Vulnerabilities and capabilities in the EU Automotive industry: Leveraging Input-Output Analysis and Economic Complexity

TL;DR

This paper analyzes the EU automotive industry's vulnerabilities and capabilities by combining input-output analysis and economic complexity to reveal dependencies on non-EU suppliers and regional shifts in competitiveness.

Contribution

It introduces a novel, detailed list of automotive supply chain products and provides new insights into EU industry resilience amid electric mobility transitions.

Findings

Increased dependency on Chinese suppliers for batteries.

Eastern European countries are gaining competitiveness.

Supply chain risks are heightened by reliance on non-EU components.

Abstract

This paper investigates the structural vulnerabilities and competitive dynamics of the EU27 automotive sector, with a focus on the complexity and the fragmentation of production processes across global value chains. Employing a mixed-methods approach, our analysis integrates input-output tables to quantify the sector's reliance on non-EU economic branches, alongside an economic complexity framework to assess the underlying productive capabilities of European countries in automotive-related industries. The findings indicate an increasing dependency on extra-EU suppliers, particularly China, for critical components such as lithium-ion batteries, which heightens supply chain risks. Currently, Eastern European countries-most notably Poland, Czechia, and Hungary-have enhanced their competitiveness in the production of automotive components, surpassing traditional leaders such as Germany. The paper advances the literature by providing a novel, granular list of 6-digit products within the automotive supply chain and offers new insights into the challenges posed by the ongoing electric mobility transition in the European Union, particularly in relation to electric accumulators.