Compared to 2021, new passenger car sales have dropped by at least 11% and up to 20% in Germany, France, Spain, Italy, and the UK. Full electric vehicle (BEV) demand is increasing; internal combustion engine vehicle (ICEV), conventional hybrid electric vehicle (HEV), and plugin hybrid electric vehicle (PHEV) demand are decreasing throughout Europe. Put simply, BEV demand is increasing while fossil fuel vehicle demand is decreasing.
“Sales of internal combustion engine (ICE) and hybrid vehicles contributed to a majority of the shortfall, in contrast to battery electric vehicles (BEVs) continuing to establish themselves within the market,” Rethink Energy writes, leading to the question, has Europe reached peak PHEV and HEV?
Germany had the smallest reduction (11%), with over 1.4 million new vehicles registered in 2022. Spain has had a similar drop compared to 2021, but it has had the toughest time recovering from the COVID hit if you look back to 2019. It sold fewer than 500,000 vehicles within the first 7 months of this year, which is more than 300,000 below the 800,000+ sold in the same period in 2019.
Italy’s market fell the most since last year, over 20%.
Can European carmakers sell their ICEV inventories? Will we see massive price wars as competition heats up to move ICE cars? “The increasingly limited shelf-life, diminishing attractiveness, and decreasing overall sales volumes within the market have the potential to create a situation where companies struggle to offload current inventories.” And this applies to not just inventories of cars, but drivetrains, exhaust systems and other components that make up the ICE industry ecosystem.
The ever increasing demand for BEVs has led European governments to evaluate their use of subsidies. Germany is considering tapering down subsidies, as is France. The UK has already ended subsidies for passenger vehicles and is looking at other electric vehicles to encourage.
“As the policy currently stands, subsidies on vehicles under €40,000 will fall in Germany from €6,000 down to €4,500 at the beginning of 2023, then fall again to €3,000 in 2024. Cars priced between €40,000 and €65,000 will have their subsidy reduced from €5,000 to €3,000, with subsidies for cars priced over €45,000 to be terminated at the start of 2024. Subsidies for company cars and plug-in hybrid vehicles are also to be terminated at the end of the year.”
Will this lead to a sharp decline in BEV demand in Germany early in 2023?
European policy is further complicated by the Russian war in Ukraine. Encouraging the take-up of BEVs will reduce demand for Russian fossil fuels going into winter, thus increasing pressure on car manufacturers and their supply chains. Will there be warehouses full of unwanted mufflers?
“When looking at the volatility of the oil market and fuel prices over the last few months alongside the continuously increasing demand for BEVs, it is becoming increasingly clear that demand for ICE and hybrid vehicles has been irrevocably damaged within Western Europe.” BEV demand is increasing, ICEV demand is decreasing.
As BEVs become more price competitive and charging infrastructure rapidly expands, oil prices are going up and supply is being reduced. This is a script for the ever more rapid end of the ICE age in Europe.
Don't want to miss a cleantech story? Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.