Automotive News Europe — 2024-06-20
Automotive Industry
High prices have become a major obstacle to EV growth after countries including Germany ceased or pared back subsidies.
Automakers in Europe sold 2.6% fewer vehicles in May than 2023 as buyers balked at the still-high prices of electric models.
New-car registrations in the EU, EFTA and UK markets fell to 1.09 m units in May 2024, industry association ACEA said.
Sales of battery-electric cars slumped 11% to 181,968 amid declines in several major markets, and their share of the total also decreased.
High borrowing costs and muted growth across Europe are weighing on consumer sentiment.
Automakers are grappling with slow EV sales as drivers are turned off by high sticker prices and subpar charging infrastructure. The European Union’s move this month (June 2024) to impose additional tariffs on Chinese EVs threatens to make imported alternatives more expensive.
Market assumptions on EVs "have been too optimistic," Citi analysts led by Harald Hendrikse said in a note. "Investments need to be cut."
High prices have become a major obstacle to EV growth in Europe after countries including Germany and Sweden ceased or pared back subsidies. Mass-market manufacturers Volkswagen, Stellantis and Renault are preparing cheaper models costing around €25,000 ($26,865), but they won’t start arriving until 2025.
The share of BEV sales in the region declined one percentage point in May 2024, to 14% of the total, amid large drops in markets such as Germany, where BEV sales fell 31% and Italy, where registrations were down 18%. Sales of plug-in hybrids fell 9.6%.
Germany, the bloc's largest EV market, in December 2023 brought an early end to subsidies for buying EVs as part of a last-minute 2024 budget deal. It has now seen a year-to-date 16% decline in EV sales.
Some automakers have begun adjusting their EV targets, with Stellantis and Mercedes-Benz Group putting on hold work on two EV battery plants in Germany and Italy. VW said in May 2024 it will need more plug-in hybrids, while Mercedes plans to sell combustion-engine cars longer than expected.
Inflation and high interest rates also remain a drag on big-ticket purchases. The European Central Bank earlier in June 2024 cut rates, but stopped short of indicating more reductions may follow.
Volkswagen and Toyota were among the few mass-market automakers managing to increase sales in May 2024, with gains of 1.8% and 8.2%, respectively.
Tesla's registrations in the region declined 36% in May 2024, a steep drop that continues the EV maker's poor performance in the second quarter. The company’s sales are down around 14% after the first five months.
Demand for EVs in Europe has cooled in recent months, after rising strongly for several years, while competition to produce more affordable models has grown.
To shield domestic automakers from an influx of cheap EV imports, the European Commission said last week it would impose provisional duties of up to 38.1% on China-made EVs starting July 2024.
Tesla said last week (second week of June 2024) it expected to increase the price of its China-made Model 3 when the EU measures come into effect.