Vulnerabilities and capabilities of the European automotive industry: Economic Complexity meets Input–Output analysis

This paper investigates the structural vulnerabilities and competitive dynamics of the EU27 automotive sector. Using a mixed-methods approach, the analysis bridges sector- and product-level dimensions by combining input-output tables, to quantify the industry extra-EU external dependencies, with Economic Complexity analysis to evaluate the productive capabilities and forecast future competitiveness of EU member states in automotive-related products. To this aim, the paper introduces a novel, microdata-validated product list of intermediate goods specific to the automotive supply chain. The empirical analysis highlights an increasing dependency on extra-EU inputs, above all from China. Historical leaders such as Germany, France and Italy retain competitive positions in several key components, but their prospects for diversification appear more limited compared to Eastern European economies. Notably Poland, Czechia, and Hungary exhibit stronger specialisation, higher competitiveness in automotive components, in some cases surpassing Germany, and potential to develop new comparative advantages. A vulnerability analysis reveals that electric accumulators are the most strategically exposed input, marked by both high import concentration and low domestic capability. Only Germany, Czechia and Slovakia display modest potential to achieve competitiveness in lithium-ion batteries, emphasising the need for a coherent and forward-looking EU industrial strategy to achieve a effective European green transition.