What just yesterday seemed like irreversible progress can change the direction of movement. The global trend towards the transition to electric cars, which seemed inevitable, is now giving way to a return to cars with internal combustion engines. The evolution of technology and the market prove that even the most compelling trends can be adjusted under the influence of economic, political and technological factors.
Porsche is reviewing its electric strategy: gasoline engines remain in the game
Porsche car manufacturer reviews its course on electrification and will continue the production of cars with traditional internal combustion engines. The financial director of the company emphasized that there is a noticeable stand in the field of luxury cars trend in favor of gasoline engines, so Porsche will adjust its product plan according to market changes.
The German brand Porsche, known for its sports cars, originally planned, that by 2030, 80% of its model range will be electric cars. However, faced with declining demand for electric cars, the company has decided to keep petrol engines in its key Cayenne and Panamera models until at least the 2030s. Sales of the electric Taycan fell by 50% in 2023, while the diesel models – the 718 Cayman and Boxster – showed a 10% increase.
Porsche plans to update the Panamera and Cayenne models by adding hybrid versions. Also are considered the possibility of petrol or hybrid versions for future models originally planned as fully electric, such as the 718 and the new high-performance crossover.
Global slowdown in sales of electric cars
The electric car revolution is faltering: sales are falling, infrastructure is not keeping up, and drivers are returning to gasoline. A few years ago, it seemed that electric cars would quickly replace gasoline and diesel cars in Europe, China, and the United States. A large increase in sales was predicted, but the reality turned out to be different.
Despite large investments and government support, sales of electric cars are slowing down. Germany, once a leader in the field, saw sales of electric cars drop by a third last July after subsidies were scrapped a year ago.
In the USA, the situation is also complicated. So, in 2021, Ford declared its intention to completely switch to electric cars in Europe by 2030. However, the company recently recognized these plans as too ambitious. Ford stated, which is reducing production of its F-150 Lightning pickup truck due to weak demand. Now Ford, like Porsche, is planning to keep internal combustion engines in its European lineup after 2030. General Motors has delayed several new electric models for this year.
In China, the growth of sales of electric vehicles is slowing down, and the market is already near to saturation. The reduction of subsidies for the purchase of electric cars accelerated this process.
The reasons for the decline in sales of electric cars are clear. First, they remain expensive. For example, the average price of a new electric car in Germany is about €52,700, which is much more expensive than gasoline counterparts.
Secondly, the charging infrastructure does not keep up with the development of the market. Even in the UK and the Netherlands, electric car owners face a shortage of fast charging stations, and there are almost none in rural areas. There is growing concern about the range of electric vehicles. Although modern electric cars can travel 400-600 km on a single charge, this distance is reduced in winter and charging stations may be busy or not working.
Experts believe that without affordable models costing $20,000 to $30,000 and the expansion of charging infrastructure, the electric car market will not grow as quickly as predicted. So for now, gasoline and hybrid cars remain more attractive to mass buyers.
Interest in hybrids as a compromise solution
Again become hybrid cars are popular because they combine the advantages of traditional internal combustion engines and electric motors. They reduce CO₂ emissions and do not depend on charging stations.
Hybrids have both an internal combustion engine and an electric motor, which allows them to work in different modes. This saves fuel, especially in urban conditions with frequent stops. Also, hybrids can use traditional fuel, which makes them better for long trips.
Many car manufacturers change their electric vehicle strategies and focus on hybrid models. For example, Chinese companies are increasing exports of hybrid cars to Europe, offering new models to meet consumer demand.
There are also more and more Ukrainians are interested hybrid cars. In November 2024, 1,800 hybrid cars were registered in Ukraine, which is 5% more than in the same period last year. This means that more and more Ukrainians choose hybrids as the best option between traditional and electric cars.
The increase in the production cost of electric vehicles
Rising prices for key metals, of course, too affects on the production cost of electric cars. Lithium, nickel and cobalt are very important for the manufacture of batteries, and their increase in price is driving up the prices of electric cars. At the same time, prices for cars with internal combustion engines remain stable. This makes them more attractive to consumers, especially in times of economic uncertainty.
According to the study, the average price of an electric car after discounts was 39,236 euros, while the average price of a car with an internal combustion engine was 32,355 euros, which is 21% less.
For many buyers, the difference in cost is the deciding factor. They choose between innovative, but more expensive electric cars, and time-tested and cheaper cars with internal combustion engines. Despite the environmental benefits of electric cars, economic realities often force people to prefer traditional cars.
The Chinese factor in changing market conditions
China still is the largest electric car market, but even here sales are slowing. This is due to economic difficulties, increased competition from local brands and reduced subsidies for electric cars.
Chinese car manufacturers BYD, Nio and XPeng are actively expanding their position in the domestic market, offering many models of electric cars. It creates significant pressure on foreign companies, in particular, Tesla, whose share of the Chinese electric-edhsd market fell from almost 9% in 2023 to 6.5% in the first seven months of 2024.
Previously, the Celestial Empire supported the development of electric vehicles through subsidies and incentives. But the gradual reduction of subsidies slowed down sales growth, as consumers have become more cautious in their decisions regarding the purchase of new cars.
Despite the difficulties, the prospects for the Chinese electric car market are very optimistic. It is predicted that sales of electric cars in the Celestial Empire may increase this year achieve 12 million units, which is 20% more than in 2023. This shows the constant interest of consumers in environmentally friendly transport and the adaptation of the market to new conditions.
Geopolitical risks and dependence on China
China controls about 60% of the world’s production of rare earth elements, giving it a strategic advantage. In addition, the state dominates the production of lithium-ion batteries, providing three-quarters of the world volume. This has been made possible by government support and investment in the industry over the years.
The US and Europe understand the risks of dependence on Chinese batteries and materials, and are taking steps to reduce this dependence. Goldman Sachs predicts, that by 2030 it is necessary to invest more than $160 billion in the development of its own production of batteries and extraction of important materials.
France, Germany and Sweden are called The European Commission to promote the development of battery production in Europe to reduce dependence on China. They emphasize the need to reduce red tape, create favorable conditions for financing and speed up approval processes in the battery manufacturing sector.
Independence from Chinese supplies is a difficult task. European Union warns, that without decisive action by 2030 it could become as dependent on Chinese lithium-ion batteries and fuel cells as it once was on Russian energy carriers.
Reaction of investors
Shares of many automakers have fallen significantly, worrying investors. Tesla, which has long symbolized success, too encountered with reduced demand and increased competition. In recent days, Tesla shares have fallen from $465 to $375 a share due to the first decline in sales in a decade.
The Spanish company Wallbox, which produces charging stations for electric cars, lost 57% of its market value since the beginning of the year. In the past month alone, the stock has fallen 32% to $0.75 per share. This drop is caused by investors’ doubts about the growth of the electric car market and a decrease in recommendations from analysts.
Pod Point, a British company specializing in charging infrastructure, encountered with financial difficulties due to the lack of private buyers of electric cars in the UK. That sent the company’s shares down 35%, to their lowest level since the company went public in 2021.
It is possible to review environmental standards in Europe
In the European Union is growing the number of calls for a review or postponement of the ban on the sale of new cars with internal combustion engines, which is planned for 2035. This may affect the strategies of automakers and strengthen the positions of gasoline and hybrid models.
The Minister of Industry of Italy proposed to review this regulation in the near future. Italian government is afraid, that the ban on diesel engines could lead to a serious crisis for European car manufacturers and put hundreds of thousands of jobs at risk. The Minister of Energy of Italy called the ban “absurd” and called for its review.
CEO BMW urged The European Commission will review the plan to ban the sale of new gasoline and diesel cars from 2035. He believes that a technologically neutral policy could reduce dependence on Chinese batteries. This demonstrates the growing pessimism among automakers and consumers about the rapid transition to electric vehicles.
Survey in Germany showed, that 2/3 of people are against the ban on ICE cars from 2035. Only one in four supports it. The Prime Minister of Bavaria called on the EU to abandon this ban, emphasizing the importance of using different technologies and the potential of synthetic fuels.
…Is the future of the automotive industry in Europe really already decided? Will political adjustments and economic realities change the course of events? If the ban on the sale of cars with internal combustion engines is revised or postponed, it will be a signal for automakers: should we rush to abandon gasoline and hybrid models? After all, while the government weighs the decision, the consumer remains the main judge, who votes with his own money for what really meets his needs.
Tetyana Viktorova
