Europe Under Pressure: Can Its Automotive Industry Stay Competitive?

00:00:00: If I had to give one recommendation, do not lose faith.

00:00:07: The fight is still going on and the last few years have demonstrated that Anything may happen, and we have seen the COVID in many events that we couldn't even imagine.

00:00:22: That has changed their way.

00:00:24: things go And The future is not written yet.

00:00:28: Still if you go on fighting We might find a way to end up with victory or... Yeah, we have to still work and not despair.

00:00:42: That's the recipe I have for

00:00:45: me.

00:00:54: Welcome to Tuva's Talkline!

00:00:55: The podcast about transformation of valued chains in the automotive powertrain.

00:01:00: My name is Marco Lorey And today We have an international guest.

00:01:03: i would like to welcome Mr.

00:01:04: Grosjean.

00:01:06: He is president of European Automotive Cluster Network EACN, and the General Manager of the French Auto Cluster Pôle Vélikoulet Le Fouture.

00:01:16: Together with his team he supports around five hundred members from the automotive and mobility sector in innovation productivity and industrial transformation.

00:01:25: He has been working at the intersection of industry, research and regional automotive ecosystems for more than two decades with a particular focus on future mobility technologies such as electrification hydrogen intelligent transport systems.

00:01:40: And autonomous driving.

00:01:41: Through

00:01:41: his role at AECN, he also brings a unique European perspective on how different automotive regions are responding to the current transformation and how cross-border collaboration can strengthen the competitiveness of the European automotive industry.

00:01:56: It is a pleasure here today.

00:01:58: what personally drives you in shaping the future for the European Automotive Industry!

00:02:04: There are two aspects of this issue.

00:02:06: First, automobile itself as a product has been shaping our lives for decades.

00:02:12: Our cities or economy could not work without cars and it's very important central in all life.

00:02:20: And also second the automotive industry is The backbone of the European Industry.

00:02:28: driving inhalation and volumes hundreds of thousands people.

00:02:35: These people are not just numbers, they're real people with names and faces and families And the current stakes is so high that we cannot leave them alone.

00:02:48: We have to fight for them.

00:02:50: I want also include all these company executives who still nice cars, nice suits but we will literally spend their whole life trying to save their companies and the reality jobs.

00:03:08: We owe it them to continue our efforts.

00:03:12: so that's two main reasons why I'm still into

00:03:16: job.

00:03:18: If you think about last five years what technology in a last five or ten year impressed your most?

00:03:25: The central part of the technological evolution is transition towards clean mobility.

00:03:33: This tradition has not yet completed but we see real progress and it's a very big challenge for many companies who see their markets deeply transformed or disappearing, but appear in a very difficult way because some companies started to evolve quick and they were too quick for the real market.

00:04:02: And some start it too late, and then disappeared because we're late.

00:04:08: so We use have our markets with Very large predictability nor its very unpredictable world that we had to live.

00:04:20: The electrification as a whole for the global perspective is good thing.

00:04:27: And also we have seen the appearance of autonomous driving, We've been announcing coming-of-autonomous driving more than ten years but it looks like that its at last coming in all roads and have the prospect to shaping new ways of mobility.

00:04:48: So it's impressive also and, apart from technological aspects... The rise in China is a very important part of the evolution world because China has become The main automotive market in the world and also, the industry leader for the automotive industry.

00:05:10: And that has changed everything for companies all around the world.

00:05:14: so... That is impressive!

00:05:17: As I said already, it changed all around the world.

00:05:19: You have been working with automotive companies and classes for more than two decades.

00:05:24: looking at European Automotive Industry today how fundamental is the transformation we are currently experiencing compared to previous changes in industry?

00:05:34: We've traveled a long road together during Europe Thirty years there have been some evolutions, jobs going south or east.

00:05:47: But on the European level we all work more-or less with the same rules.

00:05:55: and what has changed with China of other very low cost countries?

00:06:01: that they don't play in the same roles as European players.

00:06:05: That means that we cannot compete on the long run with them unless there are changes in the European way of doing things.

00:06:17: For decades, the idea was that European companies were so good they could sustain a certain amount of unfair competition but now so tough that it's not the case anymore.

00:06:36: But for, I can't remember your question any more... The best achievement at the European level is we work as a single market in industry.

00:06:50: We are more or less a single industry on the EU and this isn't the case with other continents.

00:07:01: Through the EACN you have a unique perspective on different automotive regions across Europe.

00:07:07: European regions essentially facing the same transformation or do see major differences in their challenges, strengths and strategies in Europe?

00:07:15: We are diverse but we all over Europe see concerns about very low cost countries.

00:07:25: As I said, they do not play with the same rules.

00:07:28: We talk about China but there are also countries in the south or in the southeast that have a very aggressive approach and it's no more for them to be willing take part of the market.

00:07:46: But Europe has to find a way to develop their field so companies can exist.

00:07:52: we're still rich continent with educated people, with an industrial culture and a strong customer base.

00:08:01: And we have these strengths but our main weakness is that we take enormous time to adjust new situations.

00:08:10: We were on the track for design of ten years or twenty years or thirty years from now But this situation has dramatically changed And this is, our current institutions are not very much prepared for these challenges.

00:08:33: So it will be tough time to come.

00:08:38: I have a follow up question on this one Where do you see differences in the German-to-French auto industry?

00:08:45: What are the points?

00:08:46: they differ in

00:08:47: The main aspect that's the german automotive industry was turned towards export to China, the US and French automotive industry.

00:08:59: Progressively it is more concentrated on European market I think And this has led very different political approaches toward China for example with German OEMs not wanting to have problems with Chinese and not wanting to protect the European market as much, for example French OEMs wanted to achieve.

00:09:29: But I heard that things are evolving... having evolved in some weeks or months And maybe we're on the verge of having common point-of view this subject But at the beginning, different OEMs were in different geopolitical situations and it's normal that their policies reflect these diverse situation.

00:09:57: When we discuss future of automotive industry they quickly turn to Asia, China, US and Europe as competitiveness.

00:10:05: How can we achieve our Europeans greatest rank?

00:10:09: And where do you think are falling behind globally?

00:10:12: First, we have to protect our market.

00:10:14: It's not only my point of view but also the point-of-view of much of the clusters from EACN and all that much other than them.

00:10:26: Also We Have To Be Customer Oriented Provide the cars that customers want to buy, taking into account regulations necessary and have to be respected.

00:10:42: But some years ago all Western OEMs wanted to become BMW because they saw premium cars as a way of earning money.

00:10:54: The main problem on the European market was there were not enough cars that were affordable for the regular customers.

00:11:03: This has changed in the last few years, but we still have to make customer expectancies and the OEMs offer... We have to rejoin these two tendencies because there was a large issue about this And if you don't do it The Chinese will do their job active in finding new markets.

00:11:34: Where do you see the European automotive industry on a path of rejoining these two together?

00:11:40: Do we think that they are under right track?

00:11:42: Yeah, definitely.

00:11:43: The diagnosis is there and many OEMs are aware If they want to survive, they have to provide cars that the market can afford.

00:11:56: I very much think this trend is ongoing and it's largely an issue from past at least in vehicles which are being developed.

00:12:12: We still need time for these vehicles to reach the markets but this has been addressed.

00:12:20: And also, there is the second issue that is that customers see that market still evolving and many want to wait until car that they dream of comes on the market.

00:12:39: and they think that for example electric cars have not enough autonomy, so the thing is if I wait two or three more years i will get a better car.

00:12:50: So there's no need to wait until the next car comes.

00:12:54: it's like in the computer industry some years or decades ago where every time... Every six months you'll be getting a better computer.

00:13:08: think it's better to wait before buying a new computer because I will get a veteran for the electric car.

00:13:17: We have this kind of official, I think

00:13:21: when do you think we had passed?

00:13:24: This technical mark that electric cars Will now be adopted by the mass in the markets.

00:13:32: We are thinking we're In the middle of the shift Thanks also to external issues.

00:13:42: At the beginning of year, for example in France people would say that maybe we internal combustion engines could be better than electric vehicles.

00:13:52: We had a war on the Persian Gulf and now everybody wants to go electric.

00:13:57: so it's evolving into another direction.

00:14:03: but now market shares are very high and now it's not something weird to get an electric vehicle.

00:14:17: It is getting mainstream, people tend to discover that its'nt so difficult to drive an electric car.

00:14:27: we have some markets for example in Norway where nearly all new cars are electric.

00:14:36: We are going to see that it becomes mainstream.

00:14:41: Now the shit is really coming now.

00:14:45: One criticism we often hear, is that Europe has excellent technologies and engineering capabilities.

00:14:51: you set yourself with educational backgrounds but struggles bring innovations for market quickly like AI new technology digitalization.

00:15:00: Do share this view?

00:15:01: And what could Europe learn from other regions about digitalisation and technologies.

00:15:07: Yeah, it's clear that Europe lacks individual or public monies who are willing to bet a lot of money in order for some innovations.

00:15:19: reach the market because there is lots.

00:15:32: reaches the market and it's a big bonus for this.

00:15:35: So we don't have it in Europe, It is really an issue of international competition.

00:15:43: We can also reverse these ideas At the global level, maybe it's speed which is a problem.

00:15:52: When innovation goes too fast you can have very serious issues for example with social networks and youngsters or children that we see in America trials for this, or artificial intelligence that poses very serious global security threats.

00:16:16: So maybe we shouldn't go as fast in China and America.

00:16:27: This is a philosophical question.

00:16:29: When we talk about economical competitions, it's clear that PEED is the solution for better or for worse here.

00:16:38: If you want to go fast We have to find device solutions in Europe currently Have no magical bullet for this either private public money.

00:16:52: I leave people more clever than

00:16:55: i am.

00:16:57: We have in Europe very strong regional automotive ecosystems.

00:17:02: However, they are still often organized around a regional or national structures.

00:17:07: Do we need to think much more in terms of the truly European automotive ecosystem?

00:17:12: To remain globally competitive?

00:17:15: The auto industry is Is that bit special compared to other industries.

00:17:21: It's small pyro middle at the top.

00:17:24: There are several pyramids with several OEMs at the top and they have tier one, some tier two suppliers each level supplying the upper ones.

00:17:37: So it's less regional ecosystems that ecosystems built around several OAM having their own ecosystems Some of these ecosystems overlapping but This is also one way to view it.

00:17:51: We have strong ecosystems, for example in Germany with Faudia which has a very strong body and I don't think there are any other countries in Europe with the same strong organization but as i said very different, especially if you compare Germany to other countries.

00:18:19: I pretty much think that things are evolving and we in the future will be able to have more convergent position among the different country.

00:18:32: on the other hand We can see Chinese OEMs coming into Europe so-called European OEMS American OEM Japanese OEMs, now Chinese OEM also coming to Europe.

00:18:48: All these OEM have their own particular approaches and I'm pretty much sure that Chinese Oems in Europe will have some effect on the way the automotive ecosystem is structured.

00:19:03: we'll still have different parameters with each OEM sitting at the top of its own pyramid.

00:19:10: So it will be not so much national ecosystems that ecosystems built around one or several OEMs.

00:19:19: Regarding the pyramidal structures, how do you see the effects of electrification regarding the networks?

00:19:27: Is there a big change in automotive industry and suppliers' industries?

00:19:31: And your point is positive where can we have potential?

00:19:35: Of course it has a big impact, especially when we lose some companies.

00:19:42: The companies that were used to provide internet connection engines for example are set to disappear in the long run.

00:19:52: and also there is large concentration among battery producers because there are few companies in the world that are capable, really capable of mass-producing attributes for electric vehicles.

00:20:11: So currently it's a big change because battery produces...for the time being.

00:20:18: maybe things will evolve in future but big power inside the industry.

00:20:27: It's new, it comes on because when there is a lot of power concentrated in the hands of few players its maybe dangerous for those who are dependent upon them.

00:20:44: You said it yourself.

00:20:45: Let's see how it involves into the future.

00:20:48: then let us take a look in to this feature right now.

00:20:50: if we both meet again ten years from Now what needs to have happened for Europe?

00:20:55: To still be one of the words leading automotive and mobility regions, and beat up backbone after European industry?

00:21:02: For sure they should having a political decision to protect the European industry.

00:21:10: I'm not only talking about the automotive industry, currently it is the industry that has to be protected.

00:21:18: but if we don't find solutions to protect the automotive industries and pretty much convince large chunks of Europe's industry will disappear also because do exist among other industries.

00:21:41: We know textile, we know many of the industries and also for solar panels that used to have best solar panels disappeared.

00:21:51: so we had a political solution in good conditions to protect our own industry from other continents not only China but all the players that want to send in Europe products that were not produced using the same ecological standards, the same socio-economic standards.

00:22:20: So it's a very much political issue my opinion and we have work on Indian industry stay at world wide level to innovate etc.

00:22:32: but The political issue is the central one, in my opinion for the future of your automotive industry and Europe.

00:22:41: And again, it's not a joke that we risk losing our industry in Europe – the threat is real!

00:22:55: We must act accordingly.

00:23:01: If you could give one recommendation to European automotive suppliers facing this transformation today, what would it be?

00:23:24: Anything may happen and we have seen the COVID, many events that we couldn't even imagine.

00:23:32: That has changed their way.

00:23:34: things go... The future is not written yet.

00:23:40: still if you go on fighting We might find a way to end up with victory.

00:23:47: or Yeah, we have to still work and not despair.

00:23:57: That's the recipe I have

00:24:12: for me!