Another week, another report on the state of the EU auto industry—this time from Allianz Research. But compared to the hard-hitting Dunne report I covered last week, this one misses three elephants in the room.
What the Report Recommends:
The Allianz report offers a familiar playbook to restore the EU auto industry's edge:
Smaller EV Line-ups: Focus on 5-6 models with hybrid and electric versions.
Vertical Integration: Invest in mining, battery supply chains, and charging infrastructure.
Software Investment: Build software-defined vehicles and pursue autonomous driving.
IRA-style Subsidies: Implement major incentives to drive the transition.
There are more recommendations, but these are the big ones. Yet, the report fails to confront three massive realities:
🐘#1: Incumbent OEMs Can’t Execute This Plan
The first elephant is the complete inability of legacy OEMs to implement these recommendations. Why? They lack both the cash and the will.
No Cash: OEMs are bleeding from collapsing ICE margins and rising EV losses. The report ignores the fact that executing its plan would mean gutting their ICE operations, shedding 80% of their workforce, and facing mass bankruptcies.
No Will: Boards are paralyzed by short-termism, fearing shareholder revolts and labor unrest. This isn’t a pivot - it’s a bloodbath. And it won’t happen.
🐘 #2: Massive Subsidies Aren’t Coming
The subsidies the report calls for are pure fantasy.
Political Dysfunction: EU governments are gridlocked and focused on defense spending, not auto bailouts.
No Appetite for More Spending: With government incomes stalling, there is much less room to launch an IRA-style package.
🐘 #3: The EU Already Has a Pure-Play EV Maker - Just Not in the EU
The third elephant: The report claims Europe has no pure-play EV manufacturer. Wrong.
TOGG in Turkey: While not technically in the EU, TOGG is the closest thing to a pure European EV player.
Cooperation, rather than integration: Repeating the Tesla and BYD model is out of the question - there is just no time and no capability. TOGG is a case in point; it is not vertically integrated, sourcing its batteries from Farasis Energy.
What’s More Likely to Happen:
New OEMs from the South and East: I’d expect Middle Eastern and North African players to emerge, partnering with Chinese and Korean battery firms. EU firms might catch up, but I see no signs to support that.
Software-Led Disruption: New players will focus on EV software - not just hardware - to win consumers and address cybersecurity concerns.
The EU Will Miss Its Moment: Without bold action, the EU risks ceding the future of its auto industry to players beyond its borders. And there is just no
The Allianz report is well-meaning, but these three elephants make its roadmap unrealistic. Europe's auto future may be forged outside its borders.
Read the full report here: