Eastern Europe's car industry faces tough challenges

Significance

The ban, a centrepiece of the EU’s ambitious plan to reach net-zero emissions by 2050, requires carmakers in Slovakia, the Czech Republic, Hungary and Poland (the 'V4' countries) to overhaul production processes and supply chains in order to comply and retain market share. V4 automotive producers mostly lean towards ICE cars.

Impacts

• Excluding cars that run on synthetic, climate-neutral fuels from the 2035 ban will make the transition to EVs more gradual.
• High interest rates in the V4 will make the switch to EVs costlier than in other parts of Europe.
• The V4 will face tough competition from EV manufacturers from across Asia.