An economic powerhouse for Europe, the auto industry is a world leader in e-mobility and sustainability, digitalization and road safety, but production and sales pose challenges, according to a recent “State of the EU Auto Industry” address by Sigrid de Vries, director general of the European Automobile Manufacturer’s Association (ACEA).

The automobile industry is “one of the few cutting-edge industries Europe has” and is intricately linked to the state of the European Union, de Vries pointed out. “As we navigate through uncertain times ahead, we must therefore ensure that this strategic industry remains a competitive player, well equipped to pursue the goals of zero-emission, smart and safe mobility.”

The auto sector delivers an annual trade surplus of €79.5 billion and generates €375 billion in taxation for governments in major E.U. markets. The sector also is the E.U.’s top investor in research and development (R&D), amounting to €59 billion annually, one-third of the region’s total, de Vries reported.

The R&D investment is propelling the industry’s commitment to the European Commission’s Green Deal, a set of proposals aimed at reducing net greenhouse gas emissions in by at least 55% by 2030, compared to 1990 levels. The market share of battery-electric cars doubled—some 10%—in 2021, said de Vries.

Challenges to e-mobility in the E.U. include a rapid rollout of charging infrastructure and resilient supply chains for key raw materials. De Vries cited the European Commission’s European Critical Raw Materials Act—a proposal to boost supplies of minerals such as lithium and rare earths–as essential.

In digital transformation and ever-safer mobility, de Vries believes ACEA members are leading; road fatalities recorded a year-on-year drop of more than 17%, according to most recent data. The state of the industry is “far from rosy,” however, for E.U. vehicle production and sales. De Vries said production dropped by 8% in 2021 and supply shortages continue cause negative impact.

The production slowdown affected the region’s new-vehicle sales as supply struggled to follow demand. E.U. car sales fell to 9.7 million units in 2021–3.3 million less than pre-COVID crisis levels.

The rising average age of the cars (12 years), trucks (14), vans (12) and buses (13) on EU roads presents another concern, said de Vries. “If we want to bring the cleanest and safest new vehicles into circulation, we absolutely must ensure that mobility remains affordable for all European citizens.”

De Vries also applauded the industry’s investment in retraining and uptraining for the industry emerging jobs. “ACEA is also a co-founder of the EU Automotive Skills Alliance, which needs further impetus,” she said.