Battery life and price are big issues? French media: Electrification hits European car sales

The French newspaper Le Figaro recently reported that the electrification of the automobile market is affecting the sales of european cars.

According to the report, due to the impact of the epidemic, new car sales in 2020 have stagnated, but sales in Europe last year have not recovered. Manufacturers have already estimated that new car sales in Europe will fall by 3.3 million in 2021, failing to return to the situation before the coronavirus crisis. New car sales in the EU reached a record 13 million at the time.

So, what happened on the European continent? Is this decline simply because a shortage of electronic components is hampering production? Are consumers getting discouraged by the rising prices of electric and hybrid vehicles favored by major car brands? Is the reason consumers are taking a wait-and-see approach to new regulations on carbon dioxide and pollutant emissions in Europe? The first thing to point out is that Europe is not the only continent affected by the shortage of semiconductors. Instead, it is the only market that is still declining (-2.4%) in 2021. Car sales in China rose again, up 3.8 percent year-on-year to 26.28 million units. Optimism is justified, as manufacturers expect growth of 5.4 percent in 2022. In the United States, too, the auto industry has regained its smile. Total car sales there in 2021 were 15 million units (including pickups and SUVs), up 3.4 percent.

So why is Europe more affected by chip shortages? Guillaume Clunelle, partner and head of automotive at Deloitte, said: "The Competition in Europe is very competitive, including a large number of semiconductor-intensive vehicles. The more advanced the vehicle, the more electronic components there are. In China, the same series of models is more diverse, and there are fewer hybrid models." He also believes that the geographical proximity of automakers to semiconductor suppliers has also played a role, with the latter more likely to be found in Asia and the United States. In Europe, not all manufacturers are in the same position. Renault, Nissan, Ford and Daimler saw their sales fall by 10% or more in 2021, while Toyota (+9.1%) and Hyundai (+18.4%) saw growth.

However, the chip shortage argument put forward by the European Automobile Manufacturers Association is not enough to explain the sales volume equivalent to the dismal years of the car. In Europe, the promotion of new electric vehicles is accelerating as sales of internal combustion engine vehicles are expected to stop by 2030. Of course, according to a survey conducted by Alex Partners in seven countries (France, Germany, Italy, the United Kingdom, the United States, Japan, China) and released in October last year, the number of drivers who "strongly support" buying an electric vehicle as their next vehicle has more than doubled on average compared to a similar survey conducted two years ago (25% in 2021 and 11% in 2019). In addition, the share of electric vehicles continues to grow in a shrinking market.

According to data provided by German expert Matthias Schmidt, in 2021, 21% of newly registered cars in Europe will be plug-in hybrids and 11.2% will be 100% electric. But not all motorists are determined to buy electric vehicles, which has contributed to a decline in sales in continental Europe. Deloitte's Guillaume Clunelle believes that "today, supply shocks, the price of a new electric car, are the biggest problem. In one of our upcoming studies, we found that 90% of people in France are not prepared to spend more than 50,000 euros on a new electric car, and even 74% may not spend more than 30,000 euros." Currently, very few models fit this price range. The Dacia Spring model is the cheapest on the market, starting at 17,000 euros. After deducting the eco-premium offer, the Peugeot 208 electric car costs less than 30,000 euros. But the new Renault Megane E-Tech electric car sells for between €30,000 and €45,000 after deducting eco-premium concessions.

According to Deloitte's research report, the first hurdle to buying an electric vehicle is range (25%), and the second hurdle is cost (18%). Deploying charging infrastructure in homes, workplaces and roads will increase the number of people buying electric vehicles. Instead, in order to reach cheaper prices, manufacturers will have to further reduce costs in order to keep profits.

(Refer to the news network)