According to Bloomberg, at the New Year's reception of the German Association of the Automotive Industry (VDA), German Minister of Transport Volker Wissing emphasized the importance of "technological openness" in reducing traffic emissions. He pointed out that excessive focus on pure electric vehicles by policymakers and manufacturers poses a risk to Germany's crucial automotive industry, while the electric vehicle sector faces the risk of declining demand.
For years, BMW Group CEO Oliver Zipse has expressed a similar viewpoint, advocating for the establishment of flexible production lines to produce internal combustion, hybrid, and even hydrogen-powered vehicles. His cautious strategy, similar to that of his predecessor, has been criticized for not being proactive enough in challenging leaders in the electric vehicle market, such as Tesla. However, with the slowdown in the electric vehicle market and the resurgence of plug-in hybrid cars, BMW's cautious strategy now appears to be a reasonable choice.
Jan Burgard, Head of Automotive Consulting at Berylls Strategy Advisors, stated, "The outlook for electric cars in Germany this year is not optimistic. The high-end electric car market is almost saturated, and there is limited product choice in the sub-€25,000 segment."
After years of rapid growth, selling electric cars is becoming increasingly challenging. The popularity of electric cars is facing challenges due to reduced government incentives in Europe and a decline in the number of eligible vehicles in the United States. Despite new models and flexible leasing options attracting electric car enthusiasts, infrastructure and pricing remain significant obstacles to the widespread adoption of electric cars years into the electric vehicle revolution.
According to lobbying group VDA's data, Germany's electric car sales are expected to decline by 14% this year, the first drop since 2016, as the German government canceled subsidies in December. Globally, despite Tesla sparking a price war, electric cars remain much more expensive than equivalent internal combustion vehicles, leading market analysts to revise down their electric vehicle sales forecasts.
The February 1st event aimed to bring some optimism to the increasingly dim industry. Wissing praised German automakers, stating that their technology is globally acclaimed. When asked how the German government would support the domestic electric car market, he suggested an idea - "charging infrastructure."
However, progress in charging infrastructure by the German government has not met expectations. In October 2022, Wissing launched an ambitious strategy, planning to invest €6.3 billion (approximately $6.85 billion) to increase Germany's charging stations to 1 million by 2030. However, according to data from the German infrastructure management agency, as of September last year, Germany had only about 105,000 available public charging stations. At the current construction pace, Germany needs to double the construction speed to achieve the 2030 goal.
The challenge of charging stations and the question of who will bear the cost remain unresolved after years of electrification transformation. Decision-makers and industry representatives at the event acknowledged that charging is crucial to reignite interest in electric cars, but no one was willing to clearly state who should fund such infrastructure expansion or how to fund it. Analysts from Deutsche Bank pointed out that Germany's continuously rising electricity prices further dampen demand.
Another challenge in promoting electric cars is the high cost. The automotive industry alliance must get 15 million electric cars on the road by 2030, or it faces the risk of not meeting emission targets. As of November last year, there were only about 1 million electric cars on German roads, accounting for 2% of all registered vehicles. Therefore, some analysts believe that achieving the 2030 goal will be a challenge without further subsidies.
"At present, achieving 15 million electric cars on German roads by 2030 is not realistic," said automotive consultant Burgard.
Currently, automakers have begun to hedge against risks. Volkswagen's Audi brand is reducing its electric car product line, and Volkswagen is reconsidering plans to sell shares of its battery division. If the temporary slowdown in the electric car market turns into a long-term slump, it could affect industry investments of billions of euros and mean that automakers cannot keep up with new emission regulations.
Meanwhile, according to data from the automotive industry institution DAT, the prolonged process of promoting electric cars is causing drivers to use heavily polluting old cars for longer.
For BMW's Zipse, this time might be the right bet. Last year, in an interview with the German newspaper Handelsblatt, he even accused those who belittle internal combustion engines of being "negligent" because electric cars still have a long way to go. He asked, "Do you think that within twelve years, regions like southern Italy will have charging stations in every village?"
