As far as Chinese rivals and Tesla are gaining a dominant position on the European electric car market, revealing the competitive weaknesses of the largest European car manufacturers, it becomes clear that something needs to be changed quickly, because the current approach is a direct path to failure.
Carlos Tavares, CEO Stellantis – a company created as a result of the 2021 merger of the Italian Fiat and a French concern PSA Groups believes that everyone is fully aware that in the future, companies that will not be able to face Chinese competition will get into serious trouble. In his opinion, the European car industry will face a “bloodbath” if it does not adapt.
Due to the slowdown in the implementation of electric vehicles, automotive company executives are discussing various ideas, from pooling development resources to merging European enterprises.
The coming months will be crucial
According to BloombergNEF, sales of fully electric cars this year will grow at the slowest pace since 2019.
Even for Tesla, the slowdown – which has led to widespread car markdowns – has had an impact on the company. Shares fall by 20%. this year, it has resulted in a loss of approximately $150 billion to the company’s market capitalization, more than twice the value of VW.
Electric car sales in Europe / Bloomberg
The biggest obstacles for the electric car sector include governments waiving subsidies for car purchases. In addition, car rental companies oppose the inflated repair costs of electric cars, and consumers are increasingly frustrated with climate policies affecting their wallets.
Elections in the USA and Europe may further fuel anti-electric vehicle sentiment.
Producers face high penalties
In 2025 in European Union More stringent emission regulations will come into force, which means that manufacturers will have to sell more battery-powered cars or face high fines.
According to Bloomberg calculations based on data from the company and regulators, in an unlikely worst-case scenario, Volkswagen could face fines of more than 2 billion euros if it does not sufficiently reduce greenhouse gas emissions emitted by manufactured cars. In other words, if it does not increase the share of electric cars.
A threat from beyond the great wall
Pressure is mounting on European carmakers to sell more electric vehicles. Meanwhile, state-backed Chinese manufacturers are entering the market with models that are often better and cheaper.
For example, BYD’s Dolphin is valued at around $7,000. euro less than the similarly equipped VW ID.3, which the German automaker originally touted as the Beetle of the electric vehicle era.
The Chinese manufacturer emphasizes its European ambitions. It will unveil several electric vehicle models at next week’s Geneva Motor Show, including a luxury SUV competing with the Mercedes-Benz G-Class.
Changes are necessary
If European carmakers don’t come up with a working plan B, it risks upending an industry that employs around 13 million people and accounts for 7% of global GDP. EU economy.
Demand for electric vehicles in the region is falling. Number of registrations / Bloomberg
Renault CEO Luca de Meo Advocates an alliance of European automotive companies along the lines of combining assets in Germany, France, Spain and the United Kingdom, which created a European aircraft manufacturer to compete with Boeing.
Director Luca de Meo argued that ““Airbus car” it would help share the huge costs of building low-cost electric vehicles while allowing them to benefit from greater scale.
Interest in broader cost-sharing increased late last year, when Renault presented a concept for an electric city car that would cost less than PLN 20,000. euro, i.e. half the price of ID.3 VW. The De Meo initiative is inspired by Japanese kei cars. Popular mini vehicles are produced by several manufacturers and receive preferential treatment from regulators.
However, different approaches are emerging. Stellantis’ Tavares has openly discussed his interest in mergers and acquisitions, while others are more focused on less sensitive collaborations. Last week, a Renault de Meo representative confirmed that talks are underway regarding a common platform for electric vehicles.
“We are very open to sharing this kind of investment because it is very difficult to make money on small cars,” said de Meo, who previously worked for both Volkswagen and Fiat.
Tremors in Europe could spread to the United States, where General Motors and Ford Motor are also scaling back investments in electric vehicles and have shown they are open to partnerships with other companies. As the New York Times reported over the weekend, President Joe Biden’s administration is considering giving manufacturers more time to transition to electric cars.
The main reasons for the crisis of the EV sector
This is not how it was supposed to look when the EU last year approved plans to effectively halt the sale of new combustion engine cars from 2035. There are many reasons for the deterioration in sentiment in the electric vehicle sector. Consumers received faulty software and unexpectedly high operating costs. Due to the complexity of maintenance, insurance for an electric vehicle costs more than for a conventional vehicle. In the UK, insurance rates for electric cars are twice as high as for combustion cars. However, the main obstacle to the development of the electrician sector may be affordability.
According to BNEF analyst Colin McKerracher, the crisis is expected to be only temporary as battery technology and charging infrastructure improve.
Still, the discrepancy between expectations and reality is disappointing. At its electric car plant in the eastern German city of Zwickau, Volkswagen has laid off more than 200 temporary workers and reduced production on one of its assembly lines.
Problems for European producers
Talks on electric vehicle collaboration could prove crucial for Volkswagen as the auto giant struggles despite massive investments.
In the wake of the 2015 diesel scandal, Europe’s largest carmaker unveiled perhaps the industry’s most ambitious electric vehicle project under then-CEO Herbert Diess. However, faulty software delayed key electric models, contributing to Diess’s layoff in 2022.
His successor, Oliver Blume, withdrew from many initiatives.
If it fails to get its strategy back on track, European automakers risk falling further behind, and efforts to meet regulatory rules could mean paying Tesla more for carbon credits, giving the company a net profit.
Tesla, the electric vehicle manufacturer, received almost $9 billion from its enemies / Bloomberg
last chance
Perhaps European producers will have one last chance. VW, Stellantis and Renault they work independently on models costing a maximum of 25,000. euro, however Mercedes and BMW they plan to introduce several new electric vehicles with improved technology by mid-decade.
Calls for greater trade and regulatory protections may be the last resort.
While delaying the phase-out of combustion engine cars may provide some respite, it will not solve the competitiveness problems hindering Europe’s transition to the electric age.
