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SPEECH/11/737

Siim Kallas

Vice-President and Commissioner for Transport

The challenges ahead for Europe's automotive industry

EUCAR (European Council for Automotive R&D) reception

Brussels, November 8, 2011

Ladies and gentlemen,

Thank you for inviting me here this evening to talk about where I see the challenges ahead for European transport, and for automotive research and development in particular. Europe's car and truck industry is critically important to our economy, and not only just as a major producer and employer. It provides the means for millions of passengers to travel and for many thousands of businesses to prosper.

As you know, I strongly believe that innovation and investment are the keys to maintaining competitiveness, to keep Europe's transport sector as much ahead of its rivals as possible — because in today's commercial world, we cannot afford to lag behind. In the automotive sector, Europe's position is world-class. And we clearly want to keep it that way.

There are some major challenges lying ahead for the automotive industry that will inevitably alter the business landscape for decades to come. We cannot avoid these changes and we need to act now, to prepare for the future. Merely to maintain the status quo is not an option.

Worldwide new car sales are forecast to increase by more than 10% in 2020 compared with 2008, largely driven by consumers in emerging markets turning into car users and owners. At the same time, there is already a clear trend towards lower rates of CO2 emissions in new cars. Let us not forget that the EU's competitors are also investing in low-carbon technologies in preparation for the shift towards cleaner road transport, reflecting a visible global trend towards sustainable transport technologies. We need to do the same.

Climate change and emissions reduction are issues to which I will return shortly. They also relate directly to another big concern: Europe's overdependence on fossil fuels in transport.

Our transport system has developed against a background of generally cheap oil, expanding infrastructure, European technological leadership and limited environmental constraints. We must now adapt to a very different set of conditions. We need to break our almost complete dependence on oil to fuel our road transport systems. Oil is likely to become scarcer in the years to come, demand remains strong and markets as volatile as ever — just look at how little it takes to send oil prices shooting higher with events in a country such as Libya.

So reliable alternatives need to be in place long before we run out of oil. The EU is committed to reduce greenhouse gas emissions by at least 80% by 2050 and to reach that target, transport will have to cut its emissions by at least 60% compared with 1990 levels. And it is road transport which accounts for by far the largest share of the energy used by all transport modes.

Another challenge for our cities and on our roads is increased congestion. Urbanisation will continue and traffic in cities and on their access routes will grow.

The Commission's Roadmap to a Single European Transport Area sets the goal of halving the use of conventionally fuelled cars in urban transport by 2030 and phasing them out in cities by 2050. As you know, the roadmap also has other targets for shifting road freight onto other transport modes like rail.

So it is imperative for us to push forward with developing alternative fuels as a sustainable energy source: clean and energy-efficient technologies deployed in green vehicles using electricity, hydrogen, biogas or liquid biofuels, for example — all these alternative fuels can be produced from low-carbon or carbon-free sources. They are a chance for EU industry to make sure it stays market leader as it champions new technology.

Energy-efficient vehicles will boost our industry's competitiveness, make Europe's economy greener and more resource-efficient, as well as create jobs — all in line with our Europe 2020 strategy. But the technical and economic uncertainties are still too high at this stage to rely on a single candidate for fuel substitution. The real challenge will be to introduce these technologies gradually into the European market, which should be done at the same pace as the development of the technology. For that, there will have to be proper infrastructure for charging and refuelling because consumers will naturally hesitate to buy an 'alternative fuel' vehicle if there is no easy way to refuel it. You could already imagine that this could be a practical problem with hydrogen cars, for example. But it will be the market that ultimately decides on what works best for the industry and the consumer.

Let me now turn briefly to the next steps being planned by the Commission.

Firstly, we will be presenting our medium-term strategy for transport research and innovation: the "strategic transport technology plan" (STTP). This will focus our efforts on essential technologies over the whole product development chain — from research and innovation, to demonstration and market introduction — based on a vision of an integrated, efficient and environmentally friendly and safe European transport system by 2030.

Then, an initiative on clean transport systems, which will be a comprehensive long-term fuel strategy for gradually substituting fossil fuels with alternative energy sources. While we are preparing for the long term — 2050 and beyond — there is no time to lose and we must get ready to develop energy solutions now.

Ladies and gentlemen,

Imagine, if you will, European cities served by fleets of ultra-clean, smokeless and silent vehicles, buses and other public vehicles, perhaps powered by electricity. This would really improve the quality of urban life — and is it so far-fetched? I don't think so. It could be the future. This is not about necessarily reducing the number of cars — but developing engines that consume less, and cleaner fuels.

The European Commission is working hard in this area, in particular promoting more use of intelligent transport systems (ITS), to support the competitiveness and sustainable growth of the European automotive industry. And also to make our road transport cleaner, safer and more efficient. ITS has an enormously beneficial role to play in making our road transport ready for the future. Some applications are widespread and familiar, such as on-board navigation systems installed in millions of cars and trucks which process real-time traffic and travel information. But science is moving ahead all the time, adding more and more sophisticated applications to existing control functions. There is enormous potential.

'Smart' transport systems can also be used to enhance eco-driving behaviour and maximise fuel efficiency, helping us to change our driving habits to develop a better road/car synergy. In general, it is estimated that ITS can reduce the number of annual fatalities on Europe's roads by 10% and reduce congestion costs by the same amount.

It can all be summarised in one word: innovation. We are investing heavily in research and innovation, as I know you are too, to make sure that Europe remains at the cutting edge of technological advances in transport and that we remain at the competitive forefront in the global marketplace.

But let's not forget that on their own research and innovation are not enough to solve all the challenges faced by transport. No foreseeable technology will allow roads alone to absorb the expected increase in transport volumes, while reducing congestion, limiting our oil dependency and controlling climate change. We need to change our travelling habits, better combine road travel with different modes of transport such as rail, and ensure all modes offer attractive options for passengers and freight. We must start thinking about transport as a network, as a system, rather than thinking in terms of individual transport modes.

Ladies and gentlemen,

I wish you every success at tomorrow's conference and a fruitful exchange of views. Let us work together to ensure that our automotive industry is ready for these new challenges and stays a world leader in the years and decades ahead.

Thank you.


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