Summary
– Europe is seeing a decline in carbon dioxide emissions and aims to have its citizens buy only electric vehicles by gradually outlawing internal combustion engine sales by 2035
– The EU and British government are facing challenges in meeting EV sales targets and avoiding existential blows to European automakers due to the high cost of EVs and lack of capacity by local manufacturers
– The European Union is considering raising import tariffs on Chinese EVs due to allegations of illegal subsidies, which could lead to retaliatory action by China against German interests
– Current sales of EVs in Europe are below projected targets, with forecasts showing an expected increase in sales but not fast enough to reach the 80% market share goal by 2030
– Companies in Europe are facing fines for not meeting EV sales quotas and are reconsidering their strategies, including Stellantis CEO criticizing Britain’s EV quotas and calling for changes in the 2035 ban on new ICE vehicles.
Article
The decline in carbon dioxide emissions in Europe is creating challenges for the automotive industry as the European Union and the British government aim to push for the adoption of electric vehicles (EVs) to meet ambitious climate-saving targets. However, mass market sales of EVs are hindered by their high cost, making it difficult to achieve the necessary sales to replace internal combustion engine vehicles by 2035. Local auto manufacturers in Europe are struggling to reach these targets, leading to the potential reliance on cheaper Chinese EVs to meet the goals set for reducing carbon dioxide emissions. This could pose a threat to European automakers and impact the political landscape, especially with upcoming elections for the European parliament.
Complicating matters further, the EU is investigating allegations of illegal subsidies by China in EV sales to Europe, which may result in raised import tariffs. If limitations are imposed on Chinese EV imports, it could lead to retaliatory actions that affect German interests in China. The potential consequences of trade disputes and protectionist measures could jeopardize efforts to accelerate the adoption of EVs in the region. As a result, achieving the target of an 80% market share for EVs by 2035 presents a significant challenge that may require reconsideration of current policies and strategies.
Current sales of EVs in Europe have stalled, with market share hovering around 14.4% in Western Europe as of the opening third of 2024. Estimates suggest that sales need to reach close to 9 million by 2030 to meet the ambitious targets set by the EU and Britain. However, recent trends indicate a slowdown in EV sales, with customers showing a preference for internal combustion engine vehicles over electric technology. Automakers are facing fines for failing to meet mandated EV sales quotas, further complicating the transition towards zero-emission vehicles by 2035.
Industry leaders like Stellantis CEO Carlos Tavares and BMW CEO Oliver Zipse have expressed concerns about the feasibility of meeting the ban on the sale of new ICE vehicles by 2035. Changes in regulations and the use of taxes to incentivize CO2 emissions reductions are being proposed to address the challenges faced by automakers. Forecasts for EV sales in Europe have been revised downwards, with estimates ranging from 8.3 million to 8.9 million in 2030. The adoption of EVs is expected to be driven by hybridization and improved plug-in hybrids with extended EV-only range, as well as changes in company car taxation to penalize ICE vehicles.
Despite the challenges, experts believe that the transition to EVs by 2035 is achievable if the EU remains committed to its objectives and implements effective policies to support the shift. The upcoming elections in June could have implications for the EV transition in Europe, with some political groups advocating for a reversal of the ban on ICE vehicles by 2035. Collaboration between European and Chinese manufacturers is expected to increase, with more deals likely to be made to facilitate the adoption of EVs. However, decisions on import tariffs on Chinese EVs remain a key issue that could impact the success of the transition and the competitiveness of European automakers in the global market.
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