Europeans will buy 2 million fewer electric vehicles a year in 2030 than investment researcher Jefferies had previously predicted, joining other forecasters busily slashing predictions.
If sales don’t recover, the European Union’s ban on the sale of new combustion cars by 2035 will be undermined.
High vehicle prices, unpredictable battery capacity, poor long-distance range and clunky recharging are putting EV buyers off. Private buyers are wary of unpredictable residual values, as Tesla-led price cutting has led to a debacle in the second-hand market. EVs were supposed to be cheaper to charge than combustion vehicles, but that proposition has begun to crumble too.
As the market for EVs weakens, manufacturers will be wondering if this is just a short-term blip or a serious change of direction. If the latter, the automotive industry will face an existential threat if governments fail to dilute or end mandates to ban the sale of new combustion vehicles.
Last week, a study from management consultants McKinsey torpedoed the conventional wisdom that consumers, once converted to EVs, will remain convinced for life. The study said more than 40% of U.S. EV buyers want to return to internal combustion engine cars.
Electric car sales in Europe, and the U.S., have been faltering and the Volkswagen, BMW, Mercedes, GM and Ford have scaled back over-ambitious targets.
A couple of months ago investment bank UBS 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 compared with its previous estimate of 9.6 million.
In its data updated Wednesday, Jefferies cut its forecast of EV sales to 6.8 million in 2030 from the 8.9 million published late last year. Jefferies said sales will rise slightly in 2024 to 2.1 million, a market share of 16.1%, from the previous forecast of 2.8 million (21%). In 2025 sales will hit 3.2 million (24%) compared with 4.1 million (30%) and reach 6.8 million (50%) in 2030 (8.9 million 65%).
The European Union and U.K. decreed that EV sales shall reach about 80% of all new sedan and SUV sales by 2030, and 100% by 2035. These targets are not just tokens. There are big penalties for manufacturers that fail to reach the targets. In the U.K., there is a penalty of £15,000 ($19,000) for every ICE sold above the target.
As these targets look more onerous, German manufacturers have been lobbying politicians seeking to water them down. The European Parliament elections held early this month returned more conservative members likely to accept weaker targets. Expect green lobby groups like Brussels-based Transport & Environment to react vociferously.
Jefferies said sales will reach 10.4 million in 2035 (75%) compared with its previous forecast of 11.9 million and 85%. In its report, Jefferies said it adjusted its forecasts as EV sales growth slowed. It didn’t elaborate.
The European Automobile Manufacturers Association, known by its French acronym ACEA, said Thursday that European sales of EVs fell 11% in May to 182,000, compared with the same month last year.
“Automakers are grappling with slow EV sales as drivers are turned off by high sticker prices and subpar charging infrastructure. The European Union’s move this month to impose additional tariffs on Chinese EVs threatens to make imported alternatives more expensive,” ACEA said.
When UBS cut its forecast it said it still believes EVs will eventually become the dominant powertrain choice after 2030. The European Union might decide to lessen the severity of its drive to force all new car sales to be electric by 2035 and extend that deadline, the bank said in a report based on data from its Evidence Lab consumer survey.
Not every forecaster will be surprised by these cuts.
French automotive consultancy Inovev said in a report earlier this year EV sales would account for only 40% of the European market by 2030.
“We have a European policy which is less in favor of individual transportation and more in favor of shared transportation like buses, metro, tramway, trains, two wheels. Also, more and more, people will keep their vehicles longer due to rising costs of imperatives like housing, individual health, education, and leisure,” Jamel Taganza, vice-president of Inovev, said in an email exchange.
“We believe in a slower development at the European level, due to factors like cost of EVs, charging infrastructure, the impact on the auto supply chain.”’
“The charging infrastructure is by itself a tricky topic. It needs a lot of investment, public and private, which public services at European, national, and regional level are not willing to put in priority versus other topics. And with a 40% share in Europe, it means that advanced EV countries such as Germany, U.K., Netherlands, and France will have a much higher percentage than other countries less developed like Italy, Spain, and Eastern European countries,” Taganza said.
