Europe's auto makers face challenges as electric cars stall, overall sales weaken, profits fall, plant closures loom, and challenges mount from China’s cheaper EVs.
Trying to predict the European car market’s future used to be simple. Sales were either ticking over nicely, about to accelerate, or in danger of stalling. Investors would consult a few economists, look at interest rates, and go for those companies making attractive vehicles and shun clunker makers.
The European Union demands that by 2035, its citizens will be banned from buying combustion vehicles, effectively eliminating hybrids and plug-in hybrids. These carbon dioxide-limiting rules tighten from 2024’s roughly 20% sales share for new EVs to about 80% by 2030 and 100% in 2035.European manufacturers have been slow to offer affordable EVs, and buyers are turning to China, which is way ahead of the curve and said to have an around 30% cost advantage.
“ CO2 regulation and the slowdown in the electric vehicle adoption, persisting sector and macro challenges in China, as well as trade and restructuring-led tensions," the investment bank said in a report. HSBC Global Research points to yet more troubles for European manufacturers, which it says are now suffering from higher content costs because of new regulations on Cybersecurity, and the EU General Safety Regulation, which add between €500 and €1,000 to the costs of each car, and which has been absorbed by the manufacturers up till now.
“While mass EV adoption remains a long-term ambition for both the global auto industry and policymakers, pivoting to multilateral collaborations, like strategic partnerships and joint ventures, between global and Asian EV players is being embraced as a new formula for winning in the race,” Morgan Stanley said.“We continue to see high chances of new joint ventures forming between Chinese and European during the next year, to produce, distribute, and service Chinese cars in Europe.
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