The global automotive sector after the pandemic: key questions and answers

Lorenzo Bencivelli (), Alessio Ciarlone (), Emidio Cocozza (), Andrea Gerali (), Andrea Perin () and Carmine Porello ()
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Lorenzo Bencivelli: Bank of Italy
Alessio Ciarlone: Bank of Italy
Emidio Cocozza: Bank of Italy
Andrea Gerali: Bank of Italy
Andrea Perin: Bank of Italy
Carmine Porello: Bank of Italy

No 1030, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper examines the major structural transformations that have been reshaping the global automotive industry since the COVID-19 pandemic. Organized as a series of questions and answers, it analyses key developments across market dynamics, electrification, trade policy, supply chains, and digital technology. The post-pandemic recovery has been strikingly uneven: while China's vehicle sales surpassed pre-pandemic levels, advanced economies - particularly in the European Union - remain significantly below 2019 volumes, reflecting weakened affordability and policy uncertainty. China's rapid rise as the world's largest electric vehicle producer and exporter, driven by sustained industrial policy, battery supply chain dominance, and an estimated 30 to 45 per cent manufacturing cost edge over Western competitors, has fundamentally altered competitive dynamics. European, Japanese, and Korean original equipment manufacturers face mounting pressure from Chinese electrification, trade fragmentation, and the transition to software-defined vehicles, where Chinese firms are estimated to have a two- to three-year lead. US and EU defensive measures-including prohibitive tariffs and countervailing duties-have proved only partially effective, with EU passenger car imports from China rising by nearly 30 per cent in 2025. The paper concludes that diverging industrial, trade, and environmental policies are fragmenting global automotive markets into distinct regional ecosystems, raising costs, complicating investment, and accelerating a structural realignment of competitive advantage.

Keywords: electric vehicles; trade policy; automotive industry (search for similar items in EconPapers)
JEL-codes: F13 L62 O33 (search for similar items in EconPapers)
Date: 2026-07
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