“Toxic mixture”: Why are electric cars selling so poorly?

“Toxic mixture”
Why are electric cars selling so poorly?

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Actually, 15 million electric cars should be on German roads by 2030. But this goal is becoming a long way off, the electric cars are simply not selling well enough. Jan Burgard from the Berylls specialist consultancy explains why the technology has a problem – not just in Germany.

Sales of electric cars are collapsing and funding has been stopped. How big are the problems for the industry?

Jan Burgard: The situation is serious. If you compare new registrations of electric vehicles this quarter with those in the first quarter of last year, we see a decline of 14 percent. If you extrapolate this, it seems very unrealistic that the target of 15 million electric vehicles will be achieved in 2030.

What are the reasons for this slump? Is it just due to the loss of funding?

Certainly not. We see that electromobility is also weakening in other countries, for example in the USA. There is a specific problem in Germany. The customer is basically extremely confused. Legislation is being weakened and there are discussions about e-fuels. There is an effect that is similar to the heating law. Many people think: I’ll quickly buy a combustion engine before it’s banned.

Is the electric car not attractive enough?

If you look closely, the vehicles are simply more expensive to purchase. Leasing is also difficult because there are problems with residual values. Business is weakening most among private customers. The incentives to buy are no longer available, the vehicles are more expensive, the residual values ​​are unclear and you don’t know exactly what the total costs will be. Then there is the fear of range and you can see how difficult the decision is for the individual customer.

There is still a large price difference between electric cars and comparable combustion models. Where does this come from and why hasn’t the industry managed to compensate for it yet?

The first problem is the battery, which accounts for most of the manufacturing cost. Two out of three of the batteries currently used come from China, which means that manufacturers are dependent on them. So there are no economies of scale for essential modules that could reduce costs. Companies have to be restructured and new money has to be invested in order to reach a certain level of maturity. Something like this always comes with higher costs.

But the manufacturers have tried to adapt to this. Some car manufacturers have entered battery production or have bought into it. Why couldn’t the problems be solved in this way?

Basically, Chinese battery manufacturers like CATL have a large lead in experience that is difficult to catch up with. We are lagging behind in many different areas. If demand weakens now, there will be a double effect. You can’t gain the experience as quickly as necessary. And the cost disadvantage lasts even longer. It’s a toxic mix at the moment.

China has a comparatively high proportion of electric cars, also because the authorities are increasing the pressure to buy through regulations. For example, the issuing of a vehicle license plate is often linked to the purchase of a battery-powered vehicle. Does Europe also need more such pressure?

At least you have to put the technology on the horse, including through regulatory aspects. Taking the Netherlands as an example, you can see that carbon taxation impacts the overall cost of car ownership. Norway is another example. Then the electric vehicle will be cheaper than the combustion engine. But it’s not just the legislation that’s enough. The offer must also be there and the necessary charging infrastructure. A lot of things have to come together. And we’re not doing particularly well in Germany at the moment.

Nils Kreimeier spoke to Jan Burgard

Listen in the new episode of “Zero Hour

  • Why Chinese car manufacturers are encountering problems in Europe
  • Where German companies still have a clear lead
  • Whether the Germans can expect a purchase premium again

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