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Standing at the front of the car industry’s New Year’s reception in Berlin this week, BMW CEO Oliver Zipse had reason to feel vindicated.
On stage, Transport Minister Volker Wissing spoke to a crowd of policymakers and industry executives about the importance of “open technology” in reducing transportation emissions.
He said Germany’s most important industry was at risk as policymakers and manufacturers focused solely on battery-powered cars, and that weak demand for EVs in Europe’s largest car market was his message. He said that it is having an impact on.
Zipse has been making the same point for years, advocating flexible production lines for internal combustion engines, hybrid vehicles, and even hydrogen vehicles. His cautious strategy is in line with that of his predecessor, but he has been criticized for not being aggressive in taking on electric car giant Tesla.
Well, it seems that Gypse was looking into the future. With EV adoption slowing and plug-in hybrids coming back from the sidelines, BMW’s cautious approach no longer seems like such a bad idea.
“Demand for electric cars in Germany is not good this year,” said Jan Burgaard, head of automotive consultancy Beryls Strategic Advisors. “The upper end of the EV market is almost saturated, and the lower end, the €25,000 segment, has little to offer.”
After years of rapid growth, EV sales are getting tougher. Generous government incentives are disappearing in Europe, and fewer vehicles are eligible for them in the United States. While a variety of new models and commitment-lite lease options are capturing the attention of electric enthusiasts, the EV revolution has been underway for several years, but infrastructure and price remain obstacles to widespread adoption.
Sales in Germany are expected to fall by 14% this year after the government ended subsidies in December, according to the VDA lobby group, the first decline since 2016. Despite the price war started by Tesla, market watchers globally are lowering their forecasts amid the persistent reality that cars are far more affordable than comparable internal combustion engine vehicles.
Thursday’s event was an attempt to inject some optimism into an increasingly challenging industry. Wissing praised the German automaker, saying its technology was “recognized abroad.” When asked what the government could do to strengthen Germany’s EV market, the Transport Minister suggested one idea: “charging infrastructure.”
However, Berlin lags behind in this respect. In October 2022, Wissing launched an ambitious strategy to invest 6.3 billion euros ($6.85 billion) in national infrastructure and increase the number of charging stations in Germany to 1 million by 2030. Ta.
It didn’t go as quickly as planned. As of September last year, there were only about 105,000 functioning public charging stations in Germany, according to infrastructure authorities.
The VDA pointed out that if Germany wants to meet its 2030 target, it will need to build three times as fast at its current construction rate.
The charging conundrum and who pays for it remains unresolved years after the EV transition began. Policymakers and auto industry representatives at the VDA event agreed that charging is key to reigniting interest in EVs, but they are not sure who or how to fund such infrastructure expansion. No one wanted to say whether it should be offered. Rising power prices are further constraining demand, according to a Deutsche Bank analyst note.
Another major challenge to EV adoption is price. The coalition will have to meet its goal of having 15 million EVs on the road by 2030 or face missing emissions targets. As of November, there were only about 1 million cars, or 2% of all cars. — Germany’s roads were completely electric. Without further subsidies, some analysts believe it will be difficult to meet the 2030 target.
“From today’s perspective, I think it’s unrealistic that there will be 15 million EVs on German roads by 2030,” said Burgaard, an automotive consultant.
Car markers have already begun to avoid risks. Volkswagen’s Audi brand is reducing its EV lineup, and Volkswagen is taking a step back from plans to sell a stake in its battery division. If the EV slowdown turns into a long-term recession, it could erode billions of dollars in industry investment and leave automakers unable to meet new regulations to reduce emissions.
Meanwhile, the road to EV adoption is getting longer, with drivers continuing to drive older, polluting cars for longer periods of time, according to DAT, which collects automotive industry data.
All of this could be considered a victory lap for BMW’s Zipse. In an interview with Handelsblatt newspaper last year, he went so far as to criticize those heralding the end of the internal combustion engine as “negligent” given how far EVs have come.
“Do you think that in regions like southern Italy, every village will have a charging station within 12 years?” he said.
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