The electric car market is out of breath. The reason, among others, sales collapse in Germany

The European Automobile Manufacturers Association said on Thursday that new vehicle registrations fell by 3.8% last month. up to 1.05 million pieces. It had the greatest impact on the decline in sales in Europe the German market, where sales dropped by almost a quarter.

No incentives for purchasing electric vehicles in Germany

Such a large decline in the region’s largest market, which outpaced growth in other key countries, is the result of exhaustion of incentives for the purchase of electric vehicles.

Increased borrowing costs, a slowing economy in parts of Europe and growing pessimism around electric vehicles are worsening the industry’s prospects.

Bloomberg Intelligence predicts that sales growth will slow to 5% this year. with 14 percent in 2023. According to Bernstein analysts, this will probably result in a decline in car prices and a reduction in manufacturers’ profits.

The electric car sector is out of breath

This week, Tesla lowered prices of its best-selling Model Y in markets including Germany, France and Norway. The American electric car manufacturer plans to temporarily suspend vehicle production at its factory near Berlin. Tesla explains the interruptions in production due to logistical problems caused by the fighting in the Red Sea. Last month, Audi announced it was pausing the rollout of electric vehicles.

The sharp decline in electric vehicle registrations in Germany (by almost half last month) outpaced growth in markets including the UK, Spain and France.

Sales of electric vehicles rose 28% last year, but fell by a quarter in December. The decline in the popularity of electric cars was visible not only in Germany, but also in Sweden, the Netherlands and Croatia. The European Union recorded its first monthly decline in electric vehicle sales since April 2020.

Hope for cheaper loans

However, there remain some grounds for optimism. European Central Bank President Christine Lagarde signaled this week that a cut in interest rates this summer is “likely,” fueling hopes for lower financing costs.

Bloomberg reports that in Italy, where the number of registrations increased by 6% in December, the government is considering introducing a package worth EUR 930 million aimed at increasing the sales of electric vehicles.

Meanwhile, electric manufacturers are racing to improve their products. Bernstein analysts say a wave of 35 new battery-powered models expected to be introduced this year will provide customers with a more affordable choice.