EU Auto Action Plan Expected to Boost EV Demand and Bring Pragmatism to CO2 Regulations

The European Union launched a strategic analysis on how to safeguard the future of the European automotive industry on Jan. 30. The results of this investigation are expected to be released on March 5. The investigation aims to provide the industry with support to curtail accelerating job losses and declining contribution to the European Union's gross domestic product. In contrast to the Chinese auto industry, which has soared because of a focused and coordinated regulatory framework, European policy has been contradictory and uncertain in particular areas. We believe European auto industry stocks are pricing in worst-case scenarios and therefore trading at deep discounts to their fair values. We see potential short-term and longer-term profitability improvements to result from a supportive and coordinated regulatory policy.