Despite the challenges of electrification, more than 50% of all vehicle models marketed by automakers are projected to be electric by 2030.

To keep up with this transformation, traditional automakers will partner with next-generation EV makers and digital firms to buy software architecture from them, expand R&D units in technology centers, or establish self-financing joint ventures with technology companies.

The changes in tariffs could push automakers to make different decisions and further increase competition. According to automakers, the easing of tariffs could lead to increased competition from Chinese brands, which could lead them to buy existing factories or build new factories in low-cost European and free-trade partner countries to overcome trade barriers.

Beyond the impact of tariffs, global new and used car prices had risen due to high consumer demand following the pandemic. Later, new vehicles were driven by elements such as advanced technology, larger infotainment screens, driver assistance systems, and hybrid/electric powertrains. At the height of the pandemic, supply chain disruptions and semiconductor chip shortages caused vehicle production to slow down and even stop, keeping automotive prices at high levels that are still high. A study in the US shows that new vehicle prices in dollar terms have increased by 22% since 2019.

Global car production reached 75.5 million units in 2024. Europe, North America and Japan were the regions with the biggest declines in production. European car production fell by 4.6% in 2024 to 14.4 million units. The EU's car production fell even further, by 6.2%, while Russia's would grow by around 45% in 2024.

Production in North America fell by 3.2% to 11.4 million units last year, and in the US, by 3.5% to around 7.4 million units. Car production in South America in 2024 increased by 1.7% compared to 2023, driven by Brazil, which will produce around 1.9 million cars and increase by 6.3%.

Car production in Asia is expected to increase by 1.5% in 2024, reaching around 46 million units. This increase is driven by China, which is growing strongly by 5.2% and is further consolidating its position as the world’s largest car manufacturer with a market share of 35.4%, 1.9 points higher than in 2023. India is expected to see a 4.7% increase in car production, while production in Japan and South Korea is down by 8.6% and 1.2%, respectively.

There are 255 car assembly, engine and battery manufacturing plants in Europe. Of these facilities, 98 produce cars, 44 buses, 32 trucks (heavy-duty vehicles), 30 minibuses (light commercial vehicles), 56 engines and 65 batteries, 121 produce or assemble electric vehicles.

While EU car production is expected to fall by 6.2% to 11.4 million units in 2024, the biggest decline in Europe was in Italy, with 43.4%. This was followed by Belgium (-31.2%), France (-12.4%) and Sweden (-5.1%). Germany, the EU's largest producer, recorded a 0.4% decrease in car production. While the Czech Republic saw a 3.5% increase in production, Slovakia (-7.6%) and Romania (-6.5%) experienced significant declines.

The general view in the automotive sector reveals that the European automotive industry is now having difficulty reaching the electric vehicle targets set for 2030 and 2035. We will all see how the automotive sector will take shape after the relaxation of the tariffs.