Audi's e-tron charger used for its electric vehicles is seen on display at Bharat Mobility Global Expo organised by India's commerce ministry at Pragati Maidan in New Delhi, India, February 1, 2024. REUTERS/Anushree Fadnavis
Berlin: Standing at the front of the room at an auto industry association’s new year reception in Berlin last week, BMW chief executive Oliver Zipse had reason to feel vindicated.
Onstage, Transport Minister Volker Wissing was preaching to the crowd of policymakers and industry executives about the importance of “technological openness” in reducing transit emissions.
A singular focus on battery-powered vehicles by policymakers and manufacturers is leaving Germany’s most important industry exposed, he said, with a forecast of slumping electric vehicle (EV) demand in Europe’s biggest car market hanging over his message.
Zipse has been making that same point for years, advocating for flexible production lines for combustion, hybrid and even hydrogen-powered cars.
His cautious strategy – which chimes with his predecessor’s – was attacked as not aggressive enough on challenging electric leader Tesla Inc.
Now, Zipse appears to have seen into the future. With EV adoption slowing and plug-in hybrids making a return from the sidelines, BMW’s careful approach no longer looks like such a bad idea.
“In Germany, demand for EVs does not look good this year,” said Jan Burgard, head of automotive consultant Berylls strategy advisers.
“The upper end of the EV market is almost saturated, and there is little on offer in the lower-end 25,000 segment.”
After years of surging growth, selling EVs is becoming tougher. Generous government incentives are disappearing in Europe and fewer vehicles qualify for them in the United States.
While a range of new models and commitment-light leasing options have attracted the attention of electric enthusiasts, some years into the EV revolution, infrastructure and price still remain roadblocks to widespread adoption.
In Germany, sales are set to drop 14% this year in response to the government yanking subsidies in December, the first decline since 2016, according to the German Association of the Automotive Industry (VDA) lobbying group.
Globally, market watchers have trimmed forecasts amid the enduring reality that the vehicles are much less affordable than equivalent combustion-engine cars – despite a price war kicked off by Tesla.
Last Thursday’s event was an attempt to inject some optimism into an increasingly sombre industry. Wissing praised German carmakers and extolled their technology as “celebrated abroad”.
When asked what the government could do to bolster the German EV market, the transport minister offered one thought: “Charging infrastructure.”
Yet on this front, Berlin has lagged. In October 2022, Wissing rolled out an ambitious strategy to invest 6.3bil in a nationwide infrastructure that would increase the number of charging stations in Germany to one million in 2030.
That hasn’t gone as quickly as planned. As of last September, there were only about 105,000 functional public charging stations in Germany, according to the infrastructure authority.
At the current rate of construction, VDA noted, Germany will need to triple its pace if it wants to hit its 2030 goal.
The charging conundrum, and who pays for it, remains unresolved many years into the EV transition. While policymakers and car industry representatives at the VDA event agreed that charging was key to reigniting interest in EVs, none wanted to say who should finance such an infrastructure expansion – or how.
Rising electricity prices have further tamped down demand, according to a Deutsche Bank analyst note.
The other main challenge for EV uptake is pricing. The coalition must meet its goal of getting 15 million EVs on the road by 2030, or face missing emissions targets. As of November, only about one million – or 2% of all cars – on German roads were fully electric. Without further subsidies, some analysts think hitting the 2030 target will be a challenge.
“I think it’s unrealistic from today’s perspective to reach 15 million EVs on German roads by 2030,” said Burgard, the automotive consultant.
Car makers are already beginning to hedge their bets.
Volkswagen’s Audi brand is paring down its EV lineup, and VW is taking a step back from plans to sell stakes in its battery unit. — Bloomberg
