meet more than half to three-quarters of its metal requirements for clean technologies".

China is ahead

The banker spares no criticism: "The ambitious goal of zero tailpipe emissions by 2035 will lead to a de facto phase-out of new registrations of internal combustion engine vehicles and the rapid market penetration of electric vehicles".

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"However, the EU has not followed up these ambitions with a synchronised push for supply chain conversion. For example, the Commission only launched the European Battery Alliance to build its own value chain in 2017, and Europe is far behind when it comes to installing charging infrastructure.

China, on the other hand, has focused on the entire electric vehicle supply chain since 2012 and, as a result, has moved faster and on a larger scale and is now a generation ahead in electric vehicle technology in practically all areas, while also producing at lower costs."

The result is a loss of market share in the Old Continent from 5% in 2015 to almost 15% in 2023 for Chinese manufacturers, while that of European manufacturers has fallen from 80% to 60%.

The future of European competitiveness

Obstacles for the electric car in Europe:

Manufacturers must push the electric car (or risk fines)