European governments have decreed that sales of new sedans and SUVs will be solely electric by 2035 and account for 80% of sales within five years. The facts suggest a murkier outcome.
Total victory for EVs requires a mass-market for cheap and cheerful little urban runabouts, but European manufacturers are reluctant to produce them. These seriously affordable vehicles, like China’s Wuling Bingo and BYD Seagull, would cost say €10,000 ($10,900) after tax. Meanwhile, the European Union is seeking to limit China’s EV exports.
The EU and the U.K. government require around 80% of new sedan and SUV sales to be electric by 2030, but forecasts range from only 40% to perhaps 60%. Despite this, Britain’s new government has said it will bring the EU’s 100% target for 2035 forward to 2030. That huge gap spells trouble for politicians, manufacturers and consumers, and can only be bridged by the arrival of cheap, mass-market cars.
German manufacturers are contesting the quotas. Any dilution will be contested by those saying this will undermine climate change requirements and Europe’s lead in sustainability.
Electric car sales growth in Europe has stalled, as the early acceleration inspired by early adopters and corporate purchasers died away. If the EV revolution is to succeed, manufacturers must stop wasting billions making unaffordable electric behemoths, and concentrate on making small city cars.
European automakers seem determined to produce EVs which can match the performance of traditional internal combustion engine-powered sedans and SUVs. The laws of physics, at least with current technology, make this a blind alley.
Investment bank UBS has said Europeans will buy almost nine million fewer electric vehicles between 2024 and 2030 than expected. UBS cut its forecast for European EV sales to 8.3 million in 2030. Investment researcher Jefferies expects 6.8 million sales in 2030, that’s a market share of 50%. European EV sales are currently at an annual rate of just over 2 million and a market share of under 20%. In the U.K., the government EV sales quota for 2024 is 22%, but sales are hovering at around 17%.
Will Roberts, head of automotive research at RHO Motion, expects an EV market share in Europe of 51% by 2030.
“Our current base scenarios do mean that as a whole the fleet will miss the EU targets in 2030 and in the U.K. up to and including 2030. However, at this stage, we have yet to take into account the flexibilities in these policies,” Roberts said in an email exchange.
“As for the 100% target in 2035, we do not currently forecast this being met in the EU or the U.K.,” Roberts said.
Before the EU implemented its program to force drivers to buy electric and forsake the internal combustion engine, entry-level vehicles were available at close to the €10,000 price point, making new vehicles available to Europe’s average wage earners.
Roberts said European manufacturers are currently reluctant to enter this unprofitable end of the market.
“(Affordable) vehicles that make up those sales are not yet forthcoming in the EV market, especially from European manufacturers who are holding off as long as possible from releasing affordable EVs as the profitability of these vehicles is limited or non-existent at present,” Roberts said.
Cardiff Business School’s Professor Peter Wells agrees the European industry is producing the wrong kind of EVs and missing the targets will jeopardize climate change targets.
“It is important to remember that beyond the politicians, the geopolitics, the industry and the consumers, the climate crisis is getting ever-closer. The industry must shoulder much of the blame here for the delays, and for resorting to large, powerful and resource-intensive electric cars that exacerbate rather than resolve most of the issues,” Wells said in an email exchange.
“Still, several possibilities are still in theory available, but none look good for the European industry.
1. Abandon market protection and let in cheaper, lower cost, but often actually better, Chinese cars.
2. Accept that the market, still protected, will be much smaller than current forecasts if manufacturers lack the EVs to replace ICE vehicles.
3. Allow manufacturers to pay punitive fines at a time when they are falling behind the R&D race.
Probably the best hope is option one, on the assumption that many European manufacturers are direct or indirect beneficiaries of relations with China,” Wells said.
“EVs like the BYD Seagull are exactly what we want in Europe, but manufacturers are reluctant to take the profit hit. Without these vehicles it leaves large parts of the consumer base completely isolated. They have the right to be upset if they realize they are being denied the opportunity to buy low-cost, small but entirely competent (Chinese vehicles),” Wells said in an interview.
“The industry is still trying to design EVs as if they were fully-fledged diesels, They aren’t designing vehicles which exploit battery technology to the full,” Wells said.
Wells warned that if the CO2 targets were diluted, climate change targets would be jeopardized.
Pedro Pacheco, senior research director at Gartner Group, said if the EU targets are missed that will demonstrate a lack of commitment to climate change targets. The EU would also lose its position as a global pace-setter for sustainability.
“Almost 100% electrification will come sooner or later in Europe. It might not be in 2035, but ICEs won’t stand a chance once EVs become much more price-competitive – and that is a mere matter of time. However, such would happen at a great loss for the European automotive industry if it doesn’t focus 100% on EVs and software,” Pacheco said in a LinkedIn statement.
Cardiff Business School’s Wells said in the interview there was ample scope for joint ventures with Chinese manufacturers to bring in small EVs. It would be better to develop relationships with them, rather than keep them out. After all, the Chinese were now leading the global auto industry in technology and innovation.
“We’ve been catering for the elite-end and we neglected to nurture the mass market which you need to make this transition happen,” Wells said.
