Europe Needs A New Strategy For The EV Race

March data showed that passenger-car sales in Europe fell 2.8%. On Thursday, the European Automobile Manufacturers’ Association (ACEA) revealed that registrations of new vehicles declined 5.2% to 1.38 million units in March, with BEV sales dropping 11.3%. This data reflects the stories told by Europe’s star automakers, namely Volkswagen VWAGY and Stellantis NV STLA who are struggling with lower demand, particularly on the EV front.

Europe’s March figures in more detail.

As for overall sales, Germany recorded a 6.2% drop, followed by Spain’s 4.7% fall, Italy that recorded a 3.7%decrease, and France whose sales contracted 1.5%. Battery-electric car registrations declined by to 134,397 units, with their market share contracting from 13.9% (March 2023) to 13%. Interestingly, three largest BEV markets which are Belgium, France and Germany, reported different trends. While Belgium and France posted double-digit increases, namely 23.8% and 10.9%, respectively, Germany suffered quite a decline that amounted to28.9%. However, the first first quarter of 2024 ended with a 3.8% YoY rise as a total of 332,999 new battery-poweredEVs were registered during the first three months of the year. 

Brand-wise, Volkswagen registered a 9% drop in registrations while Stellantis suffered an even worse decrease of 12.6%.

Volkswagen’s EV sales shrank with the slowdown of Europe’s EV market

The drop in sales is primarily triggered by Germany that put an end to subsidizing EV purchases in December. Unlike BMW whose sales surged during the first three months of the year, Volkswagen told an entirely different story compared to BMW who surpassed the one million milestone in EV sales. Volkswagen Group posted a 3.3% YoY drop in EV sales but what is even more concerning is that the decline reached 24.3% in Europe, which is Volkswagen’s biggest EV market. With 136,400 EVs sold, EV sales made 6.5% of Volkswagen’s total volume, dropping from last year’s 6.9% share. But like BMW, Volkswagen will be expanding its lineup by releasing new BEV models this year.

European automakers are in need of a new strategy.

This does not mean that Volkswagen won’t see an increase in EV sales going forward, especially as it joined forces with the Chinese EV maker XPeng Inc XPEV, but this data certainly implies European automakers are in need of a new long-term strategy in face of reduced subsidies, supply shortages and high interest rates that will further slower EV growth.  This trend will also benefit Chinese automakers who have set their eyes on expanding by conquering the European continent. XPeng has already entered Europe through Germany and is launching two EVs, with a promise to expand to other nations on the continent. 

Both Stellantis and Volkswagen have warned 2024 will be tough. Stellantis CEO Carlos Tavares also expressed his concerns regarding the threat of possible Chinese EV plants in Italy. If Chinese EV makers set their eyes on Italy for their production facilities, Stellantis is ready to fight and Tavares warned that tough decisions will have to be made as there will be casualties. 

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

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