Why Europe's Prosperity, Independence and Safety Might Hinge on the Future of Sustainable Mobility and Energy - and Why a Shift to The Venture Mindset is Needed
April 2, 2025
Authors
Thomas H. Sorensen, Founder and CEO of Oneday Lab
Walther V. Bech Sorensen, Principal at Oneday Lab
In this article, we will highlight some of the most important challenges for Europe right now. Europe stands at a pivotal moment. At a time when the global balance of power and technological advancements are rapidly evolving, the future of Europe’s mobility and energy sectors has emerged as the single most critical focus area. These industries form the backbone of economic output and thereby also underpin the region’s safety, energy independence, and overall societal well-being.
The Unspoken Significance of Mobility and Energy in Europe
Multiple analyses - including the two recent McKinsey reports (“European Automotive Industry: What It Takes to Regain Competitiveness” and “Europe’s Economic Potential in the Shift to Electric Vehicles”) as well as extensive briefings by the European Commission on the automotive sector - underscore how tightly Europe’s prosperity is bound to these industries.
The European Commission highlights the automotive industry’s 13.8 million direct and indirect jobs, representing about 6.1% of the EU’s total employment and roughly 7% of its GDP (European Commission: Automotive Industry). Meanwhile, McKinsey notes that Europe’s automotive sector contributed $1.9 trillion in gross value added (GVA) in 2023.
However, more importantly - as both sources also stress - is the significant multiplier effect these industries have on everything from steel and chemicals to ICT and public services. As noted by Mckinsey, every euro invested in automotive generates 2.6 times that value in upstream and downstream industries (e.g., steel, chemicals, ICT, repair, logistics).
In other words, mobility and energy are not just two big line items in European GDP; they anchor a web of downstream and upstream sectors amounting to much more impact than their mere share of GDP.
A Snapshot of the Top 100 European Companies
Recent data on Europe’s top 100 public companies measured (Fiscal Year 2023, Fortune 500) by revenue reinforces this picture. These 100 firms collectively post €6.334 trillion in annual revenue. Now, let's break that down a little bit:
In effect, Automotive, Energy, Finance, and Insurance together account for nearly 83,2% of revenue among these top 100 European companies. Because this ranking covers such a large share of Europe’s industrial base, we can use it as a proxy for overall economic health.
What we see from this is something that is rarely talked about. The European economy is today mainly built upon automotive and energy – as well as their related sectors.
The European Economy's Exposure to The Future of Mobility and Energy
To illustrate why this matters, let’s build a hypothetical - but possible case - a kind of thought experiment. Now, suppose the two very strong disruptions scenarios below will occur :
1) Automotive & Energy Experience a 35% Decline in Revenue
Currently €2.97 trillion in revenue.
A 35% drop implies €1.04 trillion in lost revenue.
2) Finance & Insurance Experience a 20% Decline in Revenue (due to direct and indirect ripple effects)
Currently €2.30 trillion in revenue.
A 20% drop amounts to €460 billion in lost revenue.
The total potential loss will equal €1.04 trillion + €460 billion = €1.5 trillion, which is equivalent to almost one quarter of the total €6.334 trillion (23,7%). If the top 100 companies are indeed a robust proxy for the broader economy, a plunge of this scale could possibly parallel an equivalent drop in GDP. However, due to the difficulty of cutting costs fast enough to match the drop in revenue - in time - the true implications of this might be much more detrimental.
The above scenario might seem extreme, but it illustrates the magnitude of the risk. If Europe’s automotive players lag behind in electrification, software-defined vehicles, or new competitive markets (like China), steep losses could become all too real. The European Commission likewise cautions that when major automotive or energy revenues plummet, the resulting job cuts and lower tax receipts can have a domino effect on everything else in the broader economy and society.
Why This Scenario Is Serious - The Future of ACES and Europe’s Innovation Gap
The Challenges and Opportunities of the Future: ACES and the Digital Revolution
Just to give a glimpse into why we have come to believe that there is a risk that the above scenario actually could play out - if nothing is done to prevent it - below is a very short walkthrough of the changes and disruptions that will affect and define the energy and auto industry over the next 10-15 years. Historically, when the magnitude and speed of change is at this level, it is not unlikely that many incumbents will find it very difficult to keep up – and therefore often the result turns out to be significant loss of market share.
The future of mobility and energy could be defined by the ACES paradigm as well as the digital revolution:
The digital revolution is, in many ways, the modern equivalent of the Industrial Revolution. It has been unfolding for more than three decades, reshaping industries through digitization, data analytics, and connectivity and with GenAI and possibly AGI it is going to take-off with rocket speed in the years to come. Yet while sectors like e-commerce and consumer electronics have embraced these changes, the automotive industry has been notably slower to adapt. In contrast, newer entrants - particularly from the U.S. and China - have reinvented distribution and sales channels by leveraging online platforms, big data, and direct-to-consumer models.
With mobility and energy being an inseparable symbiosis - and even more so in the future - such disruptions and changes in mobility would likely cascade into severe changes in energy as well. As such, the shift from oil and gas to clean energy will require innovation, new-business building and a reinvention of companies - in order to stay competitive and win.
These changes in both mobility and energy are therefore not optional - they are inevitable. Yet, Europe’s existing industrial giants have still a long way to go in order to adapt. The transformation requires more than incremental upgrades; it demands new thinking, value innovation, business model reinvention, and frontier development of technology and AI - but what are the financial signals telling us?
One financial signal comes from OEM Valuations and the P/E metric: An Early Warning Indicator for Europe. Looking at these metrics illustrates the market’s skepticism regarding incumbents’ future performance. Let’s examine what the price-to-earnings ratios are revealing - and why it matters not just for the companies in question, but for Europe’s broader economy and societal well-being.
OEM Valuations and P/E: An Early Warning Signal for Europe
Many European Original Equipment Manufacturers (OEMs) are trading at price-to-earnings (P/E) ratios below 10 - with some larger incumbents even slipping under 5. While this is a very simplified metric and proxy, these alarmingly low valuations does reflect the market’s skepticism about their ability to maintain revenue and profit growth in the face of industry disruptions and evolving consumer demands. While current revenues may not yet show signs of decline, these companies’ income streams form the foundation of GDP, job creation, and ultimately public spending.
What makes the situation especially important is the time lag between a drop in market valuations and its eventual societal fallout. Right now, the most visible impact has been on market capitalization - essentially a “paper loss.” But that loss has not yet translated into the future reductions in revenue and earnings - and thereby not translated into lower wages, reduced consumer spending, or a slump in housing prices - yet. According to stock market indicators, however, the damage has already been set in motion. The P/E ratio is a simple look into the future: it signals that if these companies do not innovate rapidly, a more pronounced financial downturn is inevitable.
It is worth noting that low P/E ratios may stem from more than just declining revenues. Heightened operational costs, asset write-downs (for instance, factory closures or technology that quickly becomes obsolete), and debt financing can all squeeze the equity base and drive valuations down. Nevertheless, whether caused by top-line contraction or eroding balance sheets, the outcome for society remains the same - threatened job stability, shrinking disposable incomes, and diminished public services. In short, Europe’s OEMs' P/E ratios are sending a clear warning that, without significant and timely innovation, the broader economy—and European society at large - could soon face severe consequences.
The Implication of an Absent Venture Mindset and a Lack of New Business-Building
The challenges Europe faces today - lagging in growth, innovation, and economic strength - did not arise overnight; they are the cumulative effects of trends that began more than 50 years ago. As a result, Europe finds itself trailing behind the United States and, increasingly, China. This lag is especially crucial given the global, highly competitive nature of industries like automotive and energy.
A stark indicator of this innovation deficit comes from research by Professor Ilya Strebulaev at the Stanford Venture Capital Initiative. His team’s study shows that VC-backed companies represent over 43.6% of the S&P 500’s market capitalization, with 7 of the 10 largest U.S. companies being VC-funded. In contrast, none of the top 10 non-U.S. G7 companies were founded in the last 50 years. This discrepancy, among other things, underscores Europe’s failure to cultivate an entrepreneurial ecosystem that consistently births market leaders - particularly crucial for industries undergoing rapid transformation, such as automotive and energy.
Without a shift toward a venture mindset and robust new-business building, European incumbents will continue to lose ground. And as mentioned, the consequences are not just corporate failures; they reverberate throughout society, threatening job markets, public spending, and ultimately Europe’s global influence. Simply put, if Europe does not embrace a culture of innovation, risk-taking and smooth financing, the region risks entering a long-term economic and societal decline.
Learn more about this here.
The Impact on The Broader Economy, Society at Large and The Citizens of Europe
When an economy experiences a significant drop in GDP, the consequences can ripple through nearly every aspect of daily life. A 20-30% decrease in average disposable income - particularly for lower- and middle-income households - could be the difference between meeting basic needs and confronting a serious threat of personal economic difficulties. This kind of downturn often leads to rising job losses, which, in turn, diminish tax revenues. As tax income falls, governments typically have less funding to maintain social services such as healthcare, education, and safety nets, intensifying the challenges faced by the vulnerable part of the population.
As economic strength is the foundation of safety and geopolitical influence, a sustained GDP decline has profound strategic implications. Although the exact outcomes will vary, a weakening economic base may reduce a country’s capacity to fund new technologies or maintain advanced infrastructure. When revenues shrink, governments can find it difficult to allocate resources for military modernization, leaving them potentially less agile in addressing evolving security concerns. In a similar vein, an energy sector under strain could result in heavier reliance on external suppliers, limiting a nation’s autonomy and exposing it to a range of political pressures. As economic clout wanes, a region’s ability to engage in high-level global negotiations, form strategic partnerships, or influence international policy may be curtailed.
Taken together, these factors underscore how a significant economic contraction does not merely represent lost profits or diminished corporate performance; it can also have far-reaching social and geopolitical consequences. Ensuring the continued strength and adaptability of core industries like energy and mobility, therefore, becomes a matter of safeguarding not only economic prosperity but also broader societal well-being and security.
Why Europe Can Still Turn This Around – and What Is Needed to Do So
Despite the daunting challenges outlined, Europe holds the potential to regain its leadership in transportation and energy. At the core of this turnaround is embracing the ACES paradigm and fully committing to the digital revolution - not as optional enhancements, but as the driving force behind new growth and long-term competitiveness. For the region’s most vital industries to flourish, this focus on mobility and energy cannot be overstated; it may well be the single most critical priority for Europe’s future prosperity.
Equally important is adopting a venture mindset and fostering new-business building. Whether it’s nurturing startups or empowering established incumbents, Europe needs a fertile ecosystem where collaboration and bold innovation are the norms. This shift is not solely about pouring resources into R&D and emerging technologies; it’s about crafting profitable, scalable, and value-driven business models that attract the necessary capital and talent. Ultimately, innovation only succeeds when it delivers tangible economic returns, fueling both corporate and societal advancement.
For the last 8+ years, Oneday Lab has worked to identify and develop profitable solutions with exactly these requirements and characteristics. Setting up our Global Green Race Fund I (GGR Fund I) has been one of our highest priorities - and we are happy to announce that we expect it to launch early 2026.
Applying "The Venture Mindset" is a crucial aspect of our work and something that we have been practicing and are still trying to strive for every day.
Below, you can learn more about our work as well as discover how embracing the Venture Mindset can help Europe chart a path back to global competitiveness.