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Posted Jul 21, 2022, 10:30 AM
One-time slack or the beginnings of a lasting slowdown? After soaring for two years, sales of electric cars in Europe have run out of steam in recent months. While a rebound is likely to be expected by the end of the year, the outlook for 2023 is more uncertain.
According to data compiled by specialist analyst Matthias Schmidt, registrations of 100% electric vehicles in the 18 Western European countries have certainly increased in the first half of 30.3% over one year, with 629,667 vehicles sold in total, while the market as a whole is on the back foot with a 14% drop in sales. But this increase is mainly due to the first quarter (+59% over one year).
Growth was much weaker in the second quarter, with only +10% in sales. And it fell to +2.9% in June compared to the same month of 2021, with drops in some countries such as Germany (-3.5%), Norway (-10.6%) or Italy (-11.9%).
The impact of Ukraine and Covid in China
These figures reflect the production difficulties encountered by certain manufacturers, explains Matthias Schmidt. “Containments due to Covid in China slowed down shipments made by Tesla to the European market in the second quarter”, points out the analyst. German brands have also had to deal with supply disruptions from equipment manufacturers based in Ukraine. The Volkswagen group, for example, saw its sales of electric cars stagnate in the first half of the year in the 18 countries concerned, with a severe -32% for the eponymous brand.
As these difficulties are in the process of being overcome, a catch-up should take place in the short term. “Sales of electric cars should pick up again in the third and fourth quarters, driven in particular by Volkswagen, which is in the process of increasing its production capacity in Germany,” continues Matthias Schmidt. The German group has 300,000 lithium-ion vehicles to deliver in its order book, he said.
More broadly, general manufacturers present in Europe are required to meet targets for reducing CO2 emissions generated by their new cars, under penalty of heavy fines. This forces them to devote a certain proportion of their registrations each year to electric cars, regardless of the production difficulties. The pure electric market share, which was 11.2% last year in Western Europe, could rise to 14% in 2022, Matthias Schmidt anticipated a few weeks ago.
Uncertainties for 2023
Will this progress continue in 2023? That remains to be seen. The regulatory pressure imposed by Brussels will not be revised upwards before 2025. In addition, the sharp slowdown in the continental economy is likely to curb demand, especially since vehicles running on lithium-ion remain significantly more expensive than their equivalent to thermal engines, and that the soaring cost of raw materials has forced manufacturers to increase their prices.
In addition, the need to reduce their public deficits could lead some states to reduce purchase subsidies, as the British government decided for example in mid-June. However, this bonus (which goes up to 6,000 euros in France) is often a major factor in customers’ purchasing decisions.
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