It may not be a crash, but it is a decline - the Germans no longer are particularly interested in electric cars. What are the reasons?
Demand for electric cars in Germany has decreased significantly - an inevitable consequence of the suspension at the end of last year of state subsidies for their purchase. From January to May, sales of battery electric vehicles fell 15.9 percent to about 141,000 units compared with the first five months of last year. This may not be a crash, but the decline is significant - especially against the backdrop of strong sales growth in previous years.
Electric cars - hasty euphoria?
Since the German car market is the largest in Europe, there have been voices that the interest in electric cars has been artificially created by the German and other European governments. Now, however, the pendulum is inevitably swinging back and we may be witnessing a renaissance of sorts for internal combustion engine (ICE) cars.
And so unions at Audi's main plant in Ingolstadt, Bavaria, are already calling on the company's management to reverse its decision to switch to all-electric cars from 2030, given that four years earlier, the .is in 2026, they wanted to stop the development of new internal combustion engines.
At the same time, the conservative bloc, which received the most votes in Germany in the European elections, calls for the repeal of the ban on the sale of gasoline and diesel cars in the EU from 2035. As centre-right and radical-right parties have significantly strengthened their positions in the new European Parliament, lifting the ban seems quite realistic. But to what extent will this affect electric car sales over the next few years? And will it affect them at all?
Meanwhile, an EU decision on July 5, 2024 imposed barrier tariffs on Chinese electric cars of up to 37.6 percent of their value, as the US previously did. The tariffs are expected to be in effect for a period of four months, during which the “intensive” trade negotiations between the EU and China. The EU's arguments: this production in China is heavily subsidized by the state, and importing such cars into Europe and selling them at dumped prices disrupts healthy competition on the European car market.
How popular are electric cars really?
The international consulting company "McKinsey" polled 30,000 electric car owners in 15 countries and here's what the results show: in Germany, 24 percent said their next car will again have an internal combustion engine, and in China even 28 percent think so. The disappointment with electric cars is even greater in the USA, the homeland of the until recently market leader Tesla: there as many as 46 percent of the surveyed owners of electric cars still prefer a car with a gasoline engine.
It appears that consumers in Europe are more satisfied with the new technology than those in China and the US. In general, however, sales in the countries of Europe are increasing - without Germany and Italy. But since the German market is the largest in Europe, the Association of European Automobile Manufacturers (ACEA) concluded that the electric car boom in Europe is mainly being slowed down by Germany.
2023 was a record year for electric car sales
And according to the newspaper "Handelsblatt" the supposed decline seen in the European electric car market is mainly due to Germany and mainly affects two manufacturers: Volkswagen and Tesla. The sales and market shares of these two companies with factories in Germany are falling, while those of their competitors, for example BMW, Toyota or China's BYD, are growing.
In 2023, 13.7 million cars with batteries or plug-in hybrids were sold in the world. From "McKinsey" saw the biggest growth in the US - up 48 percent to 1.5 million cars per current, followed by China with 37 percent to eight million cars, while in Europe sales rose by just 16 percent - to just over three million units. Of all passenger cars sold in the world in 2023, electric cars will make up 13 percent, and plug-in hybrids - six percent.
700 new models of electric cars hit the market
This doesn't look like a "genre crisis". But aren't we really watching a dying star? Could global growth stall this year - as it did in Germany? "2024 will be quite a difficult year for many electric car manufacturers. "The reduction of government incentives in Europe and the still limited choice in the US are holding back the growth rates of electric car sales in these markets," says Munich-based expert in the field Patrick Schaufuss.
At the same time, by 2026, more than 700 new models of electric cars should be launched on the market - most of them in China, where 130 manufacturers currently offer more than 400 models. In second place is Germany, where in the next two years from "McKinsey" expect over 200 new models to appear.
In China, sales of electric cars will continue to grow at a high rate, even if the domestic car market stagnates. Therefore, if only for this reason, Volkswagen, BMW and Mercedes-Benz will have to continue to invest significantly in the development of electric cars, rather than those with internal combustion engines, says Schaufuss. For these German manufacturers, China has become a major market and they simply cannot afford to lose their positions there, adds the expert.
Why does CDU want to cancel the ban on DVG?
As for the intention of the Christian Democrats of Germany (CDU) to reverse the decision to ban the sale of internal combustion engine cars in the EU, some observers are linking this to the upcoming September elections in the three East German states of Thuringia, Saxony and Brandenburg. There, and in general in the five East German states, the right-wing populist party "Alternative for Germany" (AzG) enjoys high support among voters. This party actively calls for extending the life of internal combustion engines and especially diesel engines.
Since the CDU conservatives have the best chance of opposing the AZG, they can try to attract votes with the slogan of lifting the ban on the sale of cars with internal combustion engines. In EU countries, this ban should enter into force in the distant year 2035.