The European Union’s automotive trade balance is at a critical juncture, with the potential to become a net importer of automotive components for the first time ever in 2024.
Despite significant investments in research and development (R&D), the EU’s manufacturing of innovative automotive technologies is increasingly moving abroad.
EU companies continue to dominate global automotive investment in R&D and manufacturing facilities, with European suppliers responsible for roughly a third of all foreign direct investment conducted globally. EU companies also lead in automotive-related R&D expenditure, investing significantly and almost matching the US.
EU suppliers account for 32.7% of global automotive-related investment, closely following companies headquartered in the US at 33.3%, and outspending Japanese (17.4%) and Chinese (16.4%) competitors by a considerable margin. However, investment in production is increasingly moving abroad, with the US outperforming the EU in investments into battery and semiconductor manufacturing plants.
If the current trends continue, the EU may become a net importer of automotive components this year. This situation underscores the urgent need for the EU to reinforce its competitiveness and ensure that European innovations are primarily manufactured in the EU.
