German automaker Volkswagen has revealed that its electric orders in Europe increased in Q1 2024 compared to the first quarter of 2023, shooting up by more than two times through the first three months of the year. The recent announcement counters the increasing reports of waning electric vehicle demand among consumers pressured by rising interest rates and unable to meet high electric vehicle prices.
According to Volkswagen’s most recent earnings statement, customers in Europe ordered more than double the electric vehicles ordered in Q1 2023 from January through to March, indicating rising demand for electric vehicles in the European market. Volkswagen did not release sales numbers from China, the United States or any other market.
Despite the report’s positive implications, it comes at an extremely trying time for the global electric-vehicle sector. With the early adopter market mostly saturated, the rest of the consumer market is either unwilling or unable to part with tens of thousands of dollars more to purchase an electric car. Even government subsidies and price discounts by major EV companies such as Tesla haven’t been enough to entice customers to part with a premium in exchange for a battery electric vehicle.
Furthermore, rising interest rates have made the cost of borrowing more expensive, which means that customers who could have purchased an electric vehicle through debt financing are now looking at even higher costs. With the cost of living also rising across the globe, demand for pricey electric vehicles is at an all-time low. Surprisingly, consumers have also avoided Chinese EVs despite their lower prices. The result is slowed EV sales in most markets as electric vehicles continue to pile up in ports.
Automakers that do sell their electric cars also have to contend with increasingly slimmer profit margins. Stiff competition from EV startups, established carmakers and hundreds of Chinese electric vehicle startups has forced many carmakers to cut EV prices in a bid to remain competitive. As production costs haven’t fallen in tandem with EV prices, some carmakers are operating at a loss just to get their electric cars in customers’ hands.
Even so, Volkswagen chief financial officer Arno Antliz says the company is committed to an electric future. Speaking on a call with journalists and analysts, Antliz acknowledged the global slowdown in electric vehicle sales in the European and American markets. He noted that while EV sales in these markets had fallen faster than the German automaker expected, electric vehicle penetration would still increase over time, albeit slower than Volkswagen had initially anticipated.
As superior battery chemistries from companies such as QuantumScape Corp. (NYSE: QS) are commercialized and become adopted on a wider scale, range anxiety will become a thing of the past, and EV uptake is likely to accelerate around the world.
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