BEV Slowdown Sparks Alarm, Rivalry Among European Automakers

Consumers in Europe are not buying battery-electric vehicles in the numbers automakers had expected this far into the anticipated transition from the internal-combustion engine.

And that slowdown in demand for BEVs now threatens to throw the continent’s automotive industry into disarray, confusion and destructive rivalry.

That’s because it is driving a wedge between the main industry players who have largely thrived on a consensus of how vehicles need to evolve to meet consumer needs while maintaining healthy competition between the numerous brands.

We now see automakers divided on how fast the electrification of the continent’s vehicle fleet can be achieved at a time when they face the fiercest attack on their markets since the 1970s. Yet, while the Japanese automakers’ expansion into global markets was at least trade on a level playing field, the current influx of cheaper products from Chinese brands is bolstered by unfair state subsidies.

Chief among the issues facing Europe’s automakers are the potential punitive fines that government regulators are likely to impose over ever-increasing targets to lower tailpipe emissions.

Renault’s boss Luca de Meo was among the first to call for more flexibility by European Union regulators over emissions targets that cannot be met as consumers lose interest in making the switch to relatively expensive BEVs while charging infrastructure remains inadequate.

As WardsAuto reported, he warns that automakers could be facing billions of euros in fines for not meeting these emissions targets due to be enforced next year. He says: “Everyone is talking about 2035, in 10 years (EU’s deadline for only zero-tailpipe-emission new vehicles and, possibly, carbon-neutral ICE powertrains), but we should be talking about 2025 because we are already struggling. We need to be given a little flexibility. Setting deadlines and fines without being able to make that more flexible is very, very dangerous.”

Volvo Car’s CEO spelled it out when scrapping his company’s ambition to be a wholly BEV manufacturer by the end of the decade. He says: “Many people are just not ready to make the change to pure-electric transport. Maybe it’s the charging infrastructure, or the speed of charging is not quite there yet.” At the same time, he commits Volvo to continue to invest in gas-hybrid technology for as long as customers want them.

Now Volkswagen Group’s Hans Dieter Pötsch calls for easing of CO2 targets amid sluggish BEV adoption in Europe. The chairman of the automaker's supervisory board argues electric mobility needs more time to succeed.

Speaking at the Vienna Electric Days event, Pötsch emphasizes the need to recalibrate upcoming emissions goals to reflect the current market landscape.

“We now know that demand for electric cars in Europe is falling far short of expectations,” Pötsch tells media representatives. “Electric mobility will succeed, but it will take more time. Therefore, the CO2 targets for 2025, 2030 and 2035 must be adjusted to align with reality.”

Pötsch’s comments refer to the EU's phased regulations that require automakers to progressively lower their fleet’s CO2 emissions. Automakers who fail to meet these targets face substantial fines, with the primary solution being to increase the production of EVs.

However, Pötsch, who also chairs Porsche Holding, describes the industry as facing a double dilemma.

"The government imposed these regulations without ensuring the necessary infrastructure was in place and without fully considering whether customers were ready to adopt electric vehicles," he says.

Several other car manufacturers have already appealed to the European Commission, led by President Ursula von der Leyen, for greater flexibility in meeting the emissions targets.

The Volkswagen Group reported a 1% drop in global sales during the first half of 2024, selling 4.5 million vehicles compared to the same period in the previous year. Sales of electric vehicles also declined 1%, with 317,000 EVs sold, according to company figures released in July.

Also, BMW’s CEO Oliver Zipse tells WardsAuto during the annual accounts call that: “We believe a comprehensive review of CO2 fleet legislation in the EU is essential. Something that's not taken into account (is) that it is the free decision of millions of customers (to mak, or not make, BEV purchases).

“It's not like the energy infrastructure, where you can switch something off and then something else happens automatically.”

Citing the EU’s target of a 25% CO2 reduction from 2021 levels by the end of next year, Zipse adds: “By the end of 2025, the world will note that it is not that easy. By then, the pressure will be significant for the European automotive industry.”

However, Stellantis looks set to break ranks from other European-based automakers by calling for EU regulators not to bow to pressure to delay the emissions targets.

CEO Carlos Tavares makes the call in remarks to the Agence-France Presse news agency setting up a potential clash with his fellow European automakers.

Stellantis’s joint venture with China’s Leapmotor, Leapmotor International, began shipping its first BEVs into European markets in July. This 51%-49% Stellantis-led entity enters the market with affordable C10 and T03 models built in Leapmotor’s Chinese plants.

Tavares says: “It would be surreal to change the rules now. Everyone has known about the rules for a long time and has had time to prepare, and so now it’s time to have a race.”

His comments are a clear snub to the European Automobile Manufacturers’ Assn. (ACEA), which drafted a proposal calling for the EU to take emergency measures to delay the emissions target deadline by two years.

Its statement on the ACEA website says: “The EU automotive industry has invested billions in electrification to put vehicles on the market, but the other necessary ingredients for this transition are not in place and the competitiveness of the EU is eroding.”

Further Challenge

There’s another big hurdle threatening to undermine some automakers’ bottom lines and that’s the European Commission’s punitive tariffs placed on vehicles built in Chinese factories. These affect BMW’s Mini Electric and Cupra’s only BEV, the Tavascan SUV.

While BMW may be able to absorb the tariffs, the smaller Cupra brand, the performance spin-off of the VW-owned SEAT brand, could be “wiped out,” according to its boss.

CEO of Cupra and SEAT, Wayne Griffiths, says the expected total tariff of 31.3% on the imported Tavascan could push the specialist brand into receivership. He says: “It puts the whole financial future of the company at risk. The intention (of tariffs) was to protect the European car industry but, for us, it's having the opposite effect...We need to find a solution.”

Conversely, Stellantis is not worried for the future of its Leapmotor International JV. A company spokesperson explains it can deploy the knocked-down kit model assembling cars at its European plants, while confirming that the Leapmotor T03 model is already being assembled at its manufacturing site in Tychy, Poland.

The spokesperson says: “The models can be assembled in any Stellantis plant worldwide if economically viable. Localizing production meets diverse market needs, with plant selection based on quality, cost and available capacity, though specific destinations are not yet disclosed.”

So, the battle lines seem to be drawn with the prospect of big winners and losers among the European automakers.

If all the pressure on regulators to delay targets and/or ease tariffs doesn’t work, perhaps the proposed EU plan to allow new internal-combustion-engine vehicle sales beyond 2035 using carbon-neutral fuels may provide something of a lifeline.

Industry-watchers will also be keeping a keen eye on what happens in the U.K. should its new government proceed with its stated ambition to ban all but BEV new-car sales as soon as 2030 with no exemption for powertrains employing ICE technology, including hybrids. If consumers maintain their wariness over BEV technology suiting their many different needs, new-car sales in that nation will simply fall off a cliff.