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| October 5, 2024 at 8:49 p.m.
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The automotive sector in Europe is facing an unprecedented crisis, particularly due to the slowdown in the electric car market. This situation undermines the European Union’s ambitious goals to end sales of gasoline and diesel vehicles by 2035.
European automotive sector calls for urgent help
Last September, European carmakers requested “urgent” help from the European Union, in response to falling sales of electric vehicles and stricter emissions regulations, which come into force next year. There European Automobile Manufacturers’ Association (ACEA) expressed its efforts to achieve decarbonization targets, while highlighting obstacles such as falling sales of electric cars, lack of charging infrastructure and low competitiveness of production in the EU.
In an official request to the European Commission, ACEA called for “relief measures before the new CO2 standards for cars and vans come into force in 2025”. The European Union is in fact pushing for increased production of electric cars as part of its ecological transition. However, after a period of growth, electric vehicle sales began to stagnate in late 2023, now accounting for just 12.5% of new car sales in Europe.
The challenges of European car manufacturers
ACEA identified major problems:
- insufficient charging infrastructure
- high prices of green energy
- lack of tax incentives
- lack of raw materials for batteries.
She asked the European Commission to review CO2 regulations in 2025 instead of 2026-2027. Czech Transport Minister Martin Kupka also called for a review of the ban on combustion engines for 2025.
The critical situation of the German automobile giants
The difficulties faced by German car manufacturers, such as Volkswagen, BMW et Mercedesresonate throughout Europe. With declining sales and increasing costs associated with the transition to electric vehicles, companies are struggling to remain competitive. Mercedes had to revise its profit forecast for the year due to difficulties in the Chinese market, while BMW lowered its sales and profit expectations.
Volkswagen is considering layoffs for the first time in 30 years, with the possible elimination of 30,000 jobs out of 300,000. Other countries, such as Slovenia and Portugal, where Volkswagen factories contribute significantly to the economy, are closely following this development.
Key challenges include the slowdown in electric mobility, caused in part by the removal of federal subsidies in Germany.
The drop in demand for electric cars thus led to a fall in registrations in August 2023 of 28% in Germany, compared to 18% for the entire EU.
German carmakers’ dependence on the Chinese market, which accounts for almost a third of their business, has also dealt a blow to German brands due to slowing demand.
Chinese competition and new European taxes
Faced with competition from Chinese electric cars, which are often cheaper, the European Union has proposed new taxes on vehicles imported from China to protect European manufacturers.
This measure, however, gave rise to divisions within the EU : Ten member countries voted in favor of a 35.3% tax increase, while five others, representing 23% of the EU population, opposed it. Twelve other countries abstained.
Although the taxes aim to protect Europe’s auto industry, which employs around 14 million people, they are criticized by countries like Germany and Spain which fear a trade war with China. France and Italy, on the other hand, support these measures.
The final decision to implement the new taxes, scheduled for November 1, depends on the European Commission. An agreement negotiated with China could, however, make it possible to cancel this measure.
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European commission, Chinese competition, German car manufacturers, European automobile crisis, Trade war, German industry, Automotive industry, Chinese market, automobile market, electric mobility, carbon targets, electricity subsidies, taxes on cars, ecological transition, Tunisia annuity, European Union, electric cars
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