(February 20): European passenger car deliveries rose 11% in January as automakers such as Volkswagen AG and Stellantis NV cleared order backlogs and demand for electric vehicles recovered.
The European Automobile Industry Association announced on Tuesday that new car registrations rose to 1.02 million last month. Fully electric vehicles (EVs) accounted for 11.9% of total vehicle deliveries, up from 10.3% a year ago, as automakers look to resume purchasing amid intensifying price competition.
Automakers continue to benefit from healthy orders, but will have a harder time recovering to pre-pandemic levels this year. The region’s three biggest car markets – Germany, Britain and France – are experiencing economic slowdowns, adding to the worries of consumers struggling with high borrowing costs.
“A reversal of the trend in which demand has outstripped supply since the second half of 2020 is pushing up prices and margins,” said Bloomberg Intelligence analyst Michael Dean and Bloomberg Intelligence analyst Michael Dean. “However, this remains a key industry risk this year as auto production normalizes and orders slow.” Gillian Davis said in a note:
Bundesbank President Joachim Nagel said Germany’s economy could contract slightly in the first quarter, while France cut its economic outlook on Sunday, predicting growth would be only 1% this year. Expect. Britain fell into recession in the second half of last year.
A softening would further heighten concerns about slowing EV growth. Battery electric vehicle deliveries rose 29% in January, but market share was at its lowest in a year.
Dean and Gillian said EV market share “may stall this year due to consumer apathy,” predicting only a modest increase of 16% of sales.
Cooling enthusiasm for the EV transition is putting pressure on automakers to readjust their strategies, while they remain constrained by increasingly strict European Union regulations to cut CO2 emissions.
Governments in Germany and elsewhere are squeezing demand and cutting back on incentives. And while Tesla’s price war makes cars more affordable, it’s also rippled through the industry as the collapse in used EV prices deters buyers from switching.
Many manufacturers are delaying the release of new models, and rental car companies are cutting back on purchases of their vehicles. Renault SA, which is planning a major product refresh this year, is in talks with other automakers to reduce the cost of new EVs through partnerships.
“We do not expect EU battery electric vehicle sales growth to improve over the course of the year,” Citi analysts led by Harald Hendrikse said in a note.