"The automobile industry faces increasing demands from society to reduce emissions from road vehicles. The objective of this paper is to assess whether the EU automobile industry has an appropriate innovation structure for R&D in low carbon vehicles and the role that public R&D policy can play. The Sectoral System of Innovation approach is used to map the innovation system. Then, the functions of the Technological Innovation System (TIS) framework are used to explore the innovation processes in the system. The analysis has shown that there is an effective innovation system, which may soon move into a growth phase of large scale technology diffusion. There is now a concentration of industrial research efforts on battery and hybrid electric vehicles. Since technologies such as fuel cells and composite materials have potential benefits, public R&D support may be needed to ensure their development in a range of relevant firms in the EU."

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