Has the EV Revolution Run out of Battery?

Has the electric car revolution stalled before it even shifted into high gear?

Once touted as the future of transportation, electric vehicles (EVs) today face unexpected resistance and market saturation.

The Case of China

The main culprit is a mismatch between production and demand, with significant examples found in none other than China – ironically, the birthplace of the electric car boom.

In the city of Hangzhou, unused electric cars pile up in so-called “graveyards”, surrounded by overgrowths of cobwebs, shrubs, and weeds across a series of deserted lots and fields.

Despite cycle-share initiatives and considerable government subsidies, the domestic demand in China has plummeted, prompting manufacturers to seek markets overseas.

Global Response

However, this eventually led to ports in Rotterdam and Antwerp becoming congested with unsold Chinese EVs.

In response to rising imports, the U.S. drastically increased tariffs on Chinese cars from 25% to 100%, effectively doubling the entry cost and diminishing their market appeal.

European countries are contemplating similar measures to prevent the dumping of cheap Chinese EVs, which could further constrict the already limited market space.

Impact on Market Dynamics

Traditional automakers in the U.S. and Europe, who pivoted to electric in response to the initial surge led by companies like Tesla, are now grappling with overstock and dwindling sales.

For instance, Hertz reversed their ambitious electrification plans after a $4 billion deal with Tesla, instead opting to sell off 30,000 electric vehicles to reinvest in internal combustion engines. Since the Tesla deal announcement, Hertz’s share price plummeted by 80%.

Do Drivers Dream of Electric Cars?

The UK market shows a similar pattern of reluctance among private buyers, with electric car sales dropping by 20% in April 2024. Government incentives have led to fleet purchases representing five out of every six EVs sold, a dynamic that has artificially sustained sales figures.

The government has reacted by pushing back its target for banning new petrol car sales from 2030 to 2035.

Charging infrastructure remains inadequate, with the UK still having one standard charger for every 35 plug-in cars, despite increased installations. The operational costs of EVs are also rising, with the price of electricity from a rapid charger up by about 10%, making the per-mile cost 22p compared to 17p for petrol.

Moreover, the UK’s EV infrastructure is heavily reliant on charging at home, where 30% of households do not have off-street parking. This limits accessibility for many potential users.

Industry Calls for Action

So, how has the automotive industry responded?

One particularly urgent voice has come from The Society of Motor Manufacturers and Traders (SMMT), who have called for tax cuts and better purchase incentives.

Others have urged for more charging infrastructure to increase customer confidence, as well as continued price reductions. The latter comes as EVs remain about 35% more expensive than traditional petrol and diesel cars, despite recent discounts.

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