Connecting innovation obstacles with policy needs: evidence from Italy’s EV transition

As technological change reshapes the global automotive industry, the Italian automotive supply chain offers a revealing case of the challenges associated with the transition to electric vehicles (EVs). Using novel firm-level survey data, this study identifies the main barriers to EV-related innovation and links them to the policy instruments firms perceive as most effective in supporting electrification.Our results reveal pronounced regional heterogeneity. While market-oriented policies receive broad support across territory and firm size and position in the value chain, firms in Southern Italy place greater emphasis on innovation policies to foster industrial linkages and strengthen local production networks. By contrast, suppliers in the Northwest and Centre – where the core of the Italian automotive industry is concentrated – express stronger demand for skills-oriented policies, reflecting workforce constraints during the transition. Overall, risk-averse suppliers are sceptical about policy effectiveness, while demand uncertainty, innovation costs and institutional mistrust emerge as key mediating barriers shaping policy support, especially in Northern and Central regions.