Analysts are hastily reducing long-term sales forecasts for electric vehicles in Europe, raising questions about the feasibility of the government’s targets.
German industry has asked for the easing of EU regulations on CO2 emissions, saying it poses an existential threat to European industry.
The sale of electric vehicles in Europe is currently stagnant at around two million per year, while reaching the quotas of the European Union and the British government for 2030 requires an increase of around five times. Demand slowed as the early adopter market became saturated and interest from the corporate sector waned.
The EU and the United Kingdom have stipulated that electric vehicle sales should reach around 80% of all new sedan and SUV sales by 2030, and 100% by 2035.
Penalties for those who do not meet the goals
These targets are not only symbolic – high fines have been set for producers who fail to meet them.
In the United Kingdom, the fine is £15,000 (€18,000) for each vehicle with an internal combustion engine sold above the permitted quota.
No one doubts that sales of electric vehicles will once again record strong growth. However, in order to achieve the goals, car prices must be closer to 10,000 euros than 20,000 euros.
The average price of electric vehicles in Europe is currently slightly more than 40,000 euros, according to the Brussels environmental group Transport and Environment.
Vehicles with smaller batteries, designed for urban, rural and suburban conditions, are needed. Such vehicles hardly exist in Europe, although there are some in China, such as the BYD Seagull, Wuling Bingo and the smaller Leapmotor.
This presents a dilemma for the EU. It could allow the import of these small Chinese vehicles to spur the growth needed to meet CO2 emissions and climate change targets. This would endanger the domestic industry. Or it could abandon CO2 targets and save millions of jobs.
Tariffs for electric vehicles
The EU has introduced tariffs that are likely to slow down sales of Chinese vehicles.
At the Paris Motor Show, BMW CEO Oliver Zipse said the EU must abandon its plan to ban the sale of new vehicles with internal combustion engines by 2035. Instead, it should open the market to alternative fuels such as e-fuels, biofuels and hydrogen fuel cells. His insistence on a “strictly technology-neutral route” also suggests that the EU should allow hybrids and plug-in hybrids. Other German car manufacturers joined this demand.
Poor sales of electric vehicles
Weakness in sales of electric vehicles is present throughout the year.
In April, investment bank UBS predicted that Europeans would buy nearly nine million fewer electric vehicles between 2024 and 2030 than expected. This happens due to high prices, limited range and complicated filling, which repels potential buyers.
UBS cut its forecast for EV sales in Europe to 8.3 million in 2030, down from 9.6 million previously.
In June, research firm Jefferies cut its forecast for EV sales to 6.8 million in 2030, down from last year’s forecast of 8.9 million.
The challenge of profitability
Manufacturers claim that there were a lot of affordable electric cars at the Paris Auto Show. The Reno 4 has been launched, targeting the lower end of the market, but likely to cost more than €30,000.
For most new EVs, the starting price was above that figure, which is hardly affordable for Europeans with an average salary. Renault has announced that it will offer the Twingo in 2026 for less than 20,000 euros. The electric Lipmotor T03 starts at 16,400 euros, while the restyled Dacia Spring will probably cost close to 15,000 euros.
Henning Dransfeld, director of strategy at software company Infor, agrees that price is an issue and that Europeans will have a hard time dealing with competition from the Chinese.
“However, the real challenge lies in achieving profitability. Chinese EV manufacturers and their suppliers enjoy huge government subsidies, soft loans and cheap land,” said Dransfeld.
“In contrast, European car manufacturers face higher operating and labor costs. And they don’t have the same kind of support. They may find themselves in a destructive price war with the Chinese, who cannot win,” he added.
More favorable prices until 2027.
Technology research and consulting firm Gartner says mass-market EV prices will fall, driven by the entry of new entrants and Chinese manufacturers.
“We believe that by 2027, the average EV price will reach parity with internal combustion engine vehicles of similar size and features. As EVs and plug-in hybrids become more popular in the mass market, the average price will drop.”
Jonathan Davenport, senior analyst at Gartner, said in an email.
“Competition from new market entrants – startups in the EV and PHEV sector, as well as Chinese automakers – will help drive down prices,” Davenport added.
The progress in the EV sector is obvious. Prices are falling, and the choice is expanding.
But in order to increase sales to the extent that would enable even approaching the set quotas, it seems impossible without a radical reorganization of the vehicle offer.
So far, there is no indication that this is happening.
Source:
Forbes.n1info.rs
Photo: Autoblog.rs Archive / Dacia / Renault / Leapmotor
Source: autoblog.rs
