The European automotive industry is facing a perfect storm of challenges, including slowing demand in China, competition from cheaper Chinese electric vehicles, and stricter emissions regulations. Major players like Volkswagen, BMW, and Stellantis have issued profit warnings, and the industry as a whole is in ‘grave danger’. Despite the setbacks, the future looks brighter, with more affordable electric models set to hit the market in the coming years, potentially boosting EV sales in Europe. Automotive industry and electric vehicles are key factors shaping this narrative.
Demand Slowdown & Increasing Competition
A perfect storm of challenges has gathered over the European automotive industry. In recent weeks almost all major manufacturers have warned about profits: among others, Volkswagen and BMW from Germany. the Daimler Group (Mercedes) – UK Stellantis (multibrand corporation including Jeep, Fiat and Peugeot). The main culprits? Slowing demand from China, which is cooling off and increasing competition in other markets from Chinese electric vehicles (EVs) due heavy subsidies.
We use 2.4 million people in the European auto industry, so this is a really big issue. Divided EU States approve Chinese EV tariffs — Europe set to protect auto industry by piling on moreFromThe Car Connection Others, such as the German government and Germany’s leading carmakers, warn that this could lead to a ‘trade war’ with China.
Emissions Targets and Low Demand Run Rally Aground
Closer to home, the European auto industry is also facing challenges. The volume continued to sit well below levels seen before the COVID-19 pandemic, with just 7.2 million units moved in the first eight months of the year, up 1.4 percent. Analysts say consumers have either been scared off by high prices at dealerships or they are waiting for the economy to recover.
Worse still, all-new electric cars have actually fallen behind the industry’s 2035 EU deadline to ban new petrol cars from sale. In addition, EVs have nearly collapsed to 12.6% of car sales on the European market during the eight months ended last August from the already weak 13.9% they posted throughout akin period in.. The European Automobile Manufacturers’ Association (ACEA) has asked the EU for ‘immediate relief measures’, fearing even tougher emissions targets that come into effect in 2020.
Electrifying the Future: The Way Ahead
While European carmakers face industry headwinds, the outlook is positive. European clean transport advocacy group Transport & Environment reckons that battery-electric cars will hit a market share of 20 to 24% in Europe next year. In addition to these updates, the number appears poised to grow further with seven lower-cost EVs set to launch in 2021 and 2025.
“2025 will be a happy Christmas for people shopping for an electric car in Europe,” commented, T&E cars director Lucien Mathieu. Europe’s automakers will have to further deepen their electrification activities and reduce high costs and weak demand in order to overcome this hurdle. The industry can recover to be more competitive, both nationally and internationally, but only with the right strategies and government assistance.
