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The big miss on electric cars is remaking Europe's auto industry

Albertina Torsoli, Stefan Nicola, Monica Raymunt, Bloomberg News on

Published in Automotive News

Still, the misalignment between expectations and reality is causing pain. At its electric-car hub in the eastern German city of Zwickau, Volkswagen let go more than 200 temporary workers and cut a shift on one of its assembly lines. While overall passenger-car sales rose 11% in January in Europe, analysts are expecting the share of EVs to broadly stall this year due to consumer apathy.

The talks on EV cooperation may prove critical for Volkswagen as the auto giant struggles despite massive investment. In the aftermath of the 2015 diesel scandal, Europe’s largest carmaker laid out what was arguably the industry’s most ambitious EV push under then-CEO Herbert Diess. But buggy software delayed key electric models, contributing to his ouster in 2022.

His successor Oliver Blume walked back many of the initiatives, including scrapping a €2 billion factory in Germany. Executives have told workers to prepare for additional cost cuts this year.

Unless they can get strategies back on track, Europe’s automakers risk falling further behind, and the effort to meet regulatory rules might mean paying more money to Tesla for emissions credits — handing the company pure profit.

They may have one last shot. VW, Stellantis and Renault are all independently working on models costing €25,000 or less, while Mercedes and BMW plan to roll out several new EVs with improved technology by mid-decade.

 

The last resort might be appeals for more trade and regulatory protection. The EU is due to review plans to phase out conventional cars, and manufacturers are already preparing a coordinated lobbying effort soon after European parliamentary elections in June, according to people familiar with the matter. The European Commission is investigating the extent to which China has supported its EV industry in a probe that could result in the levying of additional tariffs as early as July.

While delaying the end of the combustion-engine car might offer respite, it won’t fix the competitive issues bogging down Europe’s transition into the electric era.

“Among CEOs and in boardrooms, there’s a lot of nervousness and a lot of wait-and-see in terms of how 2024 pans out,” said Alexandre Marian, a managing director at AlixPartners in Paris.

(With assistance from Elisabeth Behrmann and Craig Trudell.)


©2024 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.

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