Europe car industry crisis: Falling sales, China competition

(ANSA) - ROME, OCT 2 - Slowing the production of cars with internal combustion engines down and at the same time drive the production of cars with electric engines forward - these are the goals set by the European Union and its member states. Despite subsidies for EVs introduced in some countries, sales of electric cars are crashing and the European car market is plunging into crisis.
    The automotive sector in Europe is facing a crisis. Instead of growing, the market for electric vehicles (EV) is slowing down, undermining the European Union's ambitious targets to end diesel and petrol car sales by 2035.
    Attempts to boost electric car sales with state e-car purchase bonuses have failed. The sales of European e-cars are not helped by strong competition from Chinese EV manufacturers. What causes these problems and how do European carmakers expect the EU to act? European auto industry urges assistance ahead of rule tightening European carmakers in September asked the EU for "urgent" assistance as they contend with slumping electric vehicle sales and stricter emissions regulations due in force next year.
    The European Automobile Manufacturers' Association (ACEA) said the industry was trying its best to comply with decarbonisation targets, but was hamstrung by problems including a shrinking electric car market, lack of charging infrastructure and poor EU manufacturing competitiveness.
    In a formal request to the European Commission, the industry lobby group asked "EU institutions to come forward with urgent relief measures before new CO2 targets for cars and vans come into effect in 2025".
    Europe has been racing to produce more electric cars as part of its green transition, with the clock ticking on an EU deadline to phase out the sale of fossil fuel-burning cars by 2035.
    However, after years of growth, electric car sales began falling at the end of 2023, and now account for just 12.5 percent of new cars sold on the continent.
    "We are missing crucial conditions to reach the necessary boost in production and adoption of zero-emission vehicles: charging and hydrogen refilling infrastructure, as well as a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a secure supply of raw materials, hydrogen and batteries," it said further in the ACEA statement.
    The lobby group asked the European Commission to bring forward a planned review of the CO2 regulations, which is currently slated for 2026 and 2027.
    Czech Transport Minister Martin Kupka wants the impact review of the ban on the sale of new cars with internal combustion engines in the EU brought forward to as early as next year, the Transport Ministry said in a press release.
    According to Sofia Alves, head of the European Commission's Administrative Capacity Building and Programme Implementation II (REGIO.E) directorate, the automotive industry will have to transform to achieve Europe's goals for a carbon-neutral economy - which should bring benefits to everyone.
    Since the technology of electric mobility should become available quickly and at affordable prices, the European Commission recommends manufacturers to work with universities and research and development centres (R&D) in that direction, she said in an interview for the Bulgarian News Agency (BTA). It was a collective effort of the EU, member states and the automotive industry. All participants in the process would have to pay part of that price, but the goal was bigger and more important, Alves argued.
    German car giants' woes ripple across Europe Troubles facing carmakers in Germany, a country with a large automotive industry including brands like the Volkswagen Group (VW) and BMW, have an impact on other countries' industries, too.
    German manufacturers are struggling with weak sales figures and the high costs of switching to electric drive systems.
    Mercedes recently had to cut its profit forecast for this year due to stuttering sales in China. Previously, BMW had lowered its sales and profit expectations for the current year. For the first time in 30 years, Volkswagen could face compulsory redundancies and plant closures. According to a media report, the European auto giant could cut 30,000 from its 300,000 jobs in Germany.
    The cuts in Germany are being closely watched by European countries cooperating with VW. For instance, the Slovenian automotive industry, which represents around ten percent of the national gross domestic product (GDP), is export-oriented and Germany is among its most important markets. "We are monitoring the situation both at the level of our key markets and at the level of the key customers of the Slovenian car industry," Economy Ministry State Secretary Matevž Frangež said.
    In Portugal, Volkswagen's Autoeuropa plant located in Palmela, south of Lisbon, continues to have a major economic impact on the country, contributing 1.3 percent to the GDP in 2023, and is also the major foreign investment ever made in the country.
    In Germany, a number of factors have been identified as to why the car industry is getting into difficulties.
    Stagnating e-mobility: The cancellation of the federal subsidy in Germany last year has caused demand for battery cars to collapse. The factories are not being utilised to capacity and there is a threat of high fines due to the stricter EU fleet targets for CO2 emissions from 2025. Politicians' flip-flopping about electromobility was also unsettling customers and led to distortions, German industry expert Frank Schwope said. (ANSA).