When it comes to electric vehicles, the EU is still trying to find the right recipe – CEPS

Report on the European Union’s Electric Vehicle Transition and its Alignment with Sustainable Development Goals

1. Introduction: Climate Action and Sustainable Mobility (SDG 13, SDG 7, SDG 11)

The European Union’s transition to electric vehicles (EVs) is a cornerstone of its 2050 climate neutrality objective. This shift directly supports several Sustainable Development Goals (SDGs), particularly SDG 13 (Climate Action), by decarbonising the transport sector. However, achieving these targets presents significant challenges.

• Uptake Requirements: To align with ‘Fit for 55’ policies, the number of registered Battery Electric Vehicles (BEVs) must increase from approximately 1.5 million in 2024 to over 6 million by 2030.
• Investment Needs: This acceleration requires a substantial increase in consumer spending, estimated at an additional EUR 66-95 billion in 2025 compared to 2024.
• Contribution to SDGs: Meeting these targets is critical for fulfilling commitments under SDG 13 (Climate Action) and advancing SDG 11 (Sustainable Cities and Communities) by reducing urban pollution and promoting clean transport.

2. Economic and Industrial Implications (SDG 8, SDG 9)

The EV transition extends beyond environmental objectives, profoundly impacting European economic stability and industrial leadership. The process is a critical test for SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure).

• Shifting Economic Landscape: The transition redefines jobs, skills, and supply chains, determining the economic value retained within the EU.
• Competitive Pressures: The EU’s share of the global EV market declined from over 80% in 2015 to 60% in 2023, while Chinese manufacturers’ share increased to 15%. This trend threatens European industrial competitiveness and employment, as highlighted by recent layoffs.
• Industrial Transformation: Successfully navigating this shift is essential for reinforcing SDG 9 by fostering innovation and building a resilient, modern industrial base capable of supporting sustainable economic growth as outlined in SDG 8.

3. Affordability and Social Equity (SDG 1, SDG 10)

The affordability of BEVs remains a primary obstacle to widespread adoption, raising concerns about social equity and the potential to exacerbate inequalities. This challenge is directly related to SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).

• Consumer Price Barrier: Surveys indicate EU consumers are willing to pay approximately EUR 20,000 for a BEV.
• Industry Cost Structure: Scenarios suggest a minimum price of around EUR 45,000 is necessary for European manufacturers to maintain current cost structures for compact-class BEVs.
• Ensuring a Just Transition: This significant price gap risks excluding lower and middle-income households from the benefits of clean mobility. Closing this gap is essential to ensure the transition is inclusive and aligns with the principles of SDG 10.

4. European Value Chains and Responsible Production (SDG 9, SDG 12)

A central challenge is the retention of economic value within the EU, which is heavily dependent on developing a robust domestic supply chain, particularly for batteries. This aligns with the objectives of SDG 9 and SDG 12 (Responsible Consumption and Production).

1. Value Chain Leakage: The EU retains 85-90% of the value for internal combustion engine vehicles but only 70-75% for BEVs. The primary reason for this discrepancy is the reliance on imported batteries.
2. Battery Supply Chain Deficit: The EU’s battery supply chain is underdeveloped. Batteries accounted for approximately 40% of a BEV’s direct cost in 2020 and could still represent 30% in 2030.
3. Investment and Cost Hurdles: European battery prices are about 20% higher than those in China, and meeting EU demand with domestic production could require up to EUR 380 billion in investment by 2030. Over half of the announced investments were at risk in 2024.
4. Policy Response: The European Commission’s “Battery Booster Package” aims to scale up domestic production, which is crucial for achieving the industrial innovation goals of SDG 9 and promoting localized, sustainable production models under SDG 12.

5. Policy Recommendations for a Sustainable Transition

EU policymakers must forge a path that balances climate targets, industrial competitiveness, and social equity. A “third way” is required to avoid suboptimal outcomes, such as sacrificing local industry for affordability or missing climate goals due to high costs.

• Targeted Demand Support: In the short term, demand-side measures like social leasing or purchase subsidies are necessary to bridge the affordability gap and support SDG 10.
• Strategic Supply-Side Measures: It is crucial to mobilize EU financing instruments to de-risk private investment, accelerate the scale-up of battery production, and secure access to critical raw materials. These actions directly support SDG 9 and SDG 12.
• Integrated Strategy: A successful transition requires an integrated approach that aligns climate ambition (SDG 13) with the creation of decent work and economic growth (SDG 8), ensuring a competitive and sustainable European industrial future.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy – The article’s focus on electric vehicles (EVs) as a shift towards low-carbon mobility and the discussion around their affordability for consumers directly relates to providing clean and affordable energy for transport.
• SDG 8: Decent Work and Economic Growth – The text emphasizes the economic implications of the EV transition, including European competitiveness, jobs, skills, and the risk of layoffs in the car industry, which are central themes of SDG 8.
• SDG 9: Industry, Innovation, and Infrastructure – The article extensively discusses the transformation of the automotive industry, the need for innovation in battery technology, the development of new supply chains, and the scaling up of infrastructure like charging stations.
• SDG 11: Sustainable Cities and Communities – The transition to EVs is presented as a visible change on “Europe’s streets,” which contributes to creating sustainable transport systems and reducing the environmental impact in urban areas.
• SDG 13: Climate Action – The entire premise of the article is rooted in the EU’s efforts to achieve climate neutrality by 2050 and meet its ‘Fit for 55’ climate targets by decarbonising the transport sector.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7: Affordable and Clean Energy
  • Target 7.3: By 2030, double the global rate of improvement in energy efficiency. The shift to EVs, which are more energy-efficient than internal combustion engine vehicles, directly supports this target.
• SDG 8: Decent Work and Economic Growth
  • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article discusses this through the lens of European competitiveness, the rise of the “software-defined vehicle,” and the need to retain economic value (“value added”) in Europe.
  • Target 8.5: By 2030, achieve full and productive employment and decent work for all. This is implied by the concerns raised about “large-scale layoffs in the car industry” and the need to redefine “jobs, skills and entire supply chains.”
• SDG 9: Industry, Innovation, and Infrastructure
  • Target 9.2: Promote inclusive and sustainable industrialization. The article’s focus on scaling up European battery production and ensuring the automotive industry remains competitive is a direct reflection of this target.
  • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable. This is evident in the discussion of decarbonising the transport sector, bringing EVs onto the streets, and developing a domestic battery supply chain.
• SDG 11: Sustainable Cities and Communities
  • Target 11.2: By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all. The article addresses this by highlighting the affordability of EVs as a “major barrier” for consumers and the need for a “growing number of… charging stations.”
• SDG 13: Climate Action
  • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article explicitly mentions the EU’s overarching policy goals, such as becoming “climate neutral by 2050” and aligning with “‘Fit for 55’ policies.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• SDG 7: Affordable and Clean Energy
  • Price of BEVs: The article provides specific figures, noting the gap between what consumers are willing to pay (€20,000) and the minimum price for European models (€45,000), serving as a direct indicator of affordability.
  • Need for subsidies: The mention of “social leasing or purchase subsidies” implies that the level of financial support required is an indicator of market affordability.
• SDG 8: Decent Work and Economic Growth
  • Value Added Retention: The article quantifies this indicator by stating that Europe retains 85-90% of value for combustion vehicles but only 70-75% for BEVs.
  • Employment figures: The mention of “large-scale layoffs in the car industry” is a direct, albeit negative, indicator related to employment in the sector.
• SDG 9: Industry, Innovation, and Infrastructure
  • Market Share: The article tracks European manufacturers’ share of the EV market, which decreased from over 80% in 2015 to 60% in 2023, as an indicator of industrial competitiveness.
  • Investment in domestic production: The text states that meeting EU battery demand could require up to “EUR 380 billion in investment by 2030,” making investment levels a key progress indicator.
  • Battery Cost and Price: The article notes that European battery prices are “roughly 20% higher than China’s” and that batteries account for “around 40%” of a BEV’s cost, serving as indicators of industrial efficiency and innovation.
• SDG 11: Sustainable Cities and Communities
  • EV Uptake Rate: The article provides specific numbers for this indicator, stating the need to go from “1.5 million BEVs in 2024 to over 6 million in 2030.”
  • Infrastructure Growth: The “growing number of electric vehicles (EVs) and charging stations” is mentioned as a visible indicator of the transition to sustainable transport.
• SDG 13: Climate Action
  • Emission Reduction Policies: The mention of the EU’s goal to be “climate neutral by 2050” and the “Fit for 55” policies are indicators of integrated climate action strategies.

SDGs, Targets, and Indicators Table

Source: ceps.eu