Global electric vehicle market stalls as sales plunge: challenges, concerns emerge

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Ambitious global plans to drive the ultimate adoption of all-electric cars appear to falter this year, as Europe records the worst collapse in electric vehicle sales since early 2020, while China and the United States report similarly alarming declines.

By Laura King

In 2022, the global consumer of electric cars will spend almost US$400 billion on new units, and the automotive industry committed to investing more than US$615 billion to meet what they believed was growing and unstoppable demand, according to data from the consulting firm AlixPartners cited by CNBC.

But the reality is that the famous EVs continue to pile up in dealerships with fewer and fewer interested buyers.

And the predictions for the coming years could be even more pessimistic, after it became known this week that Germany led the free fall of all of Europe when it recorded a reduction of almost half in sales of electric vehicles in December.

High manufacturing cost and withdrawal of subsidies to buyers

According to The Wall Street Journal, German auto industry executives have warned for months that a difficult outlook was ahead for electric vehicles, blaming a combination of high manufacturing costs and a government measure that ended subsidies for vehicles. consumers interested in leaving fuel behind.

The European Automobile Manufacturers Association (ACEA) said in its latest report that EV sales in Germany fell by 48% and plug-in hybrid sales by 74%. Overall, new car sales in Germany fell 23% in December, compared to growth rates of 14.5% and 11% in France and Spain, respectively.

Although ACEA data shows that most of Europe was prepared to move forward despite the sales slump in Germany, some analysts believe the December setback could mark a negative turning point for the industry , threatening to slow down the eventual EU ban on the sale of new fuel cars by 2035.

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“The weak economy, high financing costs and considerable geopolitical tensions are causing a reluctance to buy by both individuals and companies,” Constantin Gall, partner and head of Mobility at EY for Western European markets, told TWSJ. He said the automotive industry would face a tough time in 2024.

The price war

Some analysts warn that we are witnessing the beginning of a “price war” between low demand and lack of incentives for buyers in Germany. The response from manufacturers such asVolkswagen Group has been to reduce the prices of new models, a trend joined by its rivals BYD andtesla.

In Europe, Elon Musk’s company lowered the prices of two versions of its Model Y by more than US$5,400.

“The looming discount battle, which increasingly affects the electric segment, will also reduce automakers’ margins,” Gall noted. “

The price war and fierce competition is also affecting the shares of electric car makers in China, reportedCNBClast week. “Investors remain cautious. The Chinese automobile market has had a volatile start to the year as competition and macroeconomic uncertainties persist,” they said from Morgan Stanley.

In mainland China, the rise in electric vehicle sales fell to 28% in the third quarter of 2023, compared to 108% in the same period a year earlier, according to data from the China Automobile Manufacturers Association. China cited by the US credit rating agency Fitch Ratings.

“The competitive landscape will be more challenging and there will be pressure on prices. Although demand for electric vehicles is expected to remain resilient, the industry will face three main challenges on the supply side : excess capacity, new model launches and the emergence of new technological players such as Huawei and Xiaomi, which are aiming for “increasing competition,” Bernstein analysts said in a report.

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What is happening in the United States?

The United States is expected to add 1 million new electric vehicles to its roads this year, but dealers are increasingly slow to clear their EV inventory. According to CNBC, in August 2023 it took approximately twice as many to sell an electric vehicle in the US, compared to the figures from the previous January.

Meanwhile, fuel-burning vehicles continued to sell as quickly as usual. The majority of consumers, just over half, say they are aware that electric vehicles are the future and will eventually replace combustion engines, but less than a third of dealers hold that view.

Sales at some new electric vehicle companies, such asLucid, have been disappointing to say the least, but companies likeFord MotorThey decided to increase the production of hybrids when they saw greater stability in the demand for their electric vehicles.

As is the case in Germany, the main concerns revolve around high prices and restrictions on subsidies, but there is still poor charging infrastructure on roads.

“There is concern about public charging infrastructure, although most of the charging that will be done will be at home,” Jeff Aiosa, owner of Mercedes-Benz of New London, Connecticut, told CNBC.


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AlixPartners, Automotive Competition, Automotive Industry, Charging Infrastructure, Charging Infrastructure Concerns, China, Consumer Demand, Electric Cars, Electric vehicles, Europe, EV Sales, Ford Motor, Future of Electric Vehicles, Germany, Global Market, Government Subsidies, Lucid Motors, Manufacturing Costs, Market Challenges, Market Trends, Price War, Sales Decline, Subsidy Restrictions, Sustainability, United States

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