Goldman Plant Analysis Finds European Car Factories Paying €500 Million More Per Year in Power Than US Rivals
Goldman's plant-by-plant data show European car factories paying roughly €500 million more per year in power than US rivals, with Spain and Italy the clearest examples.
Goldman Sachs ran European industrial power costs plant by plant, and the result landed Friday (2026-09-11). A large European car factory is carrying roughly €500 million a year in excess power costs against a US competitor. For a chemical plant, the gap runs closer to €1 billion, according to an oilprice.com analysis published Friday (2026-09-11) that cites the Goldman work.5
The numbers are sharpest in Spain and Italy. "Gas set the price of electricity," the oilprice.com piece noted, describing a feature common to both countries: renewable energy fleets large enough to drive national targets, but not sufficient to displace gas as the price-setter in wholesale power markets. ICE Endex TTF front-month closed at €79.51/MWh in Friday's (2026-09-11) European session, down 3.3%. German baseload power settled at €163.08/MWh in the same session. Manufacturers in Spain and Italy pay power prices anchored to that gas benchmark.5
Europe's energy transition has been real. "Europe mostly already put the thing together," the oilprice.com analysis argued. "What's left is running it better, and running it better shows up in the accounts as less." Reduced energy consumption is a genuine efficiency gain, even if it does not announce itself as revenue growth in energy sector accounts — which is partly why it draws less weight in competitiveness debates than raw capacity additions do. But running more efficiently does not close a €500 million-a-year power cost gap against a competitor operating on different energy terms.5
China's advantage has two sources, as the oilprice.com piece stated directly: "China's edge is partly scale, and partly that 1.4 billion people don't get much of a vote on the tradeoff." The cost of rapid industrial expansion — in environmental terms, in wage compression, in deferred social investment — is absorbed without the consent mechanisms that make equivalent tradeoffs politically difficult in Spain or Italy.5
The bilateral trade data shows how asymmetric the relationship has become. Jens Eskelund, president of the EU Chamber of Commerce in China, described the economic relationship at the 2026 Conference on EU-China Relations in Beijing as "a 400-metre-long giant container ship loaded with 24,000 containers going to Europe and coming back almost empty." The Atlantic Council reported in May (2026-05-28) that the EU is edging toward its own Section 301-style trade measures in response.2
Chinese capital is meanwhile working around the tariff framework being assembled. Hungary received 44% of all Chinese investment in the EU in 2023, according to Rhodium. BYD, China's biggest EV maker, is building a $4.5 billion factory there.1 Chinese EV production inside the EU single market does not face the import duties that would apply to cars shipped from China, blunting the tool Brussels is relying on to shield carmakers in Spain and Italy.
German manufacturers face the bind from another angle. They believe they need to maintain operations in China to retain the technical capability to compete against Chinese rivals, The Economist reported in May (2026-05-19). Germany's rearmament programme adds fresh industrial energy demand on top of a power market that is already expensive.1
China's own position carries friction. Its auto sector is locked in what Noah Smith described in June (2026-06-06) on his Noahpinion blog as "an endless brutal price war," and the industrial policy push has not generated broad-based domestic prosperity. Youth unemployment in China reached highs in 2023 severe enough that the statistics bureau stopped publishing the data, Foreign Policy reported in June (2026-06-15).3,4
For Italian and Spanish plant managers, those internal difficulties change little. The oilprice.com analysis published Friday (2026-09-11) argued that Europe should commit to the €800 billion a year in investment being sought.5 EU tariff measures can raise the cost of Chinese goods at the border. They leave the power price differential Goldman identified — the €500 million a year a European carmaker pays above its US rival — completely untouched. That is the gap Spain and Italy's energy policy still has to answer for.5,2