Nils Redeker

Merz’ instinct to treat EU as intergovernmental forum clashed this week with Parliament. Calling EP’s failed omnibus vote an “unacceptable” mistake to be “corrected” didn’t land well and shows blindspot. EU is not an intergovernmental project where leaders decide and everyone else, incl. EP, follows

Für diejenigen, die die Argumente zum Industriestrompreis im Thread unten lieber kompakt und auf deutsch lesen möchten: Jan Diesteldorf hat in der Süddeutschen meinen Policy Brief aufgegriffen: www.sueddeutsche.de/wirtschaft/i...

Europe's car industry has major problems, but none of this has anything to do with future emission rules or an engine ban in 10yrs. It's about China's rise as a car exporter, US protectionism and low domestic car demand. Boost demand at home; harmonise support schemes. Must-read report

Very good thread by @jannikjansen.bsky.social on the instability of the current European Parliament and how, with a strengthened and emboldened far-right, the concept of flexible majorities is coming to its limits

While the European Council in Brussels took the spotlight, this week's events in Strasbourg should set off alarm bells. The European Parliament slamming the brakes on the first “Omnibus” package isn’t just a hiccup – it’s a symptom of strain in the EU’s democratic engine. A thread 🧵

EU leaders clash on 2035 engine ban, but experts warn subsidising demand is key As EU leaders clashed over the 2035 combustion engine phase-out at their Brussels summit, economists say governments should focus on boosting demand for European-made electric vehicles instead…

In a report published ahead of the summit by various think-tanks, including the @centreeuropeanref.bsky.social, @nilsredeker.bsky.social & colleagues @sandertordoir.bsky.social & @lucasguttenberg.bsky.social point to a different set of problems EU leaders should be trying to solve.

buff.ly/fCS8M2Q

A chart Berlin‘s economic policy-makers should think hard about.

Doing a buy-German clause in new EV subsidies would be an own goal.

The German market is simply too small, and lacks sufficient premium demand.

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Love an analysis that starts with the right problem statement. And for cars that's falling demand. Subsidies might help a bit - but ultimately the question is whether Europe is giving up on the idea of international competitiveness.

I agree conceptually - but when it comes to cars, 80% of EU exports already go to a handful of advanced economies that share our concerns about Chinese overcapacity.

I’d argue there’s enough demand and competition behind that common wall to build the scale Europe needs for global competitiveness.

This! If we don’t fix demand, we won’t avoid industrial policy - we’ll just get a hot mess of bailouts on the supply side.

And a coordinated Buy European push actually scores high on the “sound industrial policy” scale.

Coordinated “Buy European” clauses are also quite elegant economically: they don’t pick individual winners, they’re competition-friendly within the single market since national subsidies stay open to producers across the EU, and they help speed up the transition rather than cement old structures.

Good 🧵 on cars here.

Must-read on how buy-European rules can help save Europe’s car industry, brought to you by the dream trio of EU economic policy @nilsredeker.bsky.social @sandertordoir.bsky.social @lucasguttenberg.bsky.social

How buy-European rules can help save Europe’s car industr <p>Europe’s car industry faces a perfect storm. Chinese car exports are surging, European producers are being squeezed out of global markets, US tariffs are rising, and domestic demand remains 20% below pre-pandemic levels. Instead of sliding into a costly muddle of regulatory rollbacks, bailouts, and fragmented national subsidies, the EU should harness its single market - 450 million consumers and a vast corporate sector - to drive demand for Europe-made vehicles. That means co-ordinating consumer subsidies with a buy-European clause, applying it to both private and corporate fleets, and using it as a platform for reciprocal EV-subsidy agreements with trusted trade partners. A window for action is open: Germany, France, Italy, and Spain all need to renew their EV-support schemes in the coming months. Together, they represent 70% of EU car registrations—and could launch broader European coordination.</p>

Here's a link to the publicaiton. Curious what others think: www.delorscentre.eu/en/publicat...

On a final note: there’s now a real window for action. Germany, France, Italy, and Spain all need to renew their EV-support schemes in the coming months.

Together, these four account for 70% of EU car registrations. If they move, they have the critical mass to kick-start genuine EU coordination.

These partners share Europe's worries about Chinese overcapcities and often tilt their own EV support schemes in favor of local production.

Europeanising the eco-bonus would give the EU a platform to strike smart subsidy deals with these partners and stabilise external demand.

And a European eco-bonus could become a springboard for negotiating reciprocal access to EV subsidies with allies.

80% of EU car exports go to a handful of advanced economies like Japan, South Korea, Norway, and others.

This eco-bonus should cover both household and corporate fleet support.

Privat purchases account for about 40% of EU's car market and are crucial for producers of smaller models in FR, IT, and elsewhere.

The other 60% are company cars - dominated by premium models that matter most to DE.

The model limits subsidies to EVs built in low-emission supply chains -steering demand toward EU-made cars and filtering out Chinese production.

It’ll need an update, but it’s effective, WTO-proof, and ready to deploy.

These principles can be turned into policy relatively fast.

For a smart European preference, capitals should Europeanise the French eco-bonus model and apply it to their national EV-support schemes.

For that, policy should follow two simple principles:

First, all public support for EVs should apply only to cars made in Europe or allied countries.

Second, the eligibility rules should be harmonised across the EU, so member-states are not busy outsmarting each other while losing the global race

What Europe needs instead is a joint strategy that pushes where the EU has real leverage.

Europe can’t stop U.S. tariffs or Chinese subsidies - but it can boost demand at home.

By focusing the political debate on the wrong issue, Europe’s car industry may well turn into the next industrial policy train wreck.

The real risk is a costly muddle of regulatory rollbacks, bailouts, and a patch work of national subsidies - only for the sector to slow-walk into oblivion anyway

By every metric, the industry is in deep trouble — and none of it has anything to do with future emission rules or an engine ban a decade away.

In fact, the future of cars is electric - not because of Brussels regulation, but because EVs will soon be much cheaper to make and run.

And home demand isn’t helping either.

EU car sales collapsed during the pandemic - and never really bounced back.

In 2024, registrations were still 20% below pre-crisis levels, with even deeper slumps in key markets like Germany.

Things don’t look better across the Atlantic.

For years, exports to the US helped offset Europe’s losses in China. Car exports to America nearly doubled between 2019 and 2024.

Now, Trump’s 15% tariffs and EV subsidy cuts are turning that lifeline into another pain point for Europe’s carmakers.

This breathtaking rise has drastic consequences for EU producers.

EU car exports to China are down 28% since 2021. European manufacturers are losing ground in third markets like the UK.

And at home, they face growing competition - only partly cushioned by last year’s anti-subsidy tariffs.

So what’s actually going wrong? The industry is facing a perfect storm.

China is hammering the sector powered by massive state support.

In 2020, China wasn’t a net car exporter. Today, it’s the world’s largest - pumping out 8 million cars a year, almost four times Germany’s pre-pandemic peak.

The politics are also clear. The sector’s unions are powerful, and its companies are household names.

If the industry wobbles, policymakers will step in - the only question is whether they’ll do it wisely, and with the right diagnosis in mind.

For context: EU car industry still carries enormous economic and political weight

It employs 13.6 million people, drives 32% of all private R&D spending - and four of the ten sectors with the fastest productivity growth lately were in automotive and transport.