How Europe can take back the wheel in the global auto sector

Executive Summary

• 2024 was a reality check for the global automotive market and 2025 does not look much better. After recording almost +10% growth in 2023, the automative sector saw a modest +1.7% increase of new registrations in 2024, hit by lower demand; higher rates, which translated into higher loan costs coupled with tighter lending conditions, and a line-up from some carmakers that failed to match consumer expectations while legacy auto makers announced hundreds of new models over 2023-2024.
• The European auto industry in particular is facing three structural roadblocks: a lag in EV innovation, reliance on China, and policy disconnection.
  
• Europe should follow a 10-step plan to restore its competitive edge. Blueprints for success include China’s ambitious three-spoke industrial stimulus policy that combined consumer incentive measures with fiscal easing action for manufacturers and R&D funding; Norway’s balanced demand support and rapid electric infrastructure development and Tesla’s small line up and focus on tech.