The e-motion of car manufacturing in CESEE: the road ahead

Central, Eastern and South-Eastern European (CESEE) countries have benefited considerably from the grand-scale relocation of car production sites to emerging markets over the last two decades. On the back of strong foreign direct investment, the automotive industry has thus become a major economic pillar in several countries and firmly integrated into global, predominantly European, value chains. More recently, the automotive industry has seen some challenging times, though. Global and particularly European car production has been losing steam, and the industry has been hit by major black swan events, most painfully the coronavirus pandemic and Russia’s invasion of Ukraine. What is more, the global automotive industry has been undergoing unprecedented structural shifts on the demand and supply side, such as autonomous driving, shared mobility, connectivity and, most notably, the transition to electric vehicles. Against the background of these great changes and challenges, the present paper explores the emergence of the largely foreign-owned automotive industry in CESEE and its level of preparedness for managing the risks and uncertainties and seizing the opportunities implied by the ongoing development of the automotive industry. After collecting and analyzing relevant qualitative information we find that the CESEE car industry will be walking a thin line between adopting new technologies and sticking to the internal combustion engine for longer than Western countries. For CESEE countries to maximize the benefits and minimize the risks of the technological transformation in the car industry the key priority is to preserve close links with Germany, stay tuned for battery production and focus on activities and promising industries with higher value added.