What Brussels’ new industrial boss is planning for Europe’s auto industry

Good morning The new EU Industry Commissioner has told us that Brussels must adopt a “Europe first” stance in response to the aggressive economic policies of Donald Trump and Xi Jinping. In his first interview since taking office, Stéphane Séjourné said the European Commission must take an “offensive” approach to protect strategic sectors from the “negative music” plaguing European industry.

Today our climate correspondent brings us more from Séjourné, and Laura and our finance correspondent reveal new EU proposals on frozen Russian assets.

standstill

What will the new EU industry chief do about the European automotive industry? Accelerate, writes Alice Hancock.

Context: The sector has become a totem for Europe’s struggling industry and a mascot for opponents of the bloc’s green transition as slowing demand and cheaper imports force manufacturers to cut thousands of jobs.

The problem lies with Stéphane Séjourné, the EU’s executive vice-president for prosperity and industrial strategy. The French liberal took office yesterday as the European Commission’s new mandate began.

At the top of his to-do list is tackling the problems of the automotive sector, which is vocally opposed to stricter emissions standards set to come into force next year and a ban on new internal combustion engine cars from 2035.

“The automotive industry is not very different from the others,” Séjourné told the Financial Times. His diagnosis is that the problems are compounded by “an industry-specific demand issue” and the challenge of transitioning to electric vehicles.

The Commission insisted that it would not repeal targets already set in law. So what can Brussels do to stem the tide of job losses and production cuts?

“People are still hesitant to buy an electric car to travel long distances,” said Séjourné. In most cases, electric cars are more expensive than a gasoline model and there are far fewer charging stations than at gas stations.

The commission will focus on standardizing batteries and building charging infrastructure, said Séjourné.

On the demand side, it will look at “social leasing” programs, such as a heavily subsidized model currently being trialled in France.

The final part of the immediate response will be to focus on corporate fleets used by companies like Uber or DHL.

“The problem is that we don’t have a secondary market for electric cars. And that is a real problem in Europe. The price is very discouraging and there are only new items for sale,” said the commissioner. “So we need to create a used market, and the best way to create a used market is to take advantage of the professional fleets that then go into the private market.”

He added that it had not yet been decided whether electrification targets would be necessary for businesses.

Whatever the Commission does, it will have to win the favor of the right wing of the European Parliament, which is increasingly vocal about lifting the ban on petrol vehicles by 2035 and exempting car manufacturers from any penalties.

Daily chart: Ebbing

The Caspian Sea is on the verge of reaching its lowest water level ever recorded as climate change causes lasting damage.

Thawing

EU countries could release certain Russian assets held in Europe to accommodate Moscow’s retaliatory seizure of Western assets. write Paola Tamma And Laura Dubois.

Context: EU sanctions have frozen more than 70 billion euros in Russian investors’ holdings at Euroclear, Europe’s largest central securities depository. But Moscow also holds around 25 billion euros from Euroclear customers and has begun mining those assets to compensate Russian investors.

Under a decree issued last year, Russian investors whose assets are immobilized in the EU can claim compensation from Euroclear’s assets held at the Russian National Settlement Depository, the Russian equivalent. This has already resulted in more than €4 billion in cash being withdrawn from the Euroclear account at the NSD, a sum that is likely to rise further.

European officials see this as an evasion of sanctions, but the plan also poses difficulties for Euroclear.

While the cash is paid out on the Russian side, the Russian investors’ immobilized assets continue to appear on Euroclear’s balance sheet. This means that Euroclear would be doubly liable: to the Russian investors – even though they have already been compensated – and to its other customers whose assets were seized in Russia.

The latest EU sanctions package proposes a solution to this.

A draft seen by the FT includes a “loss compensation clause” that would allow Euroclear to pay out cash from accounts subject to sanctions up to the amount seized in Russia. These would then be distributed proportionately to Euroclear customers who have assets in Russia.

EU officials are due to discuss the package this week. Euroclear declined to comment.

What to see today

1. The Presidents of the European Commission, the European Parliament and the EU Council Ursula von der Leyen, Roberta Metsola and António Costa meet.

2. Meeting of EU Ministers for Employment and Social Policy.

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