Inicio EV The electric vehicle revolution is running out of steam

The electric vehicle revolution is running out of steam

The electric vehicle revolution is running out of steam
A worker fits the doors for an electric Volkswagen car at a plant in Germany
A worker fits the doors for an electric car at a Volkswagen plant in Germany. Some fear that European carmakers will be overtaken by Asian rivals as they transition to EVs © Krisztian Bocsi/Bloomberg

Thousands of imported vehicles, many of them electric cars made in China, are clogging up European ports. Along with falling sales at Tesla and BYD, the world’s two biggest sellers of battery-powered vehicles, it is a sign of trouble for the crucial shift towards green transport in the 21st century.

It was not supposed to be like this. Elon Musk made Tesla the world’s most valuable carmaker and one of the “magnificent seven” US tech groups by outflanking incumbents in luxury EVs. BYD is among the companies that transformed the Chinese market by making low-priced EVs with official backing, and are now expanding overseas.

But strains are emerging as governments and carmakers try to convert the market to EVs and to phase out internal combustion engines by the 2030s. Many car buyers are now balking at the prices of EVs compared with hybrids and petrol or diesel cars — particularly amid the rising the cost of living in recent years.

They are also worried by the lack of reliable and fast charging networks. A survey by S&P Global Mobility showed that about 45 per cent of consumers across countries cited concerns over the availability of charging stations, and the time required for charging, as reasons for not buying an EV.

The lull in EV sales is having a damaging impact on the auto industry. Tesla’s market capitalisation has fallen by nearly 30 per cent this year to about $560bn, compared with more than $1tn at its peak. Companies including Ford have delayed expansions of their range of EVs, hedging their bets with hybrid models.

This raises the worry that European and US carmakers will be unable to make an EV transition profitably and will be overtaken by Asian rivals. Luca de Meo, Renault’s chief executive, has called for the EU to adopt an Airbus-like approach to EV production, with more industrial co-operation and public investment. Renault’s worries are well founded: a quarter of EVs sold in the EU this year are expected to be made in China by brands such as BYD and MG.

Buyers have proved happy to switch to EVs if the price and the infrastructure are right. EVs represent a large majority of new car registrations in Norway, thanks in part to heavy financial incentives.

Carmakers fear what Carlos Tavares, chief executive of Stellantis, calls “jumping in the red ocean” with a price war. Tesla’s sales drops came after it cut prices on existing models: its planned “Model 2” lower-priced EV is not due to go on sale until 2026, and may be in doubt. China has a clear cost advantage in batteries and other EV technology.

This dip in sales could be temporary, and will ease as new models enter the market and costs fall. But investors worry that governments are pushing carmakers into untested territory and capital is being misallocated.

It is true that the slower EV shift could put targets for the green transition at risk, including the EU’s attempt to eliminate sales of new petrol and diesel cars by 2035, and the more gradual US approach.

But companies rarely prosper by telling customers they are wrong, and the same principle applies to governments. Mandating that carmakers produce more EVs does not guarantee that buyers want them. The EU may impose tariffs on Chinese EVs if it finds that they are unfairly subsidised but this could limit sales further, even if it protects the European industry.

So governments must work with carmakers to reduce obstacles to adoption. Economic and reliable charging networks to ease range anxiety are a priority. While Airbus is a flawed model, public investment is needed alongside private capital to make the EV transition work. Otherwise, consumers may keep revolting.