In recent years, there has been much discussion and controversy about the European electric vehicle (EV) market. Contrary to what the general public believes, EV rules and auto manufacturer business decisions have intentionally planned the current EV demand stagnation. Gaining insight into the mechanisms underlying this thing and the approaching growth phase will benefit the European EV market going forward.
The Stagnation Phase
EU Regulations and Market Dynamics
The European EV market’s stagnation is due to the EU’s automotive CO2 targets, which are set every five years. Car manufacturers emphasize EV sales less during these “stop-and-go” regulatory periods until the law requires them to do so.
They sell huge, high-margin electric vehicles (EVs) and internal combustion engine (ICE) vehicles in order to maximize short-term revenues during these transitional times. Europe’s EV sales have temporarily slowed down as a result of this tactic.
Manufacturers Strategies
They have purposefully postponed their EV marketing campaign in order to concentrate on increasing sales of both luxury EVs and their current ICE cars. Because of the emphasis on bigger, more costly EVs, average costs have increased, which has limited the market’s access to EVs.
In 2021, for example, the average cost of an EV was less than €30,000, and large EVs accounted for almost 40% of sales. The average price had climbed by more than €10,000 by the beginning of 2024, and the percentage of large EVs had reached over 60%.
Implications of High Prices
The focus on high-end models has obstructed the EV market’s overall expansion. Costs put off a lot of prospective customers, especially those seeking mass-market, reasonably priced products. But this is a calculated phase of inaction, laying the groundwork for a big strategy change as deadlines for regulations draw near.
The Growth Phase
Regulatory Push for 2025 and Beyond
Manufacturers will have to refocus their efforts on growing EV sales in order to satisfy the next set of EU car CO2 limits, which go into force in 2025. They will be focused by this regulatory push to release mass-market EV versions that are more reasonably priced. Manufacturers intend to introduce 10 new, reasonably priced EV models produced in Europe over the course of the next few years. This move is anticipated to stimulate the market and increase the number of people who can buy EVs.
Investment and Competitiveness
The European auto sector must maintain investment and competitiveness by meeting the 2035 target of 100% zero-emission cars. Any attempt to this goal would result in a large loss of investment and cause Europe to fall behind its competitors in the global economy.
Despite having a smaller automaker, North America gathered more than a third (37%) of the worldwide EV investment between 2021 and 2023, while Europe secured just over a quarter (26%) of the investment. Maintaining and increasing investment in the European EV sector requires a strong commitment to the 2035 zero-emission target.
The Role of Policy and Leadership
Leaders in the sector and decision-makers must support measures that uphold the current EU automobile CO2 targets after the elections in 2024. To ensure a healthy and competitive EV market in Europe, it will be essential to support prominent figures like Ursula von der Leyen for roles like President of the EU Commission and to align the upcoming EU Strategic Agenda with a strong commitment to zero-emission targets.
Conclusion
The current stagnation in the European electric vehicle (EV) market isn’t a sign of decreasing interest but a planned pause. This break is due to regulations and companies focusing on short-term profits.
However, as we approach the 2025 regulatory deadlines, we can expect a big push towards more affordable, mass-market EVs, marking a new phase of growth. To stay competitive globally, Europe needs to stick to its zero-emission targets and supportive policies. The combination of industry strategies and regulatory requirements will drive the growth of the European EV market in the coming years.
No comment