Automotive suppliers are concerned that the pace of development is too slow to hit climate deadlines.
The automotive supply chain in Europe, arguably the lifeblood of the automotive industry, has expressed concern at the slow pace of investment from the public purse into the charging and fuelling infrastructure. This is needed to support climate-neutral mobility – electric cars, hydrogen, and e-fuels.
Most of them (over 90%) feel that they are the ones putting in the investment but it’s not being matched by public effort. These are the findings of research by CLEPA (the European Association of Automotive Suppliers).
Europe’s automotive suppliers are concerned that investment in the infrastructure to fully support climate-neutral mobility will not be matched by the public purse and this will severely hinder progress toward zero-carbon transport and mobility.
Testing the pulse – weak but not in ICU!
CLEPA, which represents 3,000 member companies supplying the automotive industry across Europe, reported on the latest findings from the CLEPA Pulse Check, a bi-annual survey carried out by McKinsey.
The research, released in February 2023, states that nearly all (98%) of automotive suppliers are worried about their ongoing efforts and investments in climate-neutral mobility will be compromised by insufficient charging and refueling infrastructure. The rapid uptake of electric vehicles (EVs) requires a public infrastructure of at least 3.4 million charging points by 2030. To reach this, the current rollout of the recharging network needs to be four times as fast as it currently is among EU countries.
CLEPA Secretary General, Benjamin Krieger, commented, “Ensuring a sufficient number of public charging points for EVs and refueling stations for hydrogen-powered vehicles is an essential enabling condition to turn current industry efforts into a successful transition for Europe and our climate. We need to see the ambition matched at the member state level.”
Gunning for a positive outlook
That said, the research also revealed a significant improvement in the overall outlook of automotive suppliers, compared to September 2022 when industry sentiment hit an all-time low due to rising energy and material costs. In February, 35% of suppliers expressed a positive outlook, while another 35% indicated a negative outlook. This marks a stark contrast to September when a staggering 70% of suppliers reported a negative outlook.
Despite 64% of suppliers expecting revenue growth throughout 2023, profit expectations remain bleak. Cost pressures and suppressed volumes due to the ongoing semiconductor shortage continue to suppress profits. A significant number of suppliers are facing intense margin pressure, with 67% of the respondents indicating that their operational profitability level is below 5%. In fact, roughly one in four suppliers are operating at a loss. This is surely unsustainable.
Long-term investment in the sector is under increasing pressure and 37% of suppliers are reducing investment, with companies doing the utmost to maintain R&D budgets. While the automotive supply industry is making progress toward climate-neutral mobility, it requires public support and investment to ensure the necessary enabling conditions are in place. Without this, the industry’s efforts may be undermined, and the green mobility transformation compromised.