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It is a myth that electric car demand is slowing around Europe. The current stagnation of the EV market has been expected for years. It is the result of:
• The stop-and-go design of the EU car CO2 targets (in 5 year steps);
• Carmakers’ strategy to hold back the sales of EVs until it is required by the regulation, prioritising profits from ICEs and large, expensive EV models in the meantime.
In the stagnation phase, carmakers prioritise short-term profits through the sale of high-margin, expensive EVs and by pushing EV sales in the following year when they need the new models to reach the EU car CO2 targets. The disproportionate focus of carmakers towards larger, more premium models has resulted in high prices for EVs in Europe which has slowed down EV sales as a result. In 2021, the average price of EVs was below €30,000 and the share of large EVs sales was close to 40%. By early 2024, the average price had increased by more than €10,000 and the share of large EVs sold increased to around 60%.
In the next growth phase from 2025 onwards, electric car sales will pick up as carmakers need to prioritise EV sales to meet the next car CO2 target kicks-in. Carmakers make a shift towards mass-market affordable EVs as they plan to launch ten affordable Made-in-Europe EV models in the next couple of years.
Calls to dismantle the 2035 100% zero emission car target would lead to a loss of investment and leave the European auto industry less competitive and further behind global rivals. Already today, with uncertainty over its 2035 zero-emission car target and a weak industrial policy, Europe is proving less attractive to electric vehicle manufacturers: Europe securing just over a quarter (26%) of global EV investment announced between 2021 and 2023. More than a third (37%) went to North America, despite the region being a smaller car producer.
In the aftermath of the 2024 EU elections, decision makers and industry should call for the support for Ursula von der Leyen’s candidacy to EU Commission president and for the next EU Strategic Agenda to be tied to a firm commitment to the current EU car CO2 targets, in particular the 100% zero-emission car target in 2035. More generally, European carmakers need to be firmly committed to accelerate the ramp up of electric car models, especially the more affordable ones.
