The European automotive industry, contributing $1.9 trillion in gross value added (GVA) in 2023 and 8% of Europe’s GDP, faces unprecedented challenges in transitioning to electric vehicles (EVs). This study examines the economic implications of this transformation through three scenarios: (1) Disruptive, where Europe loses up to $400 billion in upstream GVA due to increased imports and external competition; (2) Ambitious-Plans, which limits losses to $130 billion by leveraging local EV production and downstream services; and (3) Full-Potential, achieving a 40% net GVA gain by localizing battery production, fostering circular economy initiatives, and enhancing digital services. The analysis highlights that BEVs contribute 15% less GVA than ICE vehicles, with imported BEVs offering only 20% regional value. Europe’s productivity growth, high energy costs, and STEM talent gap hinder competitiveness. Strategic imperatives include enhancing cost efficiency, fostering industry-wide alliances, and streamlining regulatory frameworks. Downstream services such as EV charging and battery recycling present opportunities to add $240–300 billion in GVA by 2035. The findings emphasize the urgency of bold actions to secure Europe’s leadership in the global EV market and prevent substantial GVA losses, which would significantly impact its industrial and economic landscape.