European sales of Volkswagen electric vehicles have declined by nearly 25% as interest in battery-powered cars slows and consumers increasingly opt for petrol vehicles.
In the first quarter of the year, electric vehicle sales decreased by 24% amid high inflation and escalating energy costs.
At Volkswagen Group, which includes brands like Audi, Skoda, and Porsche, global electric car sales fell by 3% to 136,400. In contrast, sales of traditional combustion engine vehicles rose by 4% to almost two million units.
This decrease in electric vehicle interest coincides with policy shifts in the region, where governments are scaling back on subsidies and re-evaluating goals to phase out petrol and diesel vehicles.
In the UK, Prime Minister Rishi Sunak postponed the ban on new petrol and diesel car sales from 2030 to 2035, and incentives for purchasing new electric vehicles were removed in 2022.
Data indicates that in Britain, the demand for petrol cars is increasing more rapidly than for electric models.
According to the Society of Motor Manufacturers and Traders, electric vehicle registrations in the last month were only 3.8% higher than the previous year, while petrol car sales saw a 9.2% increase.
Volkswagen’s lineup in the UK includes popular electric models such as the Audi e-Tron series and the Volkswagen ID.
Meanwhile, officials in the EU are contemplating revisions to a proposed ban on petrol and diesel vehicles within the union. These changes could allow the utilization of synthetic fuels, known as e-fuels, which are compatible with traditional combustion engines.
Matthias Schmidt, the founder of Schmidt Automotive Research, noted that Volkswagen’s sales have been adversely affected by the elimination of electric vehicle (EV) sales subsidies in Germany. Furthermore, the EU’s decision to pause emissions targets for vehicle fleets has negatively influenced sales.
Mercedes-Benz also reported a decline in EV sales, with an 8% decrease. The company attributes this drop to the sudden termination of a tax incentive in Germany and the gradual discontinuation of a well-received electric model from its Smart brand.
Volkswagen is experiencing increased competition in the electric vehicle (EV) market as European automakers contend with a surge of new electric cars manufactured in China. Chinese brands like BYD are introducing battery-powered vehicles at lower price points compared to their Western counterparts.
The European Union is conducting an inquiry into the subsidies granted to Chinese car manufacturers by the Beijing government. According to experts at Germany’s Kiel Institute, as reported by Bloomberg, BYD has benefited from over €3.4 billion (£2.9 billion) in subsidies from China in recent years.
While there’s been a significant decline in electric car sales in Europe, Volkswagen reported a remarkable increase of nearly 91% in China.
Hildegard Wortmann, a Volkswagen executive board member, commented: “Our varied product range allows us the flexibility to offset demand fluctuations in certain areas, such as we’re currently seeing with electric vehicles, by focusing on other segments.”
This decline in Volkswagen’s sales mirrors a notable downturn in Tesla deliveries, the leading electric vehicle manufacturer in the West. Tesla, headed by Elon Musk, reported an 8% sales decrease in the March quarter.
However, it’s not all gloomy news in the industry: BMW announced a 28% rise in EV sales in the first three months of the year. Sales of their electric models, including the i4, iX1, and i7, surged by 41% in the same period.
Nevertheless, many car manufacturers are reevaluating their plans for new electric vehicle launches, citing a decrease in consumer interest.
Bentley, a British carmaker under Volkswagen, has postponed the debut of its first electric vehicle to 2026.
Similarly, Lamborghini, another Volkswagen subsidiary, plans to introduce its first all-electric model no earlier than 2028.
Stellantis, which owns brands like Peugeot, Vauxhall, and Maserati, recently announced the continuation of its petrol-powered Fiat Panda production until 2030, a shift from its earlier plan to transition the model to all-electric by 2027.
Other carmakers are also adjusting their strategies. Ford has delayed the production of two new electric models, and Mercedes-Benz has abandoned its target for an entirely electric range by the end of 2030.
