Slowing the production of cars with
internal combustion engines down and at the same time drive the
production of cars with electric engines forward - these are the
goals set by the European Union and its member states. Despite
subsidies for EVs introduced in some countries, sales of
electric cars are crashing and the European car market is
plunging into crisis.
The automotive sector in Europe is facing a crisis. Instead of
growing, the market for electric vehicles (EV) is slowing down,
undermining the European Union's ambitious targets to end diesel
and petrol car sales by 2035.
Attempts to boost electric car sales with state e-car purchase
bonuses have failed. The sales of European e-cars are not helped
by strong competition from Chinese EV manufacturers. What causes
these problems and how do European carmakers expect the EU to
act?
European auto industry urges assistance ahead of rule tightening
European carmakers in September asked the EU for "urgent"
assistance as they contend with slumping electric vehicle sales
and stricter emissions regulations due in force next year.
The European Automobile Manufacturers' Association (ACEA) said
the industry was trying its best to comply with decarbonisation
targets, but was hamstrung by problems including a shrinking
electric car market, lack of charging infrastructure and poor EU
manufacturing competitiveness.
In a formal request to the European Commission, the industry
lobby group asked "EU institutions to come forward with urgent
relief measures before new CO2 targets for cars and vans come
into effect in 2025".
Europe has been racing to produce more electric cars as part of
its green transition, with the clock ticking on an EU deadline
to phase out the sale of fossil fuel-burning cars by 2035.
However, after years of growth, electric car sales began falling
at the end of 2023, and now account for just 12.5 percent of new
cars sold on the continent.
"We are missing crucial conditions to reach the necessary boost
in production and adoption of zero-emission vehicles: charging
and hydrogen refilling infrastructure, as well as a competitive
manufacturing environment, affordable green energy, purchase and
tax incentives, and a secure supply of raw materials, hydrogen
and batteries," it said further in the ACEA statement.
The lobby group asked the European Commission to bring forward a
planned review of the CO2 regulations, which is currently slated
for 2026 and 2027.
Czech Transport Minister Martin Kupka wants the impact review of
the ban on the sale of new cars with internal combustion engines
in the EU brought forward to as early as next year, the
Transport Ministry said in a press release.
According to Sofia Alves, head of the European Commission's
Administrative Capacity Building and Programme Implementation II
(REGIO.E) directorate, the automotive industry will have to
transform to achieve Europe's goals for a carbon-neutral economy
- which should bring benefits to everyone.
Since the technology of electric mobility should become
available quickly and at affordable prices, the European
Commission recommends manufacturers to work with universities
and research and development centres (R&D) in that direction,
she said in an interview for the Bulgarian News Agency (BTA). It
was a collective effort of the EU, member states and the
automotive industry. All participants in the process would have
to pay part of that price, but the goal was bigger and more
important, Alves argued.
German car giants' woes ripple across Europe
Troubles facing carmakers in Germany, a country with a large
automotive industry including brands like the Volkswagen Group
(VW) and BMW, have an impact on other countries' industries,
too.
German manufacturers are struggling with weak sales figures and
the high costs of switching to electric drive systems.
Mercedes recently had to cut its profit forecast for this year
due to stuttering sales in China. Previously, BMW had lowered
its sales and profit expectations for the current year. For the
first time in 30 years, Volkswagen could face compulsory
redundancies and plant closures. According to a media report,
the European auto giant could cut 30,000 from its 300,000 jobs
in Germany.
The cuts in Germany are being closely watched by European
countries cooperating with VW. For instance, the Slovenian
automotive industry, which represents around ten percent of the
national gross domestic product (GDP), is export-oriented and
Germany is among its most important markets. "We are monitoring
the situation both at the level of our key markets and at the
level of the key customers of the Slovenian car industry,"
Economy Ministry State Secretary Matevž Frangež said.
In Portugal, Volkswagen's Autoeuropa plant located in Palmela,
south of Lisbon, continues to have a major economic impact on
the country, contributing 1.3 percent to the GDP in 2023, and is
also the major foreign investment ever made in the country.
In Germany, a number of factors have been identified as to why
the car industry is getting into difficulties.
Stagnating e-mobility: The cancellation of the federal subsidy
in Germany last year has caused demand for battery cars to
collapse. The factories are not being utilised to capacity and
there is a threat of high fines due to the stricter EU fleet
targets for CO2 emissions from 2025. Politicians' flip-flopping
about electromobility was also unsettling customers and led to
distortions, German industry expert Frank Schwope said.
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