Electric cars, after years of bombastic concepts and billion-dollar investments, are about to go to European exhibition halls in a big way. Now, however, it is more difficult to sell them with profits, Reuters writes. There is nothing new that electro mobiles, that are now at the Paris International Motor Show, reduce the profitability of carmakers which are staying in black numbers. However, fears are worse that the impact could be even worse as consumers are reluctant to pay more money for electric cars. And car manufacturers have to sell them with more losses to meet their emissions targets.
“Everyone has to realize that clean mobility is like organic food, it is more expensive,” said PSA Group Chief Carlos Tavares. “Either we will accept higher spending on clean mobility or endanger the European automotive industry,” he added.
Zero- and low-emission vehicles
The carmaker’s demands are on the rise. The European Parliament will vote on a proposal to reduce carbon dioxide emissions in new cars and boost the market for zero- and low-emission vehicles. People should reduce emissions by 45 percent by 2030 compared to 2021, an average of 95 grams per kilometer. Already with this limit, many automakers are facing problems and are facing fines of hundreds of billions of euros.
After a decade-long decline, carbon emissions from new cars are rising, as customers prefer sports cars to classic cars and gasoline engines to diesel. Diesel engines emit more oxides and particles, but less carbon dioxide.
There are already indications that the prices of electric cars may drop earlier and faster. It is compared to production costs, as automakers are adapting to emission requirements and weak demand. For example, Volkswagen has already announced that the I.D. will be sold at a similar price as the conventional-drive Golf.
“VW is going to market electric cars at the same price as gasoline-powered cars. Thus losing,” said Laurent Petizon of the AlixPartners consulting firm. He believes car manufacturers have already taken into account their fines for failing to meet emission limits in 2021 in their sales strategy.
The threat to automakers and jobs
The cost of production of electric cars is, according to AlixPartners, 7800 euros higher than conventional car production. Hybrids with a combustion engine and a smaller electric motor cost more than 5,000 euros. When you count this difference in the sales price, there is no power to sell.
“This has a major impact on the profitability of the automotive industry. The demand does not even justify the investment – it’s all regulation,” said Rebecca Lindland, analyst at Kelley Blue Book. The European Automobile Manufacturers Association (ACEA) has already warned of an imminent threat to 3.4 million jobs in the sector. “The conditions for such a system change are obviously not met. Electric cars are simply not ready,” ACEA Secretary General Erik Jonnaert said recently.