EU EV Sales Down 44% in Aug, Hybrids Grow Against Trend

According to recent data released by the European Automobile Manufacturers' Association (ACEA), the European Union's new car registrations in August decreased by 18.8%, with the four major markets of Germany, France, Italy, and Spain all experiencing negative growth.

The lack of demand for electric vehicles may become the main reason for the European car market's downturn. Electric vehicle sales plummeted by 43.9% in August, and their market share has dropped from 21% last year to 14.4%. This marks the fourth consecutive month of decline this year, in stark contrast to the continuous growth seen last year.

Due to the weak performance of electric vehicles, European automotive giants such as Volkswagen, Mercedes-Benz, and BMW have all downgraded their performance guidance for 2024, with Volvo even announcing the abandonment of its plan to sell only electric vehicles by 2030.

Another consequence of the slower-than-expected transition to electrification is that large automotive groups have to try to adjust their organizational structures to cope with performance pressures. Recently, the largest European automotive group, Volkswagen Group, has been rumored to lay off 30,000 workers and close a domestic car manufacturing plant and a parts factory. According to foreign media reports, another major European automotive group, Stellantis Group, is also planning layoffs, with the first round of layoffs possibly reaching 11,000 people. Parts giants such as Bosch, ZF, and Continental are also facing the dilemma of layoffs or factory closures.

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The long-term stable competitive landscape of the European car market is facing the risk of being disrupted. This could become the best opportunity for Chinese car companies to enter the European market. In this regard, Cui Dongshu, Secretary-General of the Passenger Car Association, told reporters from Time Weekly that the wave of layoffs and the obstruction of the electrification transition are an opportunity for Chinese car companies to enter the European market.

New car sales hit a 3-year low

In August, the European car market as a whole decreased by 18.3%, falling to the lowest level in nearly three years. Affected by this, the new car sales volume in Europe from January to August this year only increased by 1.4%, with a total close to 7.2 million vehicles.

Electric vehicles are the sub-market with the largest decline. In August, electric vehicle sales decreased by 43.9% to 92,627 units, of which the sales in Germany and France, the largest electric vehicle markets in the EU, respectively decreased by 68.8% and 33.1%.

The sales of plug-in hybrid vehicles also decreased by 22.3% to 45,590 units, with almost all major markets experiencing a decline. Affected by this, plug-in hybrid vehicles in August only accounted for 7.1% of the entire car market, lower than 7.4% last year.

Petrol cars, not surprisingly, also experienced a decline, with a 17.1% decrease in August, and significant downturns in the four major markets of France, Italy, Spain, and Germany. Petrol cars hold a market share of 33.1%, lower than 32.6% last year.Surprisingly, hybrid vehicles were the only segment to grow in the European market in August. New car sales increased by 6.6% to 201,552 units, with market share rising from 24% in August 2023 to 31.3%.

The growth in hybrid vehicle sales cannot mask the fact of a weak market. Some believe that the poor performance in August could be a signal that the European car market is entering a downturn. Volkswagen previously stated that European car sales are below pre-pandemic levels, and this trend may continue in the future.

Bosch CEO Stefan Hartung, a global automotive parts supplier giant, said in an interview with Reuters that global automotive market demand is lower than expected five years ago and it will take several years to recover.

Regarding the performance of the European car market in August, Zhang Junyi, a managing partner at Oliver Wyman, analyzed to a reporter from Times Weekly that the decline in the European car market is mainly due to the not very optimistic performance of the European economy. "Due to the early withdrawal of subsidies, coupled with the rise in electricity prices across the market, the sales of electric vehicles will inevitably decline," Zhang Junyi said.

Yi Ran, who has been observing the European market for a long time, told the reporter that European countries have not introduced timely rescue market policies similar to the old-for-new subsidy and the exemption of purchase tax for electric vehicles. It is reported that in order to revive the market, Germany agreed in September to provide up to 40% tax relief for electric vehicle manufacturers.

The "emergency braking" of the European car market may have an impact on the overseas expansion of Chinese car companies.

The overseas expansion of Chinese car companies is unstoppable.

The Chinese electric vehicle market presents a different situation.

Data from the Passenger Car Association shows that in August, the sales of new energy vehicles increased by 43.2% year-on-year to 1.027 million units. Among them, pure electric vehicles increased by 18.5% to 583,000 units, and plug-in hybrid vehicles increased by 96.9%, reaching 444,000 units. In August, the penetration rate of new energy vehicles once again exceeded 50%, reaching 53.9%.

In August, the domestic new energy vehicle sales were more than 7 times that of the European market, and the penetration rate was 2.5 times that of the European market. The significant lead in market size and penetration rate provides opportunities for Chinese new energy vehicles to enter the European market.The industry generally regards China as the center of the future global electric vehicle market, following China's growth into the world's largest automobile market and the largest automobile exporter.

The development of new energy vehicles has become a consensus among countries worldwide. Against this backdrop, the global expansion of Chinese electric vehicles is unstoppable.

The European Automobile Manufacturers Association (ACEA) once attributed the sluggish demand for electric vehicles in Europe to several reasons.

The lack of charging infrastructure, the absence of a competitive manufacturing environment, the shortage of affordable green energy, purchase and tax incentives, and the lack of secure supply of raw materials and batteries are among the issues. Consumer acceptance and trust in infrastructure have also not been fully developed.

It is worth mentioning that the major disadvantages listed by the European Automobile Manufacturers Association (ACEA) happen to be the advantages of Chinese electric vehicles.

Chinese electric vehicle brands achieved a market share of 19.5% in the European electric vehicle market in 2023. This has led to an increasing number of European consumers gradually recognizing and choosing Chinese automotive brands. Although this year, due to additional tariffs and other factors, the market share of Chinese brands in Europe has declined to some extent. However, in the long term, the ambition of Chinese brands to enter the European market remains unchanged.

In April of this year, Chery acquired an automobile production plant in Spain, which is Chery's first production base in Europe and also fired the "starting gun" for Chinese cars to build factories in Europe to achieve localized production.

BYD is building new factories in Hungary and Turkey and announced the acquisition of its distributor in Germany at the end of August. These are all important moves for BYD to establish a foothold in Europe.

In addition, SAIC Motor, Dongfeng Motor, and other Chinese automotive companies all have plans to establish factories in Europe, and European automotive production powerhouses such as Spain and Italy are also using a series of preferential policies to attract Chinese car companies to build factories locally.

These signs all indicate that Chinese brands are seeking a place in the European market through localized production.