New car sales in Europe rose 4.9 percent in October as electric cars outpaced registrations for gasoline-and diesel-powered vehicles,Reuters reported on Tuesday,citing data from the European Automobile Manufacturers'Association.The figures point to a noteworthy trend:the steady expansion of electric vehicle(EV)registrations has supported the overall increase in sales of new cars,indicating a clear positive relationship between the two.
Corporate data point in the same direction.According to Reuters,registrations of cars made by Volkswagen,Stellantis and Renault rose year-on-year by 6.5 percent,4.6 percent and 10.6 percent,respectively.While the factors driving these increases may differ,the growth in EV demand across the European market has contributed to a more stable sales environment for manufacturers,including European brands.
The link between market growth and corporate performance is clear:as a market expands,firms operating within it are positioned to benefit.The automotive sector encompasses a long and complex supply chain,from carmakers to component suppliers.If Europe seeks to strengthen the performance of domestic firms along this chain,a practical approach is to expand the EV market,support the transition to electrification,and stimulate replacement demand.
For European policymakers,one question worth considering is how to expand the EV market and grow its overall size.Available data suggest that one important constraint is the price of EVs.Earlier this year,DPA reported that a YouGov survey found high costs to be the main reason German consumers were hesitant to switch to EVs.The study showed that 47 percent of respondents cited price as the primary barrier to purchasing an EV.
Making EVs more affordable is likely to be a central factor in expanding the EV market,offering European manufacturers and suppliers the opportunity to benefit from wider consumer adoption.Bloomberg reported on Tuesday that consumers are being lured by an increasing array of cheaper fully electric models such as Stellantis NV's Citroënë-C3 city car.Even so,carmakers are grappling with slower-than-expected EV uptake.
The region's manufacturers are steadily introducing more affordable electrified models.A stronger push in this direction could accelerate the growth of Europe's EV market,expanding its overall size and ultimately benefiting firms across the sector,including European carmakers and their local supply chain partners.
A pressing issue for Europe is how to reduce the cost of EVs in order to expand the market and increase its overall scale.Lowering costs is central to accelerating electrification and ensuring that European companies,including both manufacturers and suppliers,can benefit from a larger,more dynamic market.
First,promoting greater competition among automakers can help.A more competitive market can drive prices down by rewarding efficiency and innovation,while offering consumers a broader range of models at different price points.This market-based mechanism provides a direct way to achieve more optimal pricing without relying on regulatory intervention.
Second,removing trade and non-trade barriers that contribute to higher costs is crucial.Tariffs,import restrictions,and other discriminatory measures add to vehicle prices and slow market development.Streamlining these frameworks would create a more efficient market environment and support the wider availability of competitively priced EVs.
Third,fostering supply-chain collaboration can help reduce production costs.By encouraging cooperation,standardization,and technological upgrades within the EV supply chain,manufacturers can lower input costs and improve efficiency.Advances in battery technology,manufacturing processes,and measures to attract additional investment into the sector can further reduce prices,making EVs more accessible and supporting the broader growth of Europe's EV industry.
If Europe hesitates to take concrete steps to reduce EV prices and instead shields domestic automakers from competition,consumers might postpone purchases,the market could contract,and all stakeholders would ultimately be worse off.
Market statistics underscore the need for decisive action.Chinese manufacturers,with their extensive experience in cost-efficient EV production,could serve as partners in lowering prices,creating opportunities for mutually beneficial collaboration.
Expanding the EV market is crucial for strengthening the sector's overall performance.A larger market creates greater opportunities for all participants,generating gains for manufacturers and European consumers.Falling into protectionist traps that keep prices high and restrict growth would be counterproductive for all parties.
