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European carmakers have warned that electric car sales are set to plummet, citing policy failures and waning consumer confidence. Can the industry recover before major job and economic losses occur?
There are many reasons to like electric cars – they are powerful, can be charged using electricity generated in a variety of ways rather than relying on petrol, and they are often equipped with cutting-edge features and gadgets. But what if not everyone wants one?
01 Demand for electric cars falls in Europe
Such is the situation in Europe, where the European Automobile Manufacturers Association (ACEA), which represents the interests of 15 major European car brands, including iconic brands such as BMW, Ferrari, Mercedes, Renault, Volkswagen, and others, is sounding the alarm that a steady decline in electric car sales is now turning into a sharp free fall.
So far this year, sales of true EVs are down 8.4%, and the decline has been going on for some time. The situation is even bleaker for hybrids, where sales are down nearly 14% compared to last year.
ACEA is pleading with European lawmakers to make CO2 emissions reduction laws less burdensome on vans and buses, which are set to take effect before the new year. They also called for a review of light- and heavy-duty vehicle rules due in 2026 and 2027, urging those discussions to be brought forward to next year.
European carmakers insist they are committed to the greening of Europe’s roads and manufacturing, and they claim to have the technology to make it happen. However, they argue that key societal shifts and policy decisions are not keeping pace.
This could be a subtle criticism of the slow and confusing progress on effective electric vehicle import regulations, especially when it comes to heavily subsidized automakers from developing countries such as China. These countries have a competitive advantage in part because European manufacturers must follow lax environmental rules.
This may be just part of the concern. ACEA also reported that the entire electric vehicle market, not just the share controlled by its members, is in a persistent and accelerating downturn. The report lists several compounding factors, including:
Lack of charging infrastructure
Inadequate green energy production
Uncompetitive manufacturing laws
Buyers’ procurement structures and tax incentives
Insecurity and uncertainty in access to raw materials, especially batteries
Poor economic growth
Consumer acceptance of electric vehicles
Lack of consumer confidence in Europe’s commitment to timely infrastructure development
These are significant obstacles to overcome, and the laws passed to enable Europe’s transition to a greener future were written before many of the challenges were fully understood. Covid-19 has hit the European car market hard, with sales still 18% below pre-pandemic levels. Russia’s war in Ukraine has also shaken confidence in Europe and prompted many to turn to familiar, reliable options rather than risk future technologies.
Acea reports that only 16% of non-EV owners are considering switching with their next purchase, down from 18% three years ago. More troubling, 20% of current EV owners are strongly considering returning to traditional internal combustion engines, despite Europe’s climate targets.
In its report’s conclusion, ACEA warns that given these realities, automakers will either have to pay huge fines to sell people the cars they want — money that could have been invested in improving competitiveness and producing more electric cars — or they will have to cut production so much that the resulting job losses will cripple Europe’s economy and supply chains, exacerbating the conditions that led to the recession in the first place.
Their call to EU lawmakers is clear: Change the law to support the auto industry in building a climate-responsible and economically competitive industry, or everyone loses.