THIS ARTICLE IS WRITTEN BY MARIO VAN DEN BROEK AND CEM ADIYAMAN. MARIO ([email protected]) AND CEM ([email protected]) HAVE A STRONG FOCUS ON TECHNOLOGY AND ESG WITHIN RSM NETHERLANDS BUSINESS CONSULTING SERVICES. 

To address these challenges, the EU has introduced the Green Deal Industry Plan (GDIP), which includes four fundamental pillars for Europe to protect its green tech industry. The plan aims to provide a structure that does not require too much bureaucratic red tape or time to access funding, easing the administrative burden of the Temporary Crisis and Transition Framework. It also aims to achieve strict coherence between other EU policy initiatives in the areas of industrial policy, decarbonization, and strategic autonomy.

One of the key challenges to developing the industry is the current high cost of energy. Access to low-carbon energy at competitive prices is a key part of the transition, and the plan aims to achieve this. The GDIP also recognizes that without stronger financial and regulatory support for nascent industries, the scale of the subsidies available in the US and China may attract green and advanced technologies at Europe's expense – from development to production and manufacturing. Thus, the GDIP provides a bulwark to keep investment in Europe.

The plan also aims to promote the development of sustainable, locally-sourced materials and components, which could reduce reliance on imports from other regions. This could help to improve the efficiency and resilience of global supply chains and reduce the carbon footprint of industries. The plan aims to reduce the EU's dependence on fossil fuels and promote the use of renewable energy sources, which could help to stabilize energy prices and reduce the impact of volatility in global energy markets.

Challenges or opportunities?

The GDIP has significant implications for the automotive industry, as it offers an opportunity for automakers to transition to a more sustainable and competitive future. However, it requires significant investments and changes in business practices. Automakers will need to invest heavily in developing new technologies and processes that reduce carbon emissions, rethink their supply chains, and adapt to changing consumer preferences.

Furthermore, the GDIP's policies and regulations aimed at reducing emissions could create challenges for automotive clients. For instance, they may face increased costs for complying with new regulations or changes in demand for certain types of vehicles. To mitigate these challenges, the plan includes a focus on transforming the European labor force to meet the demands of this transition. This recognizes the importance of skills and human resources in achieving the plan's goals.

Compared to the IRA, the GDIP aims to promote sustainable development and climate action, shift capital flows away from fossil fuel-based investments and reduce investment risks in developing countries. The GDIP offers a framework for businesses to contribute to the transition towards a more sustainable future.

The plan's focus on reducing greenhouse gas emissions and increasing the deployment of renewable energy could create opportunities for businesses to work with automotive clients on developing strategies for transitioning to electric vehicles, developing charging infrastructure, and optimizing supply chains. It is essential to recognize that isolationist policies are not effective in the long run, and collaboration with innovative companies from Asia and other parts of the world can lead to learning and growth opportunities.

Closing remarks

The COVID-19 pandemic has also brought about unprecedented disruptions to the global economy and supply chains, creating new challenges for car manufacturers. The pandemic has exposed the vulnerabilities of the industry's globalized supply chains and highlighted the importance of building more resilient and sustainable supply chains. Car manufacturers must also navigate changing trade policies, such as Brexit and the ongoing trade disputes between the US and China, which could impact their global competitiveness. 

By embracing changes and finding a balance between investing in new technologies, reducing their reliance on fossil fuels, developing sustainable materials and components, and embracing automation and robotics, car manufacturers can position themselves for success in a rapidly changing world. They can meet the demands of changing consumer preferences, mitigate risks, and protect their competitiveness while achieving a more sustainable future.