Industry leaders in Germany say high energy and parts costs impact electric vehicle production and sales!
Soaring energy costs are threatening the future of the electric car, industry bosses in Germany have warned.
A spike in electricity prices, as well as in raw material costs and availability, a chronic shortage of parts in the Western Countries, and a widespread reduction in disposable income are having a considerable impact on the production and sales of electric cars.
If this trend continues, there is also concern that there will be a knock-on effect on investors who will lack incentives to build charging facilities, making electric cars less attractive – because they would be more impractical – to run.
Until recently, electric car ownership had been gaining attractiveness as the cost of petrol rose. But the price differential has shrunk since the recent rise in electricity prices – in Germany by around a third compared with a year ago.
Electric car owners, whether charging their cars at home or through contracts with charging operators, have seen price rises of 10% or more. Moreover, further price rises are expected since the price of electricity is linked to that of gas, which has become ever scarcer since Russia turned off its gas supplies to Germany almost two weeks ago.
Allego, one of Germany’s largest charging station operators, raised its prices from 43 cents a kilowatt hour to 47 cents at the start of this month. Express charging, via a continuous current, has risen from 65 to 70 cents a kilowatt hour, while the fastest, so-called ultra-fast charging, has gone up from 68 cents to 75 cents a kilowatt hour.
Discount supermarkets, DIY chains, and furniture stores that recently offered customers free charging while they shopped are now introducing charges.
According to the automobile economist Stefan Bratzel, development is an immediate threat to the industry.
“The electricity price explosion could end up being an acute danger for vehicle transition, and we need to be damn careful about it,” he told German media.
“If electric cars become more expensive to use, the surge in electric mobility is in danger of collapsing because hardly anyone is going to buy an electric car,” Bratzel, founder of the Center for Automotive Management (CAM), said. He and other electric car advocates are now calling on the German government to ensure that the electricity price remains under the price of petrol, which they say is crucial to the future of electric cars.
“Electric cars are losing their charm,” Helena Wisbert, director of the Duisburg-based Center for Automotive Research, wrote in a recent commentary for the economic daily Handelsblatt.
State subsidies of electric cars are set to halve to €4,500 (£3,900) from 2023, while buyers of plug-in hybrids, who currently receive a €6,750 payment towards them, will no longer be supported. The overall pot of money available is to be capped at €2.5bn, enough to cover bonuses for just 400,000 electric cars – less than 1% of the automobiles on German roads.
Industry observers say they do not believe an EU reform on the cards, which would decouple the price of electricity from that of gas, will happen fast enough.
“The boost to the market needs to function, and now, that is absolutely central,” Bratzel of CAM said.
One suggestion that could be relatively swiftly implemented would be to increase the vehicle tax on diesel and petrol cars. Currently, electric cars are not eligible for vehicle tax. They can also use bus lanes and parking places unavailable to non-electric cars.
In Norway, where the government was an early adopter of financially incentivizing electric car purchases and a widespread charging network, 64.5% of new cars registered last year were electric vehicles, putting it at the top of a list compiled by the Association of European Automobile Manufacturers.
Germany is in sixth place on the list, with 13.6%, and the UK in ninth, with 11.6%.