As it stands, 2024 seems to be a year full of challenges for the European automotive market.
In some aspects, the decline in new car sales in March in Europe also highlights the pressure that car manufacturers are facing amidst rising interest rates, sluggish economic growth, and the gradual reduction of subsidies stimulating demand for electric vehicles.
The first-quarter sales of pure electric vehicles by Volkswagen Group, Mercedes-Benz, and Tesla have all decreased, a trend that is prompting some traditional car manufacturers to reconsider when to phase out internal combustion engine vehicles gradually. Some car manufacturers have even postponed their electric vehicle targets.
It is reported that Mercedes-Benz announced on February 22 that it would delay its electrification target by five years and assured investors that it would continue to improve its internal combustion engine models. Mercedes-Benz expects that by 2030, sales of electrified vehicles, including hybrid cars, will account for 50% of its total sales, five years later than previously predicted.
Against this backdrop, Tesla is also adjusting its strategy. On April 15, Tesla sent an email to all employees announcing a global 10% workforce reduction. Tesla CEO Elon Musk emphasized in the email, "Reducing costs and increasing productivity are extremely important from every aspect of the company."
Despite a series of new electric vehicle models attracting more consumers in European markets such as France and the UK, inadequate charging infrastructure remains one of the factors hindering consumers from purchasing electric vehicles. Some European consumers are even turning to models equipped with both batteries and internal combustion engines: plug-in hybrid car sales in Europe increased by 0.7% last month, while sales of pure electric cars, gasoline cars, and diesel cars declined by 11%, 8%, and 18% respectively during the same period.
With weak demand for electric vehicles, European governments are gradually phasing out incentives for electric cars. Renault Group Chairman Jean-Dominique Senard pointed out, "Subsidies should not be forever, but we need them now. Germany's decision to end subsidies last December has greatly disrupted the stability of the electric vehicle market, which could lead to a certain degree of demand decline, especially in 2024."
Weak market demand, cancellation of incentives, range anxiety, uncertain economic prospects, and lack of affordable models are limiting the further popularization of electric vehicles in Europe. As Volkswagen Group and Stellantis have said, due to weak global demand for electric vehicles, intensified competition from Chinese competitors, ongoing cost pressures, and geopolitical tensions, the market in 2024 will be very challenging.
However, market research firm GlobalData predicts that the Western European market will achieve its strongest annual sales performance since the COVID-19 pandemic in 2024.
GlobalData expects that in March, passenger car registrations in Western Europe reached 1.3 million units, a year-on-year decrease of 2.5%, but thanks to strong growth in France, Italy, and the UK in the first three months of this year, as well as mostly positive results in other countries, cumulative passenger car sales in Western Europe increased by 4.7% in the first quarter.
Due to a more favorable supply environment, GlobalData predicts that passenger car sales in Western Europe will exceed 12 million units in 2024, marking the strongest annual sales performance since the COVID-19 pandemic began.
